THINKPIECE 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
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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 ringfenced professional indemnity insurances in place against liability to customers arising from professional negligence with the minimum limits as stated therein . This section also requires distributers to have internal complaints procedures in place for customers .
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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 .
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
the existing Consumer Protection Code and Solvency II disclosure requirements , the intention being to allow the customer to make an informed decision . The IPID is a short , standardised document , providing information about the type of insurance , summary of cover , contractual obligations and length , termination and other provisions . The IPID should be drawn up by the relevant insurance undertaking or by the insurance intermediary that manufactures the insurance product .
CROSS SELLING The IDD sets out a number of requirements applicable to cross-selling . In the IDD Regulations , it is a requirement to disclose whether it is possible to purchase the components separately .
6INFORMATION REQUIREMENTS AND CONDUCT OF BUSINESS These are set out at Part 7 of the Regulations . As may be expected , insurance distributors are to act in the interest of customers and shall not be remunerated in a way that impacts upon this . The IDD Regulations also lay down the information that must be provided to the customer by intermediaries and undertakings , in good time , prior to the conclusion of the insurance contract .
WHAT NEXT ? As 1 October 2018 draws nearer , it is important that businesses involved directly or indirectly in insurance sales consider the changes , to ensure they are prepared for the new regime as soon as it comes into force . At present , the
" 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 "
CBI is considering the key question of commission payments and consumer protection , having sought submissions from interested parties . The outcome of this process is eagerly awaited , at which point the Minister will review the discretions allowed in the IDD regarding whether to limit or prohibit commission as a means of payment in insurance distribution .
Beale & Company is a highly experienced specialist insurance firm known for providing quality , commercial and cost effective advice to insurers and professional clients throughout the Republic of Ireland , the UK and internationally .
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Issue 7 • September 2018 • The Insider