On 19 March 2021, IVASS (the supervisory authority for insurance intermediaries) published a press release stating that the first visits by mystery shoppers had already begun earlier this month. Indeed, in 2020, IVASS initiated “mystery shopping” in connection with its consumer protection role, and launched two pilot projects to verify directly whether the commercial practices of insurance distributors, as well as on the internet, were correct. In Italy, internet sales of insurance products are increasing, and IVASS aims to perform its duties while adapting to the changes in Italians’ purchase of insurance.

What is Mystery Shopping ?

Mys­te­ry shop­ping — the Ins­ti­tute explains in a memo­ran­dum — is a veri­fi­ca­tion tech­nique to check the qua­li­ty of their goods and ser­vices, and which uses people pre­ten­ding to be customers.

Wide­ly used in various com­mer­cial acti­vi­ties, this tool is consi­de­red a means of “pre­ven­tion” and not only a method of control. It can also be applied in online shop­ping, in which case it is cal­led “Mys­te­ry Sur­fing”. Mys­te­ry shop­ping, which is being deve­lo­ped with the sup­port of EIOPA (the Euro­pean Insu­rance Super­vi­so­ry Autho­ri­ty) and finan­ced by the Euro­pean Union’s Struc­tu­ral Reform Sup­port Pro­gramme, aims to pro­vide the Ita­lian insu­rance regu­la­tor with new tools and metho­do­lo­gies for car­rying out its acti­vi­ty of moni­to­ring the acti­vi­ty of insu­rance distributors.

How does it work ?

The Mys­te­ry Shop­per is a trai­ned pro­fes­sio­nal who acts ano­ny­mous­ly as a poten­tial buyer : in prac­tice, he or she goes to the insu­rance agen­cy, bro­ker, bank or post office and asks for all the infor­ma­tion nee­ded to take out an insu­rance pro­duct. This pro­ce­dure is also valid online : the Mys­te­ry Shop­per surfs ano­ny­mous­ly on the inter­me­dia­ry’s web­site and tries to gather all the infor­ma­tion nee­ded to make an infor­med choice. The­re­fore, the Mys­te­ry Shop­per ascer­tain how insu­rance pro­ducts are offe­red and then sub­mit a report to IVASS.

Unlike tra­di­tio­nal moni­to­ring tools, such as ins­pec­tions, which can unco­ver events and prac­tices that have alrea­dy occur­red, Mys­te­ry Shop­ping mecha­nism is a before-the-event control, and is par­ti­cu­lar­ly use­ful in stop­ping beha­viour that does not com­ply with an inter­me­dia­ry’s obli­ga­tions, such as the requi­re­ment that a pro­duct cor­res­ponds to a customer’s demands and needs.

This mecha­nism must be com­pa­tible with all other pre-exis­ting control tools. To do so, IVASS was ins­pi­red by a stu­dy of other Euro­pean coun­tries that have alrea­dy used this prac­tice in the insu­rance sec­tor, such as the Uni­ted King­dom and Bel­gium and is deve­lo­ping a regu­la­to­ry fra­me­work to allow this.

What do Mystery shoppers check ?

The Mys­te­ry Shop­per should check that insu­rance inter­me­dia­ries com­ply with their obli­ga­tions, such as :

  • Pro­vi­ding com­plete infor­ma­tion to cus­to­mers before and during the sale of an insu­rance pro­duct, and deli­ve­ring spe­ci­fic infor­ma­tion docu­ments to them ;
  • Com­plying with the requi­re­ment that a pro­duct cor­res­ponds to a customer’s demands and needs (the mys­te­ry shop­per will check whe­ther insu­rance inter­me­dia­ries ask their cus­to­mer for the neces­sa­ry information).

Faced with these new control mea­sures and an increa­sin­gly digi­tal and regu­la­ted insu­rance mar­ket,  insu­rance dis­tri­bu­tors must now be more vigi­lant than ever.

What’s next ?

If this expe­rience is suc­cess­ful, it may be exten­ded to other areas and sec­tors it supervises.

Howe­ver, seve­ral issues still need to be addres­sed, such as the inter­play bet­ween mys­te­ry shop­ping and other inves­ti­ga­tive tech­niques or how much weight to give to the mys­te­ry shop­per’s conclusions.

Indeed, other coun­tries as Bel­gium also use mys­te­ry shop­ping as a control method. The FSMA (the Bel­gian wat­ch­dog) has deve­lo­ped this before-the-event control method since 2013, and the conclu­sions of mys­te­ry shop­pers are not suf­fi­cient to jus­ti­fy the adop­tion of concrete mea­sures or the impo­si­tion of sanc­tions on insu­rance inter­me­dia­ries. Never­the­less, they may lead to fur­ther exa­mi­na­tion. It will the­re­fore be up to IVASS to decide whe­ther or not it is appro­priate to use the same model as Bel­gium. It is impor­tant to under­line the fact that mys­te­ry shop­ping was stron­gly cri­ti­ci­sed when the FSMA star­ted using it in Bel­gium. Indeed, some poin­ted out that other means as effec­tive as this method exist, such as tests, exa­mi­na­tions, unco­ve­red on-site ins­pec­tions, etc. Fur­ther­more, mys­te­ry shop­pers can be FSMA staff mem­bers or exter­nal col­la­bo­ra­tors, but the law does not pro­vide for any par­ti­cu­lar pro­fes­sio­nal or ethi­cal qua­li­fi­ca­tion for these third par­ties. Final­ly, mys­te­ry shop­ping has rai­sed some concerns about the conclu­sions uni­la­te­ral­ly drawn by the mys­te­ry shop­pers, or the fact that this method implies that FSMA is both judge and par­ty – which is accor­ding to them a fun­da­men­tal infrin­ge­ment of the sub­jec­tive rights of individuals.

Click here to see the press release :