The purpose of a Target Market and Fair Value Statement is to explain the identified target market and the expected distribution strategy for each AXA Retail Insurance product manufactured by AXA Insurance.
It also outlines our approach to Product Oversight and Governance to demonstrate how we design, monitor and review our products to ensure they continue to provide fair value and meet the needs, characteristics and objectives of the target market including vulnerable customers.
Product Oversight and Governance
AXA UK’s Product Governance Policy sets out the standards that AXA Retail is required to implement to ensure the achievement of fair value and good customer outcomes by having robust product oversight and governance arrangements, systems, policies and procedures in place, which encourage a business culture with customers’ interests at its core.
We identify, define and assess our target markets at an appropriate level, based on the nature and complexity of our products.
We undertake appropriate testing of our new products before launch, to make sure they meet our customers’ needs and provide fair value.
The design and performance of all our new, existing and legacy products are subject to regular assessment and review to ensure products provide fair value and that there is a continuing customer-centric focus, achieving good customer outcomes.
The features, nature and complexity of our products are carefully matched to our intended distribution channels to ensure they reach our identified target market.
These requirements are in place in order to ensure that all AXA UK customers receive fair value and that good customer outcomes are delivered in line with AXA UK’s defined customer outcome statements.
Target Market Statements
Target Market Statements provide information about all of the AXA Insurance products distributed. This includes:
The main features and optional covers associated with our products.
Who our products are designed for and who they are not designed for.
How our products should be distributed.
The complexity of our products.
How to ensure that our product provides fair value to customers as intended.
Home products - Target Market Statements and Product Strategy Documents
Has AXA Retail carried out a PROD assessment on all products?
As part of our Product Governance and Oversight of AXA Retail products:
We identify, define and assess our target markets at an appropriate level, based on the nature and complexity of our products
We undertake appropriate testing of our new products before launch, to make sure they meet our customers’ needs and provide fair value
We regularly assess and review the design and performance of all our products to ensure they provide fair value and meet the needs of the target market. This includes assessing fees and charges. From 1st October 2021, we will carry out this activity annually, as per the amended PROD rules
Where a significant change is made to the product, we assess this to ensure the product continues to meet customers’ needs and provide fair value
The features, nature and complexity of our products are carefully matched to our intended distribution channels to ensure they reach our identified target market.
Does AXA Retail’s product approval process identify whether each product provides fair value to customers in the target market, including whether it will continue to do so for a reasonably foreseeable period?
Yes, as part of our product approval process, we consider any expected changes to the total price a customer would likely pay during the period they hold the product, in addition to the relationship between the total price and the value received for subsequent renewals.
What happens if AXA Retail identify that a product does not provide Fair Value to customers?
We will take appropriate action to stop any further harm from occurring and inform all our impacted distribution partners and customers about the remedial action being taken. This could include, but is not limited to:
Amending distribution arrangements
Amending remuneration structures
Adapting, or withdrawing the product.
For each of AXA Retail’s products, what is the intended target market, are there any customers for whom the product would not be suitable, are there any notable exclusions or circumstances where the product will not perform and is there any other information which is relevant to distributors?
Please refer to our Target Market and Product Fair Value Statements, which provide information about our products including:
Who AXA Retail products are designed for and who they are not designed for (target market).
The main features and optional covers associated with our products.
How our products should be distributed.
The complexity of our products.
How to ensure that our products provide fair value to customers as intended.
What information will AXA Retail be requesting from distribution partners to support the assessment of products, and when will AXA Retail ask for this?
On an annual basis we'll be requesting data from our distribution partners to allow us to assess if the arrangements in place remain appropriate and represent value for the customer. At a minimum the information we'll require to carry out our assessments in accordance with the FCA's PROD rules is:
Information on the remuneration and fees charged in connection with the distribution of our insurance products and the services provided, including from other parties in the distribution chain
Information on any ancillary product or services provided to the customer (including insurance add ons, non-insurance additional products and retail premium finance), which may affect the intended value of our insurance product
Confirmation that the distribution arrangements are consistent with the obligations of the firm under the FCA Handbook including SYSC 10 (Conflicts of interest) and SYSC 19F.2 (IDD remuneration incentives). Where possible and appropriate, we will request this information as part of our existing engagement with our partners.
Has AXA Retail sent a communication on this before?
AXA Retail wrote to its broker community in September 2021 to let them know about the steps we are taking to oversee our products, so that we can ensure they deliver fair value for customers. We also outlined the part our broker partners must play, by providing information to enable us to complete our annual Fair Value Assessments, as required by the FCA's enhanced rules which came into force on 1 October last year.
Will brokers receive the same assessment to complete from AXA Commercial and AXA Health?
Brokers who have a relationship with AXA Commercial and AXA Health will receive a separate assessment from them.
Is there one standard assessment that insurers could use, so that there is consistency across the industry?
Some trade bodies have collaborated to create a template. We are not using this template because it did not meet all of our information needs and it is a very manual way to collect the data. AXA Retail has reconciled this against our own approach and where appropriate we have tried to align our own assessment with this template.
How can brokers be expected to know the full distribution chain's remuneration/fees and activities?
As the product manufacturer, we need to ensure we have a full view of the services provided across the chain, and the cost of these to the end customer. It is important that as part of this we understand how fees contribute to the end price, so that we can assess if our product delivers fair value, as required by the FCA's rules. Brokers have equal responsibilities as distributors to understand the value of the chains they use to sell the product.
Can brokers request an extension to the submission request?
In order for AXA to complete its internal assessments we would appreciate where possible brokers keeping to the original submission date but understand there could be extenuating circumstances preventing them from doing this. If that happens please raise it with your relationship manager and we will need to consider it on a case by case basis.
AXA Retail manufactures the product, so why do brokers have to complete the questionnaire?
AXA Retail needs a clear understanding of the distribution process. The broker partners who we have a direct relationship with are required to provide information about services, remuneration, controls, and information about any other parties in the distribution chain. It's important that product manufacturers and distributors work together to ensure that customers receive fair value from the goods and services they purchase and achieve the right outcomes at every point of their journey, regardless of who they're interacting with.
What response will brokers receive from AXA Retail following completion of the questionnaire and when?
Once we have received a full response, AXA Retail will review this and let the broker know if there are any further questions, or any next steps.
The information AXA Retail has requested from brokers is commercially sensitive and so cannot be provided, why is this needed?
AXA Retail must ensure that our products are delivering fair value to end customers. This means working closely with all of our broker partners and obtaining more information from them than we have previously, about the remuneration they receive and what they do for customers in return for this. The information we have requested is in line with the requirements set out by the FCA in their PROD rules. This does not require insurers to obtain details of any separate commercial agreements between distributors and other firms, which are paid by the distributor (rather than being included separately in the premium) or a breakdown of the distributor’s costs or profit margins.
I don’t want to fill out lots of separate requests for insurers, can I use my own solution to provide the information to you?
AXA has designed the process to be clear, as straightforward and as light touch as possible for brokers. Completing our survey also enables the data collection to be automated in the back end which will help us in terms of comparison purposes so we would really appreciate if you could spend a short amount of time to follow our preferred solution. If that is not possible then please speak to your relationship manager in the first instance and we will try and work with you on a solution.
What happens if brokers fail to respond?
Where a broker does not respond, their Relationship Manager will reach out to try and understand the reasons why and offer guidance and support to enable completion of the questionnaire. It's important AXA Retail understands the role each broker plays in distributing the product as that information forms an integral part in helping us to complete our fair value assessment.
When will AXA Retail share information relating to its product fair value assessments with us?
We know that our broker partners need to understand the value of our products, the target market, and how this impacts their distribution strategies. A lot of this information is already included in the Target Market Statements for our products, which can be downloaded above. If AXA Retail make any changes to a product based on the outcome of our fair value assessment, we will notify brokers and our Target Market Statements will be updated to reflect these.
AXA Retail plan to communicate its findings as soon as we have received a reasonable sample size of responses on our questionnaire. This will be before the deadline to allow you to consider your own regulatory responsibilities relating to our products.
We would like AXA Retail to fill in template for the products that we distribute so we can assess value?
Due to the number of products and different arrangements we have at AXA Retail, we cannot accommodate ad hoc requests for individual brokers at this time. The process we have designed, including the play back of our review, combined with the GI Value measures to be published by the FCA should be everything you need to conclude if our product is providing value to our customers.
