Following the approval of the Directive (EU) 2016/97 of the European Parliament and of the Council of 20 January 2016 on insurance distribution (recast) it is now time to assess the aim of such Directive, taking into account that EU countries shall incorporate it into national law by 23 February 2018.
In detail, it aims to improve the way insurance products are sold so that they will bring real benefits to consumers and retail investors in the EU.
Under the new directive on insurance distribution, consumers and retail investors buying insurance products or insurance-based investment products will benefit from greater transparency of insurance distributors with regard to the price and the costs of their products, so that it is clear to consumers what they are paying for.
In addition, consumers should benefit from a better and more comprehensible information, so that consumers can take more informed decisions, with a simple, standardised Insurance Product Information Document (IPID) for non-life insurance products.
Furthermore, where insurance products are offered in a package with another good or service, for example when a new car is sold at a bargain price together with motor insurance, consumers will have the choice to buy the main good or service without the insurance policy.
New rules on transparency and business conduct should prevent consumers from buying products that do not meet their needs. These rules now also apply when a product is bought directly from an insurance company, and not only (as in the past) when products are bought via intermediaries such as agents or brokers.
There are stronger safeguards for the sale of life insurance products with investment elements, such as unit-linked life insurance contracts. Insurance distributors selling such products have to make sure that the product is suitable with regard to the customer’s financial situation, investment objectives and experience in the investment field.
Insurance distributors will benefit from fair competition on a level playing field and an improved legal framework for cross-border business.
The directive recasts and replaces Directive 2002/92/EC on insurance mediation with effect from 23 February 2018.
The Directive applies from 22 February 2016.
The European Commission has published a roadmap concerning its forthcoming Green Paper on retail financial services and insurance. The roadmap notes that the Green Paper, when published, will seek stakeholders’ views on how to bring about better outcomes for consumers and firms in terms of better access, more transparent markets, increased competition as well as greater consumer choice and improved consumer protection (on a domestic and cross-border level) in an increasingly digital environment. In particular, the paper will seek to identify the barriers in the market and investigate the means, including the state of the art technological and innovative solutions, to further improve the functioning of the EU Single Market for providing, purchasing and using retail financial services and insurance.
See Commission roadmap on Green Paper on retail financial services and insurance, 2 September 2015.