This directive is a new regulatory regime for insurance distributors.
It is effective as at 1 October 2018. The new regulation stems from EU’s Insurance Distribution Directive – IDD.
The IDD directive
The directive adopted in 2016 seeks to improve consumer protection for insurance products. It is applicable to insurance intermediaries, insurance companies and online distribution.
Information and transparency is key in the new regulation. In addition any conflicts of interests should be revealed. The insurance distributor should also assess whether the product meets the need and demand of the customer.
For life insurance products stronger safeguards have been put in place in the new rules. Most importantly since these are often also investment products. The seller should take into account the financial situation and investment objectives of the customer.
Not only customers may benefit from this regulation. Fair competition and a level playing field in the insurance industry is also hoped to be achieved and therefor improve the market effectiveness.