Directive (IDD) on the distribution of insurance 2016/97

Directive of the European Parliament and of the Council (EU) 2016/97 (IDD) Insurance Distribution Directive of 20 January 2016 on insurance distribution (revised text) Text with EEA relevance.

IDD is minimum harmonization directive and its provisions are specified in two delegated regulations: Commission Delegated Regulation (EU) 2017/2358 on product oversight requirements and product management and Commission Delegated Regulation (EU) 2017/2359 on information requirements and business conduct rules.

In August 2021, Delegated Regulation (EU) 2021/1257 amending Delegated Regulation (EU) 2017/2358 and (EU) 2017/2359, incorporated sustainability factors, risks and preferences to product oversight and management requirements for insurance companies and insurance companies. distributors, as well as to business rules and investment advice for insurance-based investment products.

This directive lays down rules for the distribution of insurance and reinsurance in the European Union with the aim of improve consumer protection a ensure equal conditions for all distributors, regardless of whether they sell products directly or through intermediaries.

The directive applies to:

• insurance companies
• insurance intermediaries
• reinsurance intermediaries
• supplementary insurance intermediaries (with certain exceptions)

and to all persons who provide information about insurance products and enable customers to conclude an insurance contract online.

Directive does not include persons who provide only occasional advice on insurance in the framework of other professional activities.

Main points of the directive:

• Registration of intermediaries: Intermediaries must be entered in the register of the competent authority in the Member State in which they have their residence or registered office.
• Freedom of establishment and provision of services: Intermediaries can operate throughout the EU on the basis of the principle of freedom of establishment and freedom to provide services.
• Supervision: The home and host Member States cooperate in the supervision of intermediaries.
• Professional knowledge and skills: Intermediaries must demonstrate sufficient professional knowledge and skills and undergo regular training.
• Good reputation: Intermediaries must have a good reputation and a clean criminal record.
• Liability insurance: Intermediaries must have liability insurance for damage caused in the performance of their profession.
• Protection of customer funds: The directive introduces measures to protect customers' funds from the incompetence of the intermediary.
• Transparency of rewards: Referrals must provide information about their reward to customers.
• Assessing customer needs: The sale of insurance must always be based on an assessment of the customer's needs.
• Advice: If advice is provided, a personal recommendation must be presented to the customer.
• Cross-selling: The directive regulates the rules of cross-selling in order to prevent disadvantageous practices for the customer.
• Product supervision: Insurance companies must ensure that insurance products meet the needs of the target market.
• Sanctions: Member States must establish effective, proportionate and dissuasive sanctions for infringements of the Directive.

The directive aims to strengthen consumer protection a improve the functioning of the internal insurance market. It introduces stricter rules for intermediaries and insurance companies to ensure transparency and fairness in the sale of insurance products.