_On 12 November the European Insurance and Occupational Pensions Authority (“EIOPA”) launched a survey on the application of the Insurance Distribution Directive (the “IDD”).
The aim of the survey is to gather feedback from stakeholders on their experience of the application of the IDD in the two years following its implementation deadline. In particular, it seeks to establish the improvement of quality of advice and selling methods; the impact of the IDD on small and medium-sized enterprises; and possible further improvements identified.
The survey is only the first step towards the preparation of the report that EIOPA should have presented in February 2020 in accordance with Article 41 of the IDD. The report has been postponed to the fourth quarter of 2021 due to the impact of the Covid-19 pandemic and the postponement of the IDD’s transposition deadline. The survey has been addressed to external stakeholders, such as consumer associations, academic, trade associations, insurance undertakings and insurance intermediaries, from which EIOPA expects to receive suggestions for further improvements to the regulation of the insurance distribution environment.
Separately, EIOPA plans to carry out another exercise in cooperation with the national competent authorities to determine certain other aspects, which have not been covered by this initial survey, such as: (i) whether the national competent authorities are sufficiently empowered and have adequate resources to carry out their tasks; (ii) the need for changes in the insurance intermediaries’ market structure; (iii) the need for changes in the patterns of cross-border activity; and (iv) general evolution by EIOPA of impact of the IDD.
The present survey consists of 14 questions, and stakeholders are invited to provide their feedback by 1 February 2021.
EIOPA will carry out an assessment of the feedback received, and plans to publish a report by the end of 2021.
Some of the survey questions are of particular interest to insurance professionals, such as:
- the impact of the IDD on insurance intermediaries which are small and medium-size enterprises (question 4),
- the difficulties in the application of the IDD due to the lack of clarity in the IDD provisions (question 6),
- the challenges in applying the POG requirements (question 7), and
- the challenges in carrying out cross-border business within the European Union (question 8).
Insurance undertakings and intermediaries, either independently or through their professional associations, have the possibility to report any difficulties encountered in implementing the new regulatory requirements to the EIPOA, as well as any inconsistencies and possible obstacles to the main principles of European law, in particular to the exercise of the freedom to provide services and the freedom of establishment.
Moreover, in contrast to the survey submitted to the insurance industry two years ago, the questions raised so far are not limited to the proper implementation by Member States of the obligation of publication and easy access to national general good rules, but focus on the substance of the principles introduced by the IDD and their major impacts on the functioning of the insurance sector. The exercise will certainly prove easier for Member States such as Luxembourg, France and Belgium, whose swifter transposition has given the possibility and time to see the real impact on distribution activity, and more difficult for others such as Italy, where an important part of the transposition will only come into force after the closure of the survey.
Nevertheless, we are convinced that the insurance sector cannot miss the opportunity to make its voice heard by the EIPOA.
The need to take part in the survey is all the greater for the Luxembourg insurance sector, which has a deep experience in cross-border activities, a major basis for its premium collection, as highlighted once again in the Commissariat aux Assurances’ annual report 2019/2020 published last September.
We would like to thank M. Mark Shaw, Partner and Head of the Wildgen’s London Representative Office for the review of the article. Wildgen’s Insurance & Reinsurance Practice Group stands ready to assist professionals in any steps they may wish to take with regard to the initiative of the European Insurance and Occupational Pensions Authority. This article has been written under the direction of Karine Vilret, Partner.
_ This article has been previously published in AGEFI Luxembourg - December 2020.