Abstract
The Insurance Distribution Directive (IDD) aims to regulate insurance distribution in the EU regardless of distribution channels and means. Although new technologies affect insurance distribution, the IDD does not explicitly regulate this digital transformation. Insurers and intermediaries must comply with detailed business conduct rules that aim to counteract distribution risks. However, the IDD exempts ancillary insurance intermediaries from its scope when they meet certain conditions. The article highlights the regulatory framework on insurance, requiring insurers and intermediaries to address distribution risks, and analyses how this exemption affects the management of distribution risks in online distribution from a legal perspective. The focus on online distribution depends on the scale such distribution can achieve. The consideration of the scale allows for challenging the political choice behind the exemption of ancillary insurance intermediaries, which consists of the principle of proportionality. A regulatory proposal to counteract these adverse effects is to remove the exemption from the IDD rules for ancillary intermediaries in online distribution. Such a proposal is compliant with the principle of technological neutrality and is in line with the new legislative proposals in the Digital Services Act and Digital Markets Act.
Highlights
The EU regulatory framework on insurance requires insurers to identify and manage the risks inherent to the distribution process
Based on the previous analysis of the adverse effects arising from the exemption of ancillary insurance intermediaries from the Insurance Distribution Directive (IDD) rules, this section challenges the exemption in online distribution
The analysis identifies the regulatory principle behind this exemption, which is the principle of proportionality, and demonstrates how online distribution contrasts with the reasons invoked to apply such principle to these intermediaries
Summary
The EU regulatory framework on insurance requires insurers to identify and manage the risks inherent to the distribution process. Customers would benefit from the proper risk management of distribution risks in which both insurers and distributors fall into the same rules and supervision. The IDD aims to increase customer protection by strengthening their defence at the point of sale and anticipating the protection of designing insurance products with rules on product oversight and governance. Some of these rules assume a collaboration between insurers and distributors that must comply with the same standards and be supervised by the same authority. The proper management of distribution risks depends on the proper functioning of such collaboration
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