The Insurance Distribution Directive is EU legislation which sets regulatory requirements for firms designing and selling insurance products.
The Insurance Distribution Directive (IDD) replaces the Insurance Mediation Directive (IMD). It aims to enhance consumer protection when buying insurance – including general insurance, life insurance and insurance-based investment products (IBIPs) – and to support competition between insurance distributors by creating a level playing field.
Like the IMD, the IDD covers the authorisation, passporting arrangements and regulatory requirements for insurance and reinsurance intermediaries. However, the application of the IDD is wider, covering organisational and conduct of business requirements for insurance and reinsurance undertakings. The IDD also introduces requirements in new areas, including product oversight and governance, and enhanced conduct rules for IBIPs.
The IDD is a minimum harmonising directive, which can be accessed in the Official Journal of the European Union:
The IDD enables the European Commission to make secondary legislation. That legislation is comprised of delegated acts and implementing technical standards. These can be accessed on the European Commission website:
The IDD also empowers the European Insurance and Occupational Pensions Authority (EIOPA) to develop supporting guidelines. These can be accessed on the EIOPA website:
- Guidelines under the IDD on insurance-based investment products that incorporate a structure which makes it difficult for the customer to understand the risks involved
- Questions and Answers on the application of the IDD in respect of product governance and the regulatory requirements for insurance-based investment products.
Member States, including the UK, must implement the Directive into national law by 1 July 2018 (this was delayed from the original transposition date of 23 February 2018). The requirements will apply to firms from 1 October 2018.
As the introduction of the Directive was delayed, we recognise that firms may be in a position to comply with the IDD early. We have therefore included a formal transition period to clarify that firms may adopt some, or all, of the new IDD requirements early if they so choose.
We have issued three dedicated consultation papers, three corresponding policy statements and a Handbook Notice:
- March 2017: consultation paper 1, CP17/7
- July 2017: consultation paper 2, CP17/23
- September 2017: consultation paper 3, CP17/33
- September 2017: policy statement 1, PS17/21
- December 2017: policy statement 2, PS17/27
- January 2018: policy statement 3, PS18/1
- May 2018: Handbook Notice confirming final rules
We have also consulted on some issues related to the IDD in Quarterly Consultation Papers:
- September 2017: Chapter 4 of CP17/32
- December 2017: Chapter 6 of CP17/39
- June 2018: Chapter 2 of CP18/14
- July 2018: Handbook Notice providing feedback on CP18/14
Feedback to CP17/32 and CP17/39 was provided in the third policy statement, PS18/1.
The Treasury has also published a consultation paper and feedback statement, which can be accessed on the Treasury website: