EC Adopts Rules to Prevent Mis-Selling of Insurance Products
EC adopted two delegated regulations, which supplement the Insurance Distribution Directive (IDD or Directive 2016/97/EU), to protect consumers when they buy insurance products in the EU. The new rules specify product oversight and governance requirements for insurance undertakings and insurance distributors, along with the information requirements and conduct of business rules applicable to the distribution of insurance-based investment products. The implementation date for the rules will be February 23, 2018, along with the IDD, following scrutiny by the European Parliament and the Council. The regulations shall enter into force on the twentieth day following that of their publication in the Official Journal of the European Union.
The rules follow the adoption, in August 2017, of an implementing technical standard (ITS) on the Insurance Product Information Document (IPID). The rules also set out which information sellers must gather from their customers when providing advice and in which cases investment products might be sold with limited advice or without advice. These rules on product oversight and governance will, for the first time, oblige insurers to prioritize the interest of consumers when designing, developing, and distributing all insurance products from 2018 onward. The new conduct of business rules will ensure that consumers benefit from a high level of protection when they invest their savings in insurance-based investment products, such as certain types of life-insurance policies. Sellers of insurance products will have to comply with new standards on preventing and managing conflicts of interest and on accepting commissions and payments from third parties.
Related Link: Implementing Regulations
Keywords: Europe, EU, Insurance, IDD, Consumer Protection, IPID, Insurance Based Investment Products, EC
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