Investment advice approach at your KBC Insurance agent (savings and investment-type insurance)
Introduction
In this information document, we offer you an overview of how the investment advice provided by your KBC Insurance agent meets the IDD rules, what that means to you as a client and precisely what you can expect from your KBC Insurance agent and when.
Contents
- What products can your KBC Insurance agent advise on?
- What does product advice from your KBC Insurance agent consist of?
- How does your KBC Insurance agent integrate sustainability risks in the investment advice?
For which types of investment product can you go to your KBC Insurance agent for advice?
Your KBC Insurance agent advises on savings and investment products offered by KBC Insurance. The big advantage of this approach is that your KBC Insurance agent only advises on products he or she knows well. More specifically, you can turn to your KBC Insurance agent for unit-linked life insurance (Class 23) and guaranteed-interest life insurance (Class 21) products.
What data does your KBC Insurance agent use when providing advice with regard to savings-linked and investment-type insurance products?
Your KBC Insurance agent is required to gather all the necessary information about you that enables them to provide you with
suitable advice. This is done in various ways.
- The investment profile is used to obtain information about:
- Your investment objectives (whether you want to preserve your money or put it to work)
- Your risk appetite and risk preference
- Your financial situation
- Your investment horizon (how long you can spare the money you want to invest)
- Your sustainability preferences regarding ESG investments
- The agent assesses your knowledge and experience with the help of a product knowledge and experience test
- The agent takes into account your financial capacity and ability to bear losses in their advice. They also assess your financial buffer
and financial plans
What does product advice from your KBC Insurance agent consist of?
The advice your KBC Insurance agent will provide you on savings and investment-type insurance always takes the form of product advice.
Product advice consists of the following:
- Advice on alignment with your risk profile, your protection and other needs, and the investment term
- Evaluation of your knowledge and experience
- Summary of the advice in the ‘Advisory Overview’
- Advisory approach within profile approach: whenever advice is provided, the risks of the individual investment are considered
- Buying and selling advice if you request it or on the agent’s initiative (e.g. based on suitability for the client or when an existing investment matures).
- General explanation of the charges associated with the investment, prior to the transaction
- Personalised yearly overview of your investments and transactions through the Annual Account Statements.
- No periodic assessments are performed of the suitability of your investments.
How your KBC Insurance agent integrates sustainability risks and takes due account of the principal
adverse impacts on sustainability factors in their advice
Sustainability or ESG has never been more topical. ESG stands for ‘Environmental, Social and Governance’ and covers a number
of areas, including climate, energy use, availability of raw materials, health, security, human rights, labour laws and corporate
governance. KBC has updated its business strategy to pursue sustainability in all the activities it conducts as a bank-insurer. Our sustainability policy is firmly embedded in KBC’s wider business strategy.
KBC Insurance aims to systematically expand the range of responsible savings-linked and investment-type insurance products as well as second pillar pension products. Sustainability is therefore an important theme in the advice with regard to these products.
Your KBC Insurance agent also takes into account the potential adverse impact of sustainability risks in the selection of the products they provide advice on.
What are sustainability risks? These are environmental, social or governance situations and events that, if they were to occur,
could have a negative impact on the value of the product. The nature of these risks varies over time:
• A short-term sustainability risk usually depends on a particular event. Such risks generally only affect the value of the
investment when the event occurs. For example, an incident that leads to a lawsuit seeking compensation for
environmental damage, court cases and fines for failing to comply with social legislation, scandals such as when a
company gets bad publicity because human rights are not upheld throughout the production chain or because the
products do not meet the ESG standards it promises. Those types of sustainability risk are estimated to be higher when an
issuer is less strict in respecting ESG standards
- A long-term sustainability risk refers to risks that may develop over the longer term, such as:
- Business activities that may come under pressure as a result of climate change (for example, parts of the automobile
industry) - Changing customer product preferences (for example, preference for more sustainable products)
- Difficulties with recruiting staff
- Rising costs (for example, insurance companies facing claims due to changing weather conditions)
As this risk develops over the long term, companies may try to limit it by, for example, changing their product range or improving their production chain. However, not all companies have the same ability to adapt their activities, which means that some are more exposed to sustainability risks than others (for example, the oil sector). Therefore, the sustainability risk, for example, is partly related to the specific investment policy of a unit-linked (class 23) fund
Your KBC Insurance agent also considers the principal adverse impacts on sustainability factors when providing advice. By sustainability factors, we mean environmental, social and employment matters, respect for human rights and the fight against
corruption as well as bribery. They do this by carefully selecting the products they provide advice on.
The specialised research team from KBC Asset Management NV is supported by the Responsible Investing Advisory board, an external
advisory board of independent experts (www.kbc.be/responsible-investing > Three reasons to invest responsibly with KBC > Support
from independent experts).
KBC Insurance takes into account the sustainability risks and the principal adverse impacts on sustainability factors in its range of
products, and that is reflected in the advice provided by the KBC Insurance agent:
• Advice is provided on responsible unit-linked (class 23) funds (Responsible Investing). Those funds, that are managed by
KBC Asset Management NV, are characterised by a positive selection. The positive selection methodology combines
portfolio objectives and support for sustainable development. More information on the positive selection methodology and
the specific targets for responsible investing funds can be found at www.kbc.be/investment-legal-documents >
Investment policy for responsible investing funds.
• KBC Insurance applies the exclusion policy of the KBC group in its investment policy for the underlying investments. This
stipulates that no investments may be made in companies that are involved in the tobacco or thermal coal industries, in
the production and/or development of controversial weapons, in companies that contravene the principles of the UN
Global Compact, or futures contracts on agricultural commodities. Any such companies are not invested in. This means
that savings-linked and investment-type insurance products as well as second pillar pension products that your agent
provides advice on do not make underlying investments in blacklisted companies either. Additional exclusions apply to KBC
Insurance's responsible funds. Most of these exclusions also apply to KBC Group's own investments and concern
counterparties significantly involved in weapons, fossil fuels other than thermal coal, gambling, palm oil, adult
entertainment and fur and specialty leathers. Specific information about these exclusions can be found at www.kbc.com
> Corporate Sustainability > Setting rules and policies > KBC Group Investment Policy or by entering the search term ‘KBC
Group Investment Policy’. The general exclusion policy that applies to all savings-linked and investment-type insurance products as well as the possible exceptions can be found at www.kbc.be/investment-legal-documents > Exclusion policy for conventional and
responsible investing funds
• There is a specific exclusion policy for responsible unit-linked (class 23) funds. That policy goes beyond the general exclusion
policy (see above). Specific attention is paid to weapons, fossil fuels, gambling, adult entertainment, fur and speciality
leathers, palm oil and controversial regimes. You can find further information on the exclusion policy at
www.kbc.be/investment-legal-documents > Exclusion policy for responsible investing funds
• In addition, a number of the principal adverse impacts are implicitly taken into account through our Proxy Voting and
Engagement Policy. Under the Proxy Voting and Engagement Policy, KBC Asset Management NV votes in shareholder
meetings and actively communicates with companies, because KBC Asset Management NV firmly believes that active
share ownership can have a positive influence on its investee companies in the medium and long term. For further
information, see Proxy Voting and Engagement Policy: (kbcgroup.eu) and the Statement on the Principal Adverse
Sustainability Impacts Statement
More information on how KBC Insurance takes into account sustainability risks and the principal adverse impacts on sustainability
factors can be found at www.kbc.be/investment-legal-documents > Transparency on sustainability risks and adverse impacts on
sustainability.
Responsible funds that your agent provides advice on have the Towards Sustainability Label, or an application process for this
label is pending. This label is an initiative of Febelfin. Funds that have been awarded this label:
- Have a clear sustainability strategy in place
- Exclude very harmful companies or activities
- Pursue a transparent policy in relation to socially questionable practices (for instance, nuclear energy, tax evasion, the death
penalty)
See www.towardssustainability.be/en/quality-standard for more details.
Glossary
Sustainability preferences for investing: to keep up with the changing demands of society, we – and by extension the entire financial sector – must make a significant contribution to achieving the European climate targets, one of which is to be climate-neutral in Europe by 2050. The bar is set high with ambitions focusing on Environmental, Social and [good] Governance issues or ‘ESG’. Whenever we refer to ESG, we are referring not only to the environment (E = Environmental), but also to how a company treats its staff and customers and its role in society (S = Social) and how well a company is run (G = Governance). European sustainability targets are regulated by legislation, including the Sustainable Finance Disclosure Regulation – or SFDR – (see term) and the EU Taxonomy Regulation (see term). Your sustainability preferences for investing will be assessed based on these two pieces of legislation and the Principle of Adverse Impact (PAI) (see term).
EU Taxonomy Regulation: the EU Taxonomy is a classification system for determining which economic activities are environmentally sustainable. The taxonomy currently uses six environmental objectives for this purpose, namely:
• Protection and restoration of biodiversity and ecosystems
• Climate change mitigation and adaptation
• Pollution prevention and control
• Transition to a circular economy
• Waste prevention and recycling
• Sustainable use and protection of water and marine resources
Environmentally sustainable activities must make a substantial contribution to at least one of them and not do significant harm to any of the other five environmental objectives.
Although the EU is currently preparing a directive that would require companies to publish sustainability information (the Corporate
Sustainability Reporting Directive), this legislation is still a work in progress. Consequently, there is currently a lack of sustainability data available. This element will, therefore, not be included in KBC's ‘responsible investing’ methodology (just yet).
Financial buffer: this constitutes part of the investment profile. This financial reserve is money you set aside not only to cover
unexpected expenses, but also to give you financial peace of mind and security. KBC suggests a minimum buffer of 5 000 euros.
Level of knowledge and experience: your level of knowledge and experience concerning the investment product in which you want
to invest. Our ‘product knowledge and experience assessment’ is based on your answers to our questions on savings-linked and
investment-type insurance products as well as your experience based on the transactions you have carried out in the relevant
products during the past four years.
Overview of advice: a written statement of suitability you receive when advice is provided. That document specifies how the advice
provided meets your preferences, needs and other characteristics.
Principal Adverse Impacts (PAI): the SFDR also specifies the extent to which adverse impacts on sustainability factors (or Principal Adverse Impacts – PAI) must be excluded and how the investor can explicitly opt for this.
Economic activities can have not only a positive, but also a negative impact on sustainability factors. Principal Adverse Impacts (PAI)
refer to the adverse impact of investment decisions on sustainability factors such as the environment, social matters, respect for
human rights and anti-corruption.
As an investor, you can choose environmental and social themes, so that your investments can limit the adverse impacts on
sustainability factors under these themes.
Product rating: this is the rating of each investment product, determined on the basis of six parameters. These parameters provide a broad approach for assessing risks and result in a rating from 1 to 7. The higher the product rating, the higher the risk associated with the product.
Profile approach: the product rating of each investment may not be higher than the maximum rating permitted by your investment
risk preference.
Product advice: the product rating of each investment may not be higher than the maximum rating permitted by your risk
preference.
Sustainable Finance Disclosure Regulation (SFDR): the SFDR is a European regulation which stipulates that, for each investment product, a percentage of ‘sustainability’ has to be calculated which then has to correspond with the customer’s preferences. SFDR also imposes transparency and disclosure requirements on financial institutions to prevent greenwashing, i.e. the pretence by a company or organisation to be greener or more socially responsible than it really is.
According to SFDR, sustainable investments are investments in economic activities that help achieve an environmental objective (such as limiting the use of fossil fuels) and/or a social objective (such as a gender-neutral remuneration policy), while always adhering to good corporate governance practices (for instance, complying with tax laws). In addition, the contribution of an economic activity to one target may not have an adverse impact on any of the other targets.
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