Insurance-based investment products—overview

The Directive (EU) 2016/97, Insurance Distribution Directive (IDD) replaced the Directive 2002/92/EC, Insurance Mediation Directive (IMD) effective 1 October 2018. The IDD was adopted at ‘level 1’ of the EU legislative process and contained high-level rules to be supplemented at level 2 by more detailed rules and at level 3 by guidance issued by the European Insurance and Occupational Pensions Authority (EIOPA). At ‘level 4’ the Commission reviews how Member States have applied the regime and takes enforcement action where they have failed adequately to do so.

Whereas the IMD only applied to ‘intermediaries’, the IDD affects all market participants who distribute insurance products, thus bringing insurers and reinsurers directly within its scope. The IDD expanded the requirements of the IMD and introduced a number of new requirements, including additional requirements for insurance-based investment products (IBIPs) with regard to conflicts of interest, information to customers, remuneration, and suitability and appropriateness. This Practice Note provides a summary of the additional requirements for IBIPs, including relevant level 2 rules and level 3 guidance.

For more