The entry into force of the Insurance Distribution Directive (IDD) has been postponed by seven months to 1 October 2018, and EU member states now have until 1 July to transpose the Directive into their national law. The IDD replaces the Insurance Mediation Directive (IMD) which introduced specific minimum standards for the mediation of insurance contracts, principally brokering.
The IDD remains a minimal harmonisation directive, meaning Member States retain the possibility of adopting stricter legislation, including extending its provisions to contracts of large risk.
The European Commission’s reason for pushing back the date of entry into force seems to be the amount of time needed by all stakeholders to implement the legislation, especially in light of its links with other insurance and investment related Directives, such as Solvency II and MiFID II. Sixteen Member States and the European Parliament requested the postponement, which was voted on 1 March 2018. Although the Directive itself was adopted in 2015, the technical texts and guidelines for its implementation were only issued at the end of 2017 by EIOPA, the European insurance authority.
This Directive regulates the selling of insurance products by intermediaries in the EU and will establish a new disclosure regime for remunerations and commissions, whether they are fees charged to insureds or commission received from premiums paid by insureds. It also extends to “variable remunerations” like sales incentives or contingent commissions paid to intermediaries by insurers.
The IDD also includes new requirements for the information that needs to be delivered to customers by the insurance intermediaries and harmonisation rules on training requirements for insurance intermediaries.