The New Insurance Distribution Regulation in the EU—A Critical Assessment from a Legal and Economic Perspective

Abstract

The new Insurance Distribution Directive (IDD) regulates insurance distribution more precisely and more comprehensively than the former Insurance Mediation Directive (IMD). For one thing, all insurance distributors will now be encompassed; for another, there will be a substantial increase in the obligations relating to information, advisory services, documentation and business conduct. Considering the effort and expense involved, this raises the question of possible benefits. In this article, the IDD provisions are assessed for the first time with a focus on Europe and from both a legal and an economic perspective. There are regulations that are considered positive from both perspectives (e.g. the Insurance Product Information Document in the non-life segment), others that are viewed rather critically from both perspectives (e.g. product oversight and governance requirements) as well as those that are partly assessed differently (e.g. conduct of business rules). All in all, the IDD appears to be associated with over-regulation in some areas. The legislator should subject these areas to critical scrutiny at the time of the IDD review after 3 years.

The IDD and Its Impact on the Life Insurance Industry

“…16/007 on draft Implementing Technical Standards concerning a standardised presentation format for the Insurance Product Information Document of the Insurance Distribution Directive (EIOPA-BoS-17/055), available at https://register.eiopa. europa.eu/Publications/Reports/IDD%20Final%20Report%20on%20draft%20ITS%20on% 20IPID.pdf; Köhne and Brömmelmeyer (2018). 99 Clifford Chance (2013) and Köhne and Brömmelmeyer (2018).…”

“…europa.eu/Publications/Reports/IDD%20Final%20Report%20on%20draft%20ITS%20on% 20IPID.pdf; Köhne and Brömmelmeyer (2018). 99 Clifford Chance (2013) and Köhne and Brömmelmeyer (2018). ascertain the suitability and appropriateness of a product (Art.…”

“…Köhne and Brömmelmeyer (2018) and Hogan Lovells (2017).129 Scism (2012) andKöhne and Brömmelmeyer (2018).…”

Information Duties Stemming from the Insurance Distribution Directive as an Example of Faulty Application of the Principle of Proportionality

“…First, a baseline 61 The existing economic studies argue that the obligations relating to information entails substantial non-recurring and ongoing administrative expenditures not only for the distributors but also for the competent authorities of the member state and the customers themselves. See: Köhne and Brömmelmeyer (2018), p. 732. 62 EIOPA, Consultation Paper on the proposal for Implementing Technical Standards on a standardised presentation format of the insurance product information document, EIOPA-CP-16/ 007, 1 August 2016, pp.…”

Regulating Telematics Insurance

“…59-79;Hofmann et al (2018), pp. 740-769;Köhne and Brömmelmeyer (2018) Marano (2019a). ; SchaekenWillemaers, Gaetane (2014).53 EU Publications (2016) Insurance distributionnew rules from 2018, Document 32016L0097 [online] https://eur-lex.europa.eu/legal-content/en/LSU/?uri¼CELEX:32016L0097.…”