EU agreement on rules over insurance selling

EU agreement on rules over insurance selling

European politicians have reached an agreement which they claim will improve the way insurance products are sold.

At a meeting in Brussels on 3 July, the European parliament and European Commission gave their backing to the Insurance Distribution Directive, moving it a step nearer implementation.

Lord Hill, EU commissioner for financial services, said: “This agreement is good news for European consumers.

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“Consumers will benefit from greater choice and information when they buy insurance products, with more accountability and competition.”

Under the directive, insurance distributors will have to become more transparent about the price and the costs of their products, so that it is clear to consumers what they are paying for.

Where insurance products are offered in a package with other goods or service consumers will have the choice to buy the main goods or service without the insurance policy.

Non-life products will also have to come with a standardised product information document.

The agreed rules include stronger requirements for the sale of life insurance products with investment elements and rules on mutual recognition of professional knowledge and ability, where professionals obtain qualifications in another member state.

A statement from the European Commission said the IDD did not impose a specific business model for the sale of insurance products, meaning execution-only sales or sales with advice could continue.

ABI director of regulation Hugh Savill said: “The agreement reached on the Insurance Distribution Directive is the result of several years of hard work and negotiations.

“We will be closely looking at the final details, in particular for the insurance product information document and its practical implications for our member companies and their customers.”

Jason Whyte, director in life insurance at EY, said the rules wouldn’t be a sea-change for UK consumers.

He said: “The Insurance Distribution Directive looks to have picked up many of the major themes of RDR and incorporated them into the wider European framework.

“But as with all regulatory change, the devil is in the detail and we will have to see how the IDD is implemented by the FCA before we know the full impact.”


In 2002 the Insurance Mediation Directive was introduced to regulate selling practices by brokers and other intermediaries selling insurance products.

In 2012, the EU began the process of updating these rules, which became the Insurance Distribution Directive.

The European parliament is expected to put the directive to a vote this autumn and each member state will then be asked to endorse it.

They will then have 24 months to transpose it into their national laws before it takes effect.

Source: Financial Adviser/European Commission

Adviser view

James Gardiner, a financial planner with London-based Westminster Wealth Management, said: “Any form of disclosure is always good, and if the IDD makes it more transparent, this will enable consumers to be clear about what they are signing up to buy.”