European commissioners have proposed to push back the application date of the Insurance Distribution Directive from February to October 2018.
Originally scheduled for 23 February, shortly after the European Union brings in the second iteration of the Markets in Financial Instruments Directive into force on 3 January, the application of the Insurance Distribution Directive (IDD) is now likely to be brought in on 1 October 2018.
While national regulators must still transpose it into regulation by the original deadline, regulated firms have until 1 October to apply the new rules.
The Insurance Distribution Directive regulates the way insurance products are sold, including across borders.
It sets out the information that consumers should receive before they sign an insurance contract.
It also imposes conduct of business and transparency rules on distributors.
According to a statement issued by the European Commission, the European Parliament and 16 member states requested such a postponement to help smaller insurance distributors get ready for the new rules.
It is clear that our industry is struggling with macro-legislative change overload, and the Insurance Distribution Directive was probably deemed the poor relation in that context.Paul AvisIn the statement, the European Commission said: "Despite the transposition period foreseen and the fact that the date of entry into application was well known to stakeholders, it appears that some insurance distributors, especially smaller ones, are not yet fully ready for the new rules."
The Commission also adopted two Delegated Regulations under the IDD in September 2017.
These lay out rules on product oversight and governance, on information requirements and conduct of business rules for the distribution of insurance-based investment products.
In order to align the application dates, the Commission has also proposed postponing the application of two Insurance Distribution Directive Delegated Regulations to 1 October, although member states are still required to transpose the directive into national law by the original date.
Paul Avis, marketing director for Canada Life Group, said: "We have become increasingly aware that many advisers have not come to grips with the potential impact of the Insurance Distribution Directive around CPD and training, disclosure of remuneration and appropriateness (and inappropriateness) of product types being clearly disclosed.
"Alongside Mifid and the General Data Protection Regulation, it is clear that our industry is struggling with macro-legislative change overload, and the Insurance Distribution Directive was probably deemed the poor relation in that context."
Mikkel Bates, consultant at FE’s regulatory data service, said: “The IDD puts a variety of obligations on distributors of non-life, life and insurance based investment products (IBIPs).
"In many ways, it imposes Mifid-type obligations on products that fall outside the scope of Mifid II."
