The new Insurance Distribution Directive (IDD) is to be implemented in Denmark no later than by 23 February 2018. The Danish Implementation Council recently considered the Danish implementation plan for the IDD, and a legislative proposal for a new Danish Insurance Mediation Act is expected in October 2017.
The IDD is a minimum harmonisation directive replacing the Insurance Mediation Directive (IMD). The IMD is implemented in the currently applicable Danish Insurance Mediation Act and attaching Danish executive orders. Whereas the IMD only applies to insurance and reinsurance intermediaries, the scope of application of the IDD is extended to also include the distribution of insurance products by insurance and reinsurance undertakings.
EU and EEA insurance intermediaries and insurance undertakings conducting business in Denmark on the basis of the freedom of establishment or the freedom to provide services must comply with any Danish insurance distribution provisions protecting the “general good”, such as good business practice. Furthermore, it follows from the IDD provisions that insurance intermediaries conducting business in Denmark on the basis of the freedom of establishment must comply with Danish provisions enacted in relation to chapters V and VI of the IDD on:
• Remuneration of insurance distributors
• Information to customers
• Insurance advice
• Product oversight and governance
• Cross-selling, and
• Insurance-based investment products
The implementation of the IDD will not result in any changes being made to the Danish regulation of insurance intermediaries and insurance undertakings from non-EU/–EEA countries.
In March 2017, the Danish Implementation Council considered the Danish implementation plan for the IDD.
According to the information available, the IDD is expected to be implemented in Denmark primarily by way of a new, revised version of the Danish Insurance Mediation Act. A legislative proposal is expected to be made in October 2017 with the new Act anticipated to enter into force in January 2018 in accordance with the Danish Government’s principle of two effective dates per year for regulation directed at Danish businesses, i.e. 1 January and 1 July, respectively.
In addition to the above, new Danish executive orders on the following subjects are expected to be issued:
• Good business practice on the part of insurance distributors
• Requirements as to the professional knowledge and competence of insurance distributors, and
• Registration of insurance intermediaries
Furthermore, changes are also expected to be made to the following Danish rules and regulations currently in effect:
• Danish Executive Order No. 1256 of 1 November 2013 on Insurance Intermediaries’ Liability Insurance, Guarantees and Management of Trust Funds
• Danish Executive Order No. 442 of 1 May 2013 on Insurance Brokers’ and Reinsurance Brokers’ Annual Reporting
• Danish Executive Order No. 330 of 7 April 2016 on Good Business Practice for Financial Undertakings
• The Danish Financial Business Act (Danish Consolidated Act No. 174 of 31 January 2017), and
• The Danish Act on Financial Advisers and Mortgage Credit Intermediaries (Danish Consolidated Act No. 1079 of 5 July 2016)
Recommendations made by the Danish Implementation Council
The Danish Implementation Council recommends that the current Danish commission ban for insurance brokers be upheld regardless of the fact that such preservation will constitute gold plating of the IDD.
The Danish Implementation Council further recommends a deviation from the Danish Government’s principle of two effective dates per year for regulation directed at Danish businesses and that the last allowable implementation date of the IDD is instead applied (23 February 2018).
The recommendations made by the Danish Implementation Council are now to be considered by the Danish Implementation Committee.