Insurance Europe (IE) has published its response to EIOPA’s “Consultation Paper on Technical Advice on possible Delegated Acts concerning the Insurance Distribution Directive” (IDD).

IE argues that, in “a number of instances“, EIOPA’s proposals “go beyond the rules set out in the IDD“. For example:

On product oversight & governance, IE argues that (a) a consumer should be free to buy a product that meets his demands and needs, even if he’s outside the pre-set “target market” for that product; (b) EIOPA’s Delegated Acts would stop this; and (c) that “clearly exceeds” the IDD’s requirements.

On conflicts of interest, IE is also concerned that:

  • by creating a list of inducements that pose a high risk of detriment to quality of service, and including the payment of commission on the sale of insurance-based investment products (IBIPs) on that list, EIOPA effectively bans commission payments, when the IDD expressly allows the individual Member States to ban commission, or not, as they see fit; and
  • EIOPA’s high level criteria for the assessment of non-complex IBIPs will create an effective ban on execution-only product sales as well, and that will undermine “another explicit member state option … that permits the execution-only sale of non-complex IBIPs

On timing, IE describes its as “extremely important” that the Delegated Acts are finalised as soon as possible: the Delegated Acts “will require significant changes to current business models and organisational structures, which will take time and significant costs to implement. Companies must … be left with sufficient time after the final … delegated acts are confirmed to … prepare and implement the new rules, while minimising additional and unnecessary costs.

The IDD came into force in February 2016, and must be transposed into law by 23 February 2018. It gives the European Commission a power to adopt delegated acts on (a) product oversight & governance; (b) conflicts of interest; (c) inducements; and (d) the assessment of suitability and appropriateness, and reporting. In late February 2016, the Commission asked the European Insurance & Occupational Pensions Authority (EIOPA) for its technical advice on each of these things, so that it could decide whether; and, if so, how, to exercise these powers. EIOPA published its Consultation Paper in July. There’s a summary of the Consultation, and its particular proposals, here.