The New Insurance Distribution Regulation in the EU—A Critical Assessment from a Legal and Economic Perspective

Abstract

The new Insurance Distribution Directive (IDD) regulates insurance distribution more precisely and more comprehensively than the former Insurance Mediation Directive (IMD). For one thing, all insurance distributors will now be encompassed; for another, there will be a substantial increase in the obligations relating to information, advisory services, documentation and business conduct. Considering the effort and expense involved, this raises the question of possible benefits. In this article, the IDD provisions are assessed for the first time with a focus on Europe and from both a legal and an economic perspective. There are regulations that are considered positive from both perspectives (e.g. the Insurance Product Information Document in the non-life segment), others that are viewed rather critically from both perspectives (e.g. product oversight and governance requirements) as well as those that are partly assessed differently (e.g. conduct of business rules). All in all, the IDD appears to be associated with over-regulation in some areas. The legislator should subject these areas to critical scrutiny at the time of the IDD review after 3 years.