The European Commission has published a press release to welcome an agreement between the European Parliament, Council and Commission on the text of the proposed Insurance Distribution Directive (IMD2 / the IDD).
According to the Commission, when the IDD has been transposed into the national laws of the EEA’s Member States, and insurers and distributors are required to comply with those laws, consumers will benefit from:
- Greater price and commission transparency when they buy insurance
- Better conduct of business rules, “to prevent consumers buying products that do not meet their needs”
- Better information, so that consumers can take more informed decisions – in particular, firms will be obliged to give consumers a standard Product Information Document for non-life insurance products (“This completes already existing consumer information documents for life insurance products (under … Solvency II …) and for investment products (under the PRIIPS Regulation)”
- Unbundling so that, if a consumer is offered goods and services as part of a package that includes an insurance product, they will be entitled to buy the goods and services without the insurance product, if that’s what they’d prefer
- “…stronger requirements for the sale of life insurance products with investment elements”
The IDD will not prohibit “execution-only” sales (as some have suggested).
EEA Member States may also allow insurance distributors to earn commissions and third-party payments when they sell a policy, “but only if they are able to demonstrate that this commission also benefits the customer“.
The trilogue agreed text is not publicly available yet; and the Commission’s press release does not give an indicative date for publication.