The new rules will change the way in which insurance products are sold


Earlier this month, the EU agreed a proposal for a revised directive on insurance sales. The new rules will change the way in which insurance products are sold and aim to benefit consumers and retail investors.

Jonathan Hill, EU commissioner responsible for financial stability, financial services and capital markets union, said: ”Consumers will benefit from greater choice and information when they buy insurance products, with more accountability and competition.

The Directive will cover the entire distribution chain and will be known as the Insurance Distribution Directive (IDD), replacing the Insurance Mediation Directive 2002.

Under the new Directive, consumers and retail investors buying insurance products will benefit from:

  • greater transparency: insurance distributors will have to become more transparent about the price and the costs of their products, so that it is clear to consumers what they are paying for. The consumer should know whether the seller of an insurance product has an own economic incentive to sell that particular product;
  • better and more comprehensible information, so that consumers can take more informed decisions, with a simple, standardised Product Information Document for non-life insurance products. This completes already existing consumer information documents for life insurance products (under the Solvency II Directive) and for investment products (under the PRIIPS Regulation).
  • 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; and
  • rules on transparency and business conduct to prevent consumers from buying products that do not meet their needs.

These rules will now also apply when a product is bought directly from an insurer and not only (as previously) when products are bought through a broker or intermediary.