Q&As

Does the Insurance Distribution Directive apply to insurance intermediaries distributing only general insurance products (ie no insurance-based investment products)? What is the process for conflicts of interest for insurance intermediaries distributing only general insurance products (ie no insurance-based investment products)? What is the process for conflicts of interest for insurance intermediaries distributing insurance-based investment products?

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Produced in partnership with Julia Dias QC of 7KBW
Published on LexisPSL on 26/09/2018

The following Insurance & Reinsurance Q&A produced in partnership with Julia Dias QC of 7KBW provides comprehensive and up to date legal information covering:

  • Does the Insurance Distribution Directive apply to insurance intermediaries distributing only general insurance products (ie no insurance-based investment products)? What is the process for conflicts of interest for insurance intermediaries distributing only general insurance products (ie no insurance-based investment products)? What is the process for conflicts of interest for insurance intermediaries distributing insurance-based investment products?
  • Insurance Intermediaries: conflicts of interest and the Insurance Distribution Directive (IDD)
  • Conflicts under the IDD
  • Conflicts under English law

Insurance Intermediaries: conflicts of interest and the Insurance Distribution Directive (IDD)

This Q&A addresses how insurance intermediaries should handle conflicts of interest following implementation of Directive (EU) 2016/97, the Insurance Distribution Directive (IDD).

The IDD applies from 1 October 2018. It is not directly applicable and is implemented by the Insurance Distribution (Regulated Activities and Miscellaneous Amendments) Order 2018, SI 2018/546. Its primary aim is to enhance consumer protection when buying insurance, including general insurance, life insurance and insurance-based investment products (IBIPs). It thus applies to insurance intermediaries who distribute any type of insurance product. Nonetheless, the IDD imposes more prescriptive obligations specifically on IBIP distribution so as to align customer protection in this area more closely with MiFID II; see, in particular, Delegated Regulation (EU) 2017/2359 which is directly applicable.

It is important to note that the UK has taken full advantage of the latitude accorded member states to adopt stricter provisions than the IDD by amending the Financial Conduct Authority (FCA) Handbook to:

  1. apply IDD standards to a wider range of entities than required

  2. maintain existing standards where these exceed the IDD

  3. introduce standards above IDD requirements to align with MiFID II

English lawyers should therefore refer to relevant UK legislation and the FCA Handbook and not simply to the EU texts. See further below.

Conflicts under the IDD

All distributors, Article 17.1 of Directive (EU) 2016/97, IDD,

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