ACPR Recommendation 2019-R-01 of December 6, 2019 on Advertising Communications for Life Insurance Contracts

Online publication on the ACPR website on 12/19/2019 Recommendation 2019-R-01 of December 6, 2019 on advertising communications for life insurance contracts

1. Context
   Advertising communications constitute the very first step in the relationship between an insurance professional and their clients and are, therefore, decisive for the subsequent conclusion of insurance contracts.

Clients and the public in general pay particular attention to information disseminated through advertisements. Faced with the complexity of certain products or offers, they may be tempted to retain only the advantageous characteristics of advertisements, to the detriment of risks or less favorable characteristics. Thus, through advertising communications, clients may be encouraged to subscribe to contracts, make new payments on their contracts, or invest in unit-linked funds without having understood their exact nature or any associated risks.

Concerned with both respecting the interests of savers, policyholders, and investors, and with the healthy development of financial savings in all its forms, the Financial Sector Consultative Committee (CCSF) adopted, on June 3, 2008, a recommendation regarding the advertising of financial products.

For its part, and within the framework of its mission to supervise and control advertising communications, the ACPR has been led to observe bad practices that could harm the understanding of the life insurance offers and products proposed. These result from a lack of clarity or the omission of certain elements, notably regarding the nature of the life insurance contract, the corollary risks of the promoted benefits (including the risk of capital loss), or more generally regarding returns. In particular, unit-linked contracts must be perfectly distinguished from euro-denominated contracts, which do not offer the same guarantees, whereas some communications tend to bring them closer together.

In order to communicate its expectations regarding advertising communications to all professionals, regardless of the nature of the life insurance contracts concerned, the ACPR recommends good practices allowing for the provision of exact, clear, and non-misleading information, in accordance with the provisions of Articles L. 132-27 and L. 521-1 of the Insurance Code1, both regarding general presentation elements of the advertisement and specific application methods. This is notably the case for the nature of the contract, the balanced presentation of benefits promoted versus risks incurred, the presentation of yield rates, and commercial operations (including arguments related to contract fees).

This recommendation results from the merger of Recommendation 2015-R-01 on advertising communications for life insurance contracts and 2011-R-02 regarding

1 See also Articles L. 223-25-2 of the Mutual Code and Articles L. 932-23 and L. 932-24-1 of the Social Security Code.

advertising communications for unit-linked life insurance contracts composed of bonds and other debt securities.

The ACPR has also issued specific recommendations for advertising communications concerning unit-linked life insurance contracts constituted of complex financial instruments2 or linked to funeral expense financing3.

2. Recap of the legislative and regulatory framework
   2.1 Regarding the content of advertising communications
   The current legal provisions set requirements relating to advertising discourse on the one hand, and the identification of the companies originating the advertisement on the other.

2.1.1 Regarding advertising discourse
According to Articles L. 132-27 and L. 521-1 of the Insurance Code4, advertising communications relating to a life insurance contract or a capitalization contract must present content that is exact, clear, and non-misleading, and must be clearly identified as such.

Article L. 310-28, paragraph 3 of the Insurance Code5 also sanctions the making of false statements in any document made available to the public or clients.

Furthermore, Article R. 310-5 of the Insurance Code6 provides in particular that documents intended to be distributed to the public or published by a company must not contain any reference to State control, nor any assertion likely to mislead regarding the true nature of the company or the real importance of its commitments.

Regarding the Consumer Code, Article L. 121-2 provides that a commercial practice is misleading notably when it is based on false allegations, indications, or presentations likely to mislead regarding the nature of the service, its essential characteristics, its sales conditions, or the scope of the advertiser's commitments.

Article L. 121-4 of the same Code also draws up a list of commercial practices considered misleading in all circumstances, some of which could concern the marketing of life insurance contracts.

2.1.2 Regarding the identification of the advertiser
According to point 3° of Article L. 121-2 of the Consumer Code, a commercial practice is also misleading when the person on whose behalf the practice is implemented is not clearly identifiable.

Complementarily, Article R. 310-5 of the Insurance Code7 sets out identification requirements for the insurance company from which the advertising documents originate, by mentioning its name or corporate name.

Article R. 521-4 of the Insurance Code further provides that any correspondence or advertising, regardless of the medium, emanating from an insurance company or an intermediary acting as a distributor must indicate its name or corporate name, its professional address, and, if applicable, its intermediary registration number.

2 Recommendation 2016-R-04 on the marketing of unit-linked life insurance contracts constituted of complex financial instruments, taken in accordance with point 3° of II of Article L. 612-1 of the Monetary and Financial Code.
3 Recommendation 2015-R-02 on the marketing of life insurance contracts linked to funeral expense financing.
4 Cf. Articles L. 223-25-2 of the Mutual Code and L. 932-23 and L. 932-24-1 of the Social Security Code.
5 Cf. Articles L. 510-12 of the Mutual Code and L. 951-11 of the Social Security Code.
6 Cf. provisions similar to Articles R. 211-1 of the Mutual Code and R. 931-1-2 of the Social Security Code.
7 Cf. provisions similar to Articles R. 211-1 of the Mutual Code and R. 931-1-2 of the Social Security Code.

2.2 Regarding the methods of elaborating advertisements and transmitting information
Articles L. 132-28 and R. 132-5-1 of the Insurance Code8 impose on insurance companies and their intermediaries to establish an agreement to organize, among other things, the methods of transmission by the intermediary of advertisements before their dissemination, and validation by the insurer who ensures their conformity with the insurance contract. Only advertisements validated by the insurer can thus be disseminated.

Furthermore, exchanges of information between insurance companies and intermediaries are also provided for under the governance and product surveillance device provided by Article L. 516-1 of the Insurance Code, notably:

• insurance companies9 make available to distributors all information10 necessary to assess all characteristics of the insurance product and knowledge of the product validation process carried out before marketing, including the defined target market of the insurance product;
• intermediaries equip themselves with appropriate devices to obtain this information and to understand the characteristics and defined target market of each insurance product.

3. Scope of the recommendation
   3.1 The insurance contracts concerned
   This recommendation covers advertising communications relating to all life insurance contracts, including their supports (euro funds, unit-linked funds, diversification provision shares, etc.), and capitalization contracts covered by Articles L. 132-27 of the Insurance Code, L. 223-25-2 of the Mutual Code, and L. 932-23 of the Social Security Code (hereinafter "life insurance contracts").

Advertising communications in favor of financial instruments are notably concerned when these are also promoted as unit-linked funds of life insurance contracts.

3.2 The persons concerned
This recommendation addresses insurance and capitalization companies governed by the Insurance Code, mutuals and unions governed by Book II of the Mutual Code, and provident institutions and unions governed by Title III of Book IX of the Social Security Code (hereinafter "insurance organization(s)") as well as insurance intermediaries mentioned in Articles L. 511-1 of the Insurance Code, L. 116-2 of the Mutual Code, and L. 932-49 of the Social Security Code (hereinafter "intermediary(ies)"), including when these insurance organizations or intermediaries operate in France under the freedom to provide services or freedom of establishment, as well as persons subscribing to a group insurance contract.

3.3 The advertising supports concerned

Regarding mutuals and unions, Article L. 116-5 of the Mutual Code.
9 And, if applicable, intermediaries who take part in the design of insurance products.
10 In accordance with paragraph 2 of Article 8 of Regulation (EU) 2017/2358, this information relates in particular to the main particularities and characteristics of insurance products, their risks and costs, including implicit costs, and all situations likely to cause a conflict of interest prejudicing the client.

All good practices set out in this recommendation are to be taken into account mutatis mutandis, regardless of the medium and format of dissemination of the advertising communications concerned.

4. Recommendation
   With the objective of providing exact, clear, and non-misleading information to the policyholder during the marketing of life insurance contracts, the ACPR recommends to the concerned persons, in accordance with the provisions of Articles L. 612-1, II 3°, and L. 612-29-1, paragraph 2 of the Monetary and Financial Code, the following good practices:

4.1 On general advertising presentation methods, the ACPR recommends:
4.1.1 To clearly identify the advertising nature of the communication, notably by its format, its content, or, failing that, by explicit information.
4.1.2 To present the different information clearly so as to allow the public to easily grasp its meaning. This will in particular:

• use presentations, formulations, or vocabulary intelligible to the concerned public;

• not use ambiguous vocabulary, terms whose common meaning could distort the information relative to the characteristics of the promoted life insurance contract, or information that, although exact, could be likely to mislead the public;

• not disguise, minimize, or obscure important elements, declarations, or warnings, in particular, not to mislead regarding the characteristics of the contract;

• not use numerical data in a context that does not allow for immediate understanding of their meaning, in particular, not to maintain confusion between a yield rate and other types of rates (for example: annuity service rate, rate of another financial service).
  4.1.3 To present in a balanced manner the risks that are the corollary of the highlighted benefits, mentioning them in an apparent manner, in the main body of the advertising text, so that these risks stand out from other information and so that the public does not have to search for them in the advertising communication to take note of them. The assessment of the balanced nature of the presentation relies on a set of elements notably including the placement in the communication, the size of the characters, typography, and color used.
  4.1.4 To choose a support and dissemination format adapted to the advertising message(s) in order to allow the public to have a balanced presentation of the offer allowing them to understand its main characteristics.
  4.1.5 To make the different information perfectly readable or audible, under normal reading or listening conditions. Regarding written information, it is appropriate, in particular, to display them:

• in a horizontal position;

• with characters of sufficient size and normally spaced;

• in a character color contrasted with that used on the background of the advertisement.
  4.1.6 To present reference mentions in a perfectly clear and readable manner. This will in particular:

• attach, by an apparent and distinct number or sign, each information to its mention appearing in the reference. This sign will be reproduced near the concerned information and the corresponding reference mention;

• separate the mentions from each other by any appropriate means (bold reference numbers or signs, spacing between mentions, line spacing, line breaks, etc.), so that they do not blend into each other;

• limit the excessive use of mentions and references;

• furthermore, for advertising communications disseminated on small internet banners, when reference mentions are accessible by clicking, make them accessible with the first click and in a presentation that allows viewing on a dedicated page for the concerned offer the reference mentions and the information to which they relate.

In any case, information for which a specific presentation is recommended by this text to respect the balance of the offer cannot be subject to reference mentions. This is notably the case of mentions that must expressly appear in the main body of the advertising text, or near certain information.

4.2 On the nature of the contract, the ACPR recommends:
4.2.1 To allow the public to identify the nature of the life insurance contract or the promoted support (for example: euro contract, unit-linked contract, etc.).
4.2.2 To ensure that the presentation, and notably the commercial names used, when they are not taken from regulations, are not likely to mislead regarding the nature of the contract and its potential risks, nor to cause confusion with another savings product or financial service.
4.2.3 When the commercial name chosen to designate a life insurance contract marketed prior to Recommendation 2015-R-01 is likely to cause confusion with another savings product or financial service, provide information on the nature of the life insurance contract, in an apparent manner and in immediate proximity to the mention of the commercial name.

4.3 When the communication concerns a contract or support presenting a risk of capital loss / on an argument related to the guarantee, the ACPR recommends:
4.3.1 When the communication promotes a contract or supports presenting a risk of capital loss, or an offer requiring investment in these supports, mention in a balanced manner, under the conditions of 4.1.3 above, by explicit formulation, the risk of capital loss, possibly partial, in case of early withdrawal or at maturity.
4.3.2 To use an argument related to capital guarantee only if it is unconditional, that is, if it does not contain any condition other than the obligation to keep the contract or supports until their maturity. When the guarantee covers the capital minus fees paid by the policyholder, mention this information in an apparent manner.
4.3.3 When this capital guarantee is not total, indicate the percentage of sums paid by the client to which the guarantee corresponds and specify in an apparent manner if these sums paid are understood net of fees.
4.3.4 When a third-party guarantee commitment is mentioned, present this commitment in such a way that it cannot be confused with a guarantee from the insurer. Specify the identity of the guarantor as well as the circumstances of the triggering of the guarantee (for example: guarantee in case of issuer's failure to meet its obligations) and its eventual limitations (amount, duration, etc.).

4.3.5 To insert in very apparent characters, near indications related to the yield of unit-linked funds, a warning, written in accessible language, on the risks related to the proposed support (interest rate risk, liquidity risk, and counterparty risk) such as: "bond/debt security proposed as a unit-linked fund of a life insurance contract, subject to the risk of issuer default and loss of value of invested capital in case of surrender, arbitrage, or settlement by death before the maturity of this security". This warning cannot be made by simple reference to the prospectus of the debt securities, when it exists.

4.4 When the communication concerns the past or future yield of the contract, the ACPR recommends:
On the past or future yield rate:
4.4.1 When a yield rate is announced, express the announced rate as an annualized rate, net of management fees borne by the contract or the promoted supports, before social and tax deductions, and present it as such in the advertising communication.
4.4.2 To indicate if, apart from management fees already taken into account in the calculation of the rate, other fees could be levied.
4.4.3 To mention in an apparent manner, the period of application of the announced yield and the subscription conditions to benefit from it, including:
the holding period of the contract, supports, or the maintenance of invested sums, for a given period; if the yield of a unit-linked fund before maturity of the instrument it represents can be superior, inferior, or even negative; the minimum investment amount, specifying if it is net or gross of fees; the conditions for allocation to supports or different unit-linked funds, which implies mentioning, if applicable, the risk of capital loss, even partial, in case of early and/or at maturity exit.
4.4.4 To ensure that the mentioned rate corresponds to that of the promoted support or contract.
4.4.5 To abstain from using references to figures, images, symbols, or formulations that could suggest, if not the case:
a systematically positive yield, or a systematic increase in yield (such as figures always in progression, arrows pointing upwards, formulations such as: "this support guarantees you a regular progression of your capital").
4.4.6 To not communicate on a rate relating to a contract or support that is no longer marketed except to clients already holding the contract or support concerned.
4.4.7 Regarding unit-linked life insurance contracts composed of debt securities11:
to display an annualized yield rate using, for zero-coupon bonds, a formulation such as: "X % annual paid after Y years (holding period of the unit-linked fund associated with the announced yield)". Ambiguous formulations such as: "X % annual capitalized over Y years" or "Fixed rate over Y years: X %" must be avoided; to clearly indicate the modalities of coupon payments.

On past yield rate:

11 Bond securities and other debt securities referred to in points 1, 2, 2bis, 2ter, and 2quater of A of Article R. 332-2 of the Insurance Code

4.4.7 To identify in an apparent manner that the announced yield rate is a past rate by specifying its reference period.
4.4.8 To insert in a balanced manner, under the conditions of 4.1.3, a warning according to which the announced past yield does not prejudge future yield.
4.4.9 For unit-linked supports, not to use the past yield rate as the central theme of the communication.
4.4.10 To indicate, in an apparent manner and in immediate proximity to the rate, if this rate relates to the euro fund or another support.
4.4.11 When, on the support concerned by the rate announcement, several different rates have been paid during the reference period, mention the minimum rate paid. When the advertising communication indicates in addition to the minimum rate paid one or more other rates, present the different rates in a balanced manner, under the conditions of 4.1.3.

On future yield rate:
4.4.12 To identify in an apparent manner that the announced yield rate is a future yield rate.
4.4.13 To indicate in an apparent manner and in immediate proximity to the rate if the rate guarantee is applicable only to the euro fund when the promoted contract is a multi-support contract.
4.4.14 To mention in a balanced manner, under the conditions of 4.1.3 above, that the yield is, if applicable, not certain and to specify the conditions for its realization (for example: variation of a financial index, credit event).
4.4.15 When the offer is valid for already subscribed contracts, indicate clearly, unambiguously, and in an apparent manner, if the announced rate is applied to payments made previously or only to payments made during the duration of the offer. This presentation can take the form of a formulation such as: "valid on new payments made until...".

4.5 When the communication concerns promotional commercial operations, the ACPR recommends:
4.5.1 When the commercial operation is subject to conditions, indicate this in an apparent manner and in immediate proximity to the promoted benefit by a mention (such as: "subject to conditions", "subject to conditions").
4.5.2 To indicate in an apparent manner the conditions to which the promotional offer is subject, notably its validity period, and the modalities of the promotion.
4.5.3 If the client is subject to the normal conditions of the offer after the promotional period, mention the conditions that will be applicable at this date.
4.5.4 When the promoted benefit is counterbalanced by the existence of fees, indicate the fact that fees will be levied (notably during...