Anthony Dault, director of insurance regulatory services at PwC Luxembourg
Photo: PwC Luxembourg
In a Q&A with Anthony Dault, director of insurance regulatory services at PwC Luxembourg, Delano discusses the key changes and implications of the insurance distribution directive, which is set to come into force in October 2018. Today we publish the first in a series of interviews with Dault on this topic.
“The insurance distribution directive (IDD) regulates the way insurance products are designed and sold both by insurance intermediaries and directly by insurance undertakings. It lays down the information that should be given to consumers before they sign an insurance contract; it imposes certain conduct of business and transparency rules on distributors; it clarifies procedures and rules for cross-border business and it contains rules for the supervision and sanctioning of insurance distributors in case they breach the provisions of the Directive.” Source: Europa.eu.
Delano: The insurance distribution directive is set to come into force in October 2018; in what key ways does it differ from its predecessor, the insurance intermediary directive (IMD)?
Anthony Dault: The main differences introduced by the IDD compared to IMD reside, first, in the scope of actors it covers. While the IMD governed only the intermediaries (basically brokers and agents), IDD now applies also to insurers directly selling to clients, as well new types of distribution such as comparison and aggregators websites (where and when the policyholder can buy insurance products directly through them).
IDD also applies to, with some limitations and/or exemptions, ancillary insurance intermediaries (e.g. car dealers). As such, the IDD will clearly encompasses the vast majority of insurance sales while the IMD covered roughly half of it. Similar to the IMD however, large risk insurance remains out of scope of the IDD.
From a Luxembourg perspective, it is worth noting that pure “business introduction” (i.e. communication of basic information on potential clients to insurers, or of insurance product information to prospective clients) is out of scope of the IDD, provided the “introducer” refrains from any insurance intermediation-related tasks as defined in the IDD). This will provide enhanced clarity.
Delano: Why where these changes put in place?
AD: The IDD is clearly embedded in the trend towards greater consumer protection. It introduces a much-needed level playing field within the wider financial services industry (it should not be any riskier to buy a banking product than an insurance one), as well as between the various actors of the insurance ecosystem (buying directly from the insurer should not be riskier and less transparent than buying insurance from an intermediary). Selling of insurance must be centred on the demands and needs of the clients, and not the other way around.
This Q&A is based on available information at the date of writing. In addition, in several instances, it reflects the personal views of Anthony Dault and not necessarily the views and position of PwC Luxembourg as a whole.