The European Council has formally adopted the EU Insurance Distribution Directive (formerly known as the Insurance Mediation Directive 2) (the “IDD”) on the 14th December 2015. The IDD will introduce an updated minimum regulatory standard in the practice of selling insurance products within the European Union. Member states have two years to implement the IDD into national law following publication in the Official Journal of the European Union.
The most important change brought about by the IDD is the introduction of insurance undertakings within the scope of mediation of insurance products. The rules will therefore apply to those insurance undertakings who sell directly to their customers in order to ensure a holistic environment for consumers.
The IDD has also introduced enhanced professional requirements, where certain individuals involved directly in insurance distribution are required to sit through 15 hours of professional training and development on an annual basis.
In order to enhance consumer protection, insurance distributors are to act in the customer’s best interest and should carry out periodical reviews of insurance products being distributed. The IDD introduces as well certain disclosure requirements, including remuneration disclosures and management of conflicts of interests.
Lastly, the IDD has clarified the role of the home and host state regulators in passporting of both the freedom of services and freedom of establishment and requires member states to publish online ‘general good’ provisions that apply to firms passporting in their country.
The text of the IDD can be accessed by clicking here.