The European insurance industry, from providers to intermediaries, is preparing for the implementation in a year’s time of the EU’s Insurance Distribution Directive (IDD), which updates and replaces the 2002 Insurance Mediation Directive. The goal of the new legislation is a welcome one – to establish a pan-European level playing field by harmonisation of the rules governing distribution. OneLife, along with the Luxembourg life assurance sector as a whole, is already advanced in its preparation and adaptation to this important change to the distribution framework.

The directive, which took effect in February 2016 and must be transposed by member states by 23 February 2018, provides a framework of minimum standards for regulation of insurance brokers, agents and other intermediaries, but EU member states will be free to incorporate additional requirements as they adopt it into national law. However, the aim is to make further progress toward completion of a European single market in a sector that remains highly fragmented despite the existence of cross-border passporting for insurers and intermediaries.

The directive seeks to increase consumer protection through uniformity of the rules governing distribution, bringing direct distribution, bancassurance, and online comparison sites into line with independent and tied intermediaries, as well as ensuring increased transparency and reporting requirements. The legislation also includes provisions designed to ease the impact on smaller distributors.

The new regime also brings insurance distribution into line with other EU legislation, including the transparency and comparability provisions of the forthcoming regulation on Packaged Retail and Insurance-based Investment Products (PRIIPs) as well as the professionalism and reputational requirements of the Solvency II directive. It provides for increased co-operation between national and European regulators and introduces new rules regarding sanctions applicable to distributors, as well as setting out standards in areas such as managing conflicts of interest and ensuring that products are appropriate for the client.

A major thrust of the legislation, however, is to make it easier for intermediaries to benefit from the single European market for insurance products by simplifying formalities for operating on a cross-border basis and restricting national measures that in the past have created barriers to foreign businesses, or at least ensuring that national rules for the sector are easily available.

As a leading centre of the pan-European life sector, Luxembourg is highly regulated and in advance with the implementation of IDD requirements, with the industry regulator already adopting some measures on a national basis ahead of the deadline. OneLife is up to speed with the changes taking place in the European market and is ready to help intermediaries both adapt and take advantage of the new opportunities opening up in the European marketplace.

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