THINKPIECE
THINKPIECE
THE
INSURANCE
DISTRIBUTION
DIRECTIVE
The Insurance
Distribution
Directive deadline is
1st October 2018.
22
THE 6
THINGS
YOU NEED
TO KNOW
A recast of the
existing Insurance
Mediation Directive, it
is designed to ensure
that there is a level
playing field across all
intermediaries selling
insurance products.
With a scope that is
much broader than
just the traditional
insurance industry,
we asked Associates
Mary Smith and Cathie
Shannon from Beale and
Company Solicitors to
give us an overview.
T
he IDD Regulations transpose
into Irish law the Insurance
Distribution Directive “IDD”,
which establishes requirements
applicable to insurance
intermediaries, ancillary
insurance intermediaries, insurance
and reinsurance undertakings
(collectively “Distributors”).
The IDD Regulations have a
compliance deadline of 1 October
2018, by which date Distributors will
be required to have taken all necessary
steps to comply. The IDD replaced the
Insurance Mediation Directive (“IMD”)
and like the IMD, is a “minimum
harmonisation” directive meaning that
each member state is free to introduce
more stringent provisions provided these
are consistent with the IDD. The IDD
applies to all sales of insurance products,
including direct selling. It makes
significant changes, with insurance-
based investment products being subject
to more prescriptive rules.
The ambit of the IDD Regulations is
broader than the traditional insurance
industry and includes those for whom
the distribution of insurance is an
ancillary service, such as travel agents
and car rental firms, save in certain
limited instances. Those working in
claims, loss adjusting, and those who
review insurance contracts such as
lawyers, are outside the scope of the
IDD.
The IDD Regulations merit reading
in full by those in the industry, as
they impact how insurance business is
conducted day-to-day. Some notable
features are addressed in more detail
below:
1
REGISTRATION WITH CBI
The IDD Regulations provide that
Issue 7 • September 2018 • The Insider
whilst insurance and reinsurance
intermediaries must register with
the CBI, insurance undertakings do
not have to. Not all employees of an
intermediary are obliged to register,
but those in management must. The
CBI must ensure that an on-line
registration system is set up, with the
registration process to take no more
than three months. Undertakings and
intermediaries who are responsible
for other intermediaries (including
ancillary intermediaries) should ensure
that the relevant intermediary meets
the conditions for registration and that
they are registered. The Regulations
provide that those already registered
or authorised to carry out insurance
activities issued under the IMD are
automatically registered under these
Regulations
3
CUSTOMER PREMIUMS
The IDD Regulations provide that
monies paid by a consumer to an
intermediary are treated as having been
paid to the insurance undertaking,
whereas monies paid by the insurance
undertaking to the intermediary will
be treated as having been paid to the
customer only when the customer
actually receives them. The transfer
of customer monies is regulated via
client accounts, the content of which is
protected in the event of bankruptcy.
4
ADVICE AND STANDARDS / INSURANCE
PRODUCT INFORMATION DOCUMENT
The IDD Regulations provide that
the Insurance Product Information
Document “IPID” for non-life products
is to be provided to customers, alongside
2
PROFESSIONAL KNOWLEDGE / GOOD REPUTE
The IDD Regulations (Part 5) provide
that the professional knowledge of
management and employees working
in insurance distribution should
match the level of complexity of
their activities. At least 15 hours
relevant CPD must be completed (in
keeping with the current Minimum
Competency Code). The requirements
of integrity mean that those working
in distribution are obliged to have
a clean criminal record in respect
of certain dishonesty offences.
Distributors will be allowed to check
their employees’ good repute. These
good repute requirements apply only
to those working in distribution roles
and not to all employees.
Regulation 21 stipulates that
intermediaries are to have ring-
fe