The insurance distribution directive : a legal analysis

Abstract

The Insurance Distribution Directive (IDD) constitutes a piece of the European Union’s primary legislation. This book analyses the impact that the IDD has on insurance distributors, that is, insurance intermediaries and insurance undertakings, as well as the market. The main changes introduced by the IDD are examined and thoroughly discussed. This is the first book approaching in a detailed manner the analysis and interpretation of the IDD. It forms a comprehensive legal and regulatory analysis of the changes introduced by the IDD and draws on interrelations between the rules of the Directive and other disciplines that are relevant to the distribution of insurance products. This book discusses various topics related to the interpretation of the IDD in relation to (a) the harmonization achieved under it, (b) the role of the IDD as a benchmark for national legislators, (c) the interplay of the IDD with other regulations and sciences and (d) an empirical analysis of the standardized pre-contractual information document. One of the key objectives of the IDD was to further facilitate cross-border activities of insurance intermediaries. The new rules on the freedom to provide services and freedom of establishment are analysed with the aim to understand whether the IDD has led or will lead to more market integration. The principle of proportionality is examined. Whilst the presumption is that all the measures adopted in the IDD are proportional to the aim of enhanced customer protection, in reality proportionality in the IDD is put in doubts, as the information duties go beyond what is necessary to achieve the objectives. Product oversight and governance (POG), which forms one of the major innovations introduced by the IDD, is addressed together with the way that POG fits into the overall EU insurance regulation. The impact of the IDD on life insurance and its effect in the insurance industry are also examined. The international character of the life insurance sector and its impact on the implementation of the IDD, which aims at the so-called minimum harmonization, are also addressed. The EU regulatory framework with regard to insurancebased investment products (IBIPs) is analysed as many provisions on IBIPs under the IDD are based on the corresponding rules under MiFID II, even though differences remain. This book also discusses (a) the principle of ensuring the best interest of customers, (b) the impact of the IDD on insurance companies, because of the fact that distributors are also assessed together and (c) the lessons to be learned from the IDD by other legal regimes. In relation to the latter, the sanctions and other pecuniary measures in other legal regimes, including a comparison with the US law and the micro-insurance regulation of South Africa, are also examined and discussed. Moreover, the impact of the General Data Protection Regulation (GDPR) and the IDD on the EU data protection and insurance distribution laws, as well as datadriven innovations and applications such as ‘Telematics’ insurance, is examined. Also, the role of IDD as the new EU legal framework for enforcing consumer ADR system in the insurance sector is addressed. In addition, the implications of the introduction of the IDD on distribution risk management and on firm’s entire value chain are discussed together with the influence of the new rules on the product management to the insurance undertakings, intermediaries and the insurance market. This book also contains a thorough analysis of the rules regarding the Insurance Product Information Documents mandated in Article 20 of the IDD by making an empirical analysis of several IPIDs. Academics, regulators, practitioners and students who are interested in the issues of insurance distribution can draw useful insights from the legal and regulatory analysis provided by this book.