Further to our update1 in December on the Insurance Distribution Directive (IDD), the Council of the European Union has now adopted the text of the IDD which replaces the existing Insurance Mediation Directive (2002/92/EC) (IMD).
The IDD will come into force twenty days after its publication in the Official Journal of the EU and Member States will then have two years to transpose the IDD into national laws and regulations. Based on the current timetable, firms will be required to comply with the Directive, as transposed into the law of the relevant member state, in early 2018. The existing law relating to insurance brokers, agents and other intermediaries is being updated to take into account developments in insurance markets and like the IMD, the IDD will be a “minimum harmonising” directive. This means that Member States will be able to supplement it with additional provisions.
IDD identifies situations in which breaches are referred back either to the competent authority of the home member state or the host member state regulator. However, this is at odds with the Financial Conduct Authority, which has the authority to take enforcement action against EEA firms passporting into the UK and UK firms passporting into other EEA states. Some of the principles in the IDD are very similar to the Financial Conduct Authority’s Principles for Business and Insurance Conduct of Business relating to disclosure of remuneration, suggesting that it may be the beginning of EU-level principles-based regulation for insurance distributors.
The full press release can be found at: http://www.consilium.europa.eu/press-releases-pdf/2015/12/40802206665_en_635856873600000000.pdf