The IDD works well and must remain flexible and consumer-centric


Insurance Europe has published a position paper on the Insurance Distribution Directive (IDD) legislative framework, ahead of the publication of the next report by the European Insurance and Occupational Pensions Authority (EIOPA) on the application of the IDD.

Overall, the IDD is working well and has been successful in increasing consumer protection through strong and effective conduct rules for the sale of all insurance products. The minimum harmonisation and principles-based approach taken in the IDD allows the rules to be appropriately applied at national level, and takes accounts for the structure of the local market and consumers’ expectations.

The position paper presents some comments in relation to the practical application of the IDD, which should be viewed in the context of an otherwise robust piece of legislation:

  • The IDD is a consumer-focused piece of legislation. Therefore, applying it to other settings, like reinsurance, business to business or commercial contracts, is overly burdensome and not needed. For a proportionate application of the rules, fewer requirements are needed for clients who require less protection.
  • The IDD must be made more digital-friendly and technologically neutral to preserve both innovation and competition, and to facilitate digital communication for a smooth consumer journey. For example, the current rules require paper documentation by default, which makes it difficult for insurers to respond to consumers’ increasingly digital expectations.
  • The implementation of the new IDD rules on sustainability, as well as the new EU requirements on sustainability disclosures, have been particularly challenging to apply for the industry. These difficulties have been compounded by the different definitions and deadlines set by EU legislators and the limited data availability which hinders insurers’ ability to offer sustainable products. While it is still too early to assess the full impacts, it is already clear that the terminology used in the EU legislation is difficult for consumers to understand.