Insurance Distribution Directive Research Articles

온라인 플랫폼의 보험상품 비교·추천 서비스에 대한 연구

The online insurance product comparison and recommendation service is a new sales method that changes from the existing face-to-face sales method of insurance agencies to an online service. In addition, large online platform companies such as Naver Pay, Kakao Pay, and Toss are also trying to enter new businesses. The online platformʼs entry into the insurance industry has advantages such as innovation in the insurance market due to increased competition, expansion of consumer accessibility and choice, and customer satisfaction through provision of customized services. On the other hand, there are disadvantages such as heated competition between platform companies and insurance companies, commission issues, financial alienation issues, and monopoly by a few dominant platforms. The main purpose of financial authorities introducing this service is to increase consumer convenience, so the service should be operated and regulated in a way that ensures maximum consumer interest and protection. In the case of the EU and UK, it is clarified that acts such as comparing insurance products and providing information using media such as the Internet correspond to “insurance sales” through “insurance Distribution Directive,” and non-insurance companies are required to register as insurance brokers to sell insurance. In addition, we regularly evaluate the impact of the spread of insurance price comparison sites on the insurance industry and continuously announce system improvement plans to correct problems occurring in the recruitment market. It is necessary for Korean financial authorities to identify problems with price comparison websites occurring in the UK and preemptively prepare guidelines or clear regulatory standards for compliance and prohibitions of comparative service providers. Lastly, it is necessary to carefully consider allowing Big Tech to enter the insurance industry after monitoring cases such as those in the UK and establishing regulations to offset risks to some extent.

Quo vadis Collective Insurance? Observations on ECJ Rulings Affecting Group Insurance

This paper discusses the development of group insurance under European Union law. The topic is important since neither European law nor rarely any national law of the EU member states defines a group insurance contract. This, in turn, may mean that it is case law that will have a significant impact on the development of this model of insurance coverage. The purpose of this paper, therefore, is to analyze recent ECJ rulings and the positions of doctrine or European bodies on the nature of group insurance and to draw conclusions on the prospects and path of its development in the future. The topic also seems relevant to the ongoing work on the revision of the Insurance Distribution Directive.

Determination of Public Supervision Aspects and Legal Pillars of Activities of Financial Agents in Central European Countries

Financial intermediation can be performed by certain types of financial agents or financial brokers in selected European countries. Using primarily analysis and the comparison, the authors focus on certain legal aspects of distribution of financial services in selected Member States of the EU and the EEA, providing a comparative legal analysis. In Slovakia, it is being focused on the subordinate financial agent. The subordinate financial agent is an entrepreneur entitled to perform financial intermediation. The subordinate financial agent belongs under the delegated supervision of the independent financial agent. The paper deals with a consideration de lege ferenda, a change to the relevant legislation according to which the subordinate financial agents could belong to the supervised financial market entities. The authors provide pros and cons regarding the direct supervision of this entity realized by the National Bank of Slovakia. The paper is being prepared by using analysis, synthesis, the inductive method, the deductive method, and the comparative method. When regulating distribution of financial services on the European level, the Insurance Distribution Directive had played a key role. Mainly due to protection of financial consumers, the subordinate financial agent should belong under the direct supervision of the National Bank of Slovakia.

Regulating Robo-Advisors in Insurance Distribution: Lessons from the Insurance Distribution Directive and the AI Act

Insurance distributors are increasingly using robo-advisors for a variety of tasks, ranging from facilitating communication with customers to providing substantive advice. Like many other AI-empowered applications, robo-advisors have the potential to pose substantial risks that should be regulated and corrected by legal instruments. In this article, we attempt to discuss the regulation of robo-advisors from the perspective of the Insurance Distribution Directive and the draft AI Act. We ask two questions for each. (1) From a positive legal perspective, what obligations are imposed on insurance distributors by the legislation when they deploy robo-advisors in their business? (2) From a normative perspective, are the incumbent provisions within that legislation effective at ensuring the ethical and responsible use of robo-advisors? Our results show that neither the Insurance Distribution Directive nor the AI Act adequately address the emerging risks associated with robo-advisors. The rules implicated by them regarding the use of robo-advisors for insurance distribution are inconsistent, disproportionate, and implicit. Legislators shall further address these issues, and authorities such as EIOPA and national competent authorities must also participate by providing concrete guidelines.

FUTURE OF ROBO-ADVISORS IN LIFE INSURANCE SECTOR

The aim of this article is to indicate the most important issues related to the use of robo-advisors in life insurance as well as the future directions of development for such technology. This elaboration has utilized a review of professional literature, including industry-related materials and case studies. In October 2018, upon the implementation of the EU Insurance Distribution Directive (IDD), which governs the distribution methods of insurance, the financial sector loudly commented on the risk of financial advisors being replaced by virtual advisors (also referred to as robo-advisors), i.e. bots based on technologies that use artificial intelligence. In this article, an attempt has been made to answer the question whether it is possible for artificial intelligence, in the nearest future, to replace human insurance advisors in the customer consultancy process. Due to the complex nature of the process, the considerations have acknowledged the regulatory, social and cultural challenges, since all of them have a direct impact on the shape of the market. Because of the limited length of the article, the subject has been presented only from the perspective of financial advisors. Another limitation is caused by the fact that data regarding innovations and sales are confidential, and they are well-protected by enterprises. Thus, access to detailed statistics is very limited, especially with regard to specific sectors and products of financial companies.

Management of Distribution Risks and Digital Transformation of Insurance Distribution—A Regulatory Gap in the IDD

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.

Liability for Incorrect Client Personalization in the Distribution of Consumer Insurance

The use of personalization mechanisms should allow the insurance distributor to reduce exploration costs and adjust the offered insurance product to the needs, features, and situation of each individual client. This study seeks to examine how liability should be allocated when the process of the personalization of an insurance product does not result in the client’s choice of an optimal product. First, we identify the typical uses of new technologies allowing for an adjustment of insurance contracts. Second, we analyze the interplay between their application and the legal obligations of insurance product distributors. Subsequently, the paper discusses the scope of factors the insurance distributor is liable for when using personalizing tools in contacts with clients. We submit that offering an online personalization of insurance products ought to be regarded as being equivalent to providing advice under Art. 2, Sec. 1, Point 15 of the European Union Insurance Distribution Directive (IDD). From the consumer’s perspective, our analysis makes the case for the insurance distributor’s liability for mispersonalization of an insurance contract.

The Global Relevance of the EU Single Market on Insurance After the Insurance Distribution Directive (IDD)

The amount of insurance premiums collected within the European Union places this market among the world leaders. Although insurance regulation is still partly national, the European Union's effort to introduce harmonized rules between the Member States has intensified since the financial crisis. This essay intends to highlight the global relevance assumed by the regulatory framework of the European Union. The introduced set of rules arises from the principles established internationally and, in turn, influences these principles. Thus, the EU regulatory framework on insurance is relevant to understand the potential evolution of the international standards on insurance. The analysis focuses on the rules protecting the policyholders, as this is the main objective of the insurance regulation and supervision of the European Union. Therefore, this study examines the recent Insurance Distribution Directive (IDD) salient features in light of the overall regulatory framework governing the insurance business in the European Union. In addition, the study also tests the resilience of new rules to the COVID-19 pandemic and digital transformation, which were not at the core of the IDD.

Italy

This technical note (TN) provides an update and an assessment of the supervisory framework and practices for the Italian insurance sector since the last assessment concluded in 2013. The mission conducted a target review focusing on the implementation of Solvency II, the financial resilience of insurers, the effectiveness of supervision, and previously identified weaknesses without a full assessment of Italy’s observance with the International Association of Insurance Supervisors (IAIS) Insurance Core Principles (ICPs). Implementation of the European Union (EU) Solvency II Directive in 2016 has significantly strengthened regulation and supervision since the last FSAP, introducing risk-based capital standards, comprehensive insurance group supervision and new requirements on governance, risk management and controls. The supervision of intermediaries has also been strengthened in line with the EU Insurance Distribution Directive in 2018.

The Impact and Challenges of the Insurance Distribution Directive (IDD) on Maltese Insurance Undertakings

The Impact and Challenges of the Insurance Distribution Directive (IDD) on Maltese Insurance Undertakings

Suzbijanje nepoštene prodaje proizvoda osiguranja prema Direktivi o distribuciji osiguranja

One of the main reasons for the occurrence of the financial crisis in 2007 was certainly the sales procedure of insurance products, which, as it later turned out, were inadequate. The crisis was a signal to the European Commission that it is necessary to improve the consumer protection regarding insurance products and to improve the transparency of insurance distribution. It was necessary to provide equal protection to consumers of insurance products in the entire EU market, through the introduction of several innovations in the regulation of this sector and thus restore the confidence of consumers. In that sense, the Insurance Distribution Directive has set the suppression of unfair sales of insurance products as its most important goal. The author researched those key novelties of the Insurance Distribution Directive, which were adopted in order to prevent unfair sales of insurance products. The paper presents an analysis of new rules and aims to show how revolutionary new regulatory framework is and how much it will contribute to the fight against unfair sales of insurance products

Pre-contractual Information Duties of Insurers. A German and Polish Approach

Information is the key element of consumers and customers protection in insurance. Implementation of Insurance Distribution Directive (IDD) by EU member states in 2018 was yet another step – at least in theory – in expanding access to basic knowledge about insurance products. Nevertheless, despite certain new solutions included in IDD, pre-contractual duties of insurers still remain primary source of mentioned information for policyholders. EU member states have adopted various approaches to IDD implementation and – in particular – legal shape of pre-contractual obligations of insurance contract parties. Hence, the purpose of this paper is to introduce contemporary perspective on insurers pre-contractual information duties in German and Polish legal systems. First part includes a basic outline of insurance law in both countries in scope of IDD implementation. It is followed by comparative commentaries on “demands-and-needs test” as well as general information duties set out i.a. in German Insurance Contract Act (VVG) and Polish Insurance Distribution Act (UDU).The paper closes with certain conclusions and findings.

Navigating InsurTech: The digital intermediaries of insurance products and customer protection in the EU

Emerging technology-driven innovations in the insurance industry is a trend of recent years. ‘InsurTech’ is the portmanteau describing this phenomenon. Insurance intermediaries are the main distributors of the insurance contracts and several digital intermediaries are already operating with InsurTech. The European Union legal framework on insurance distribution mainly consists of the Insurance Distribution Directive, which came into force a few months ago. However, the Insurance Distribution Directive does not provide standards specifically dictated to these intermediaries. The paper aims to verify, despite this shortcoming, whether and how the recent discipline applies to digital intermediaries.

Dobra regulativa i princip ekonomske slobode u slučaju evropskog prava osiguranja

The authors put forward the thesis that the European regulator's activity can be assessed in the context of the criteria of good regulation (in each of their dimensions). This is due in particular to the form and content of the legislative process in the European Union. They analyze the Directive (EU) 2016/97 (hereinafter: 'the Insurance Distribution Directive' or 'IDD') in the context of its quality per se, the legislative process and the intended objective of preventing misselling, while assessing its impact on economic freedom. The first objective of the paper is to discuss the hypothesis that 21st century is the time of transition from government to governance, which is connected with the postulate of the necessity of good governance in the European Union (hereinafter: 'EU') and in the Member States. The second objective of this paper is to discuss the analytical issues related with the very concept of good regulation in the EU and its impact on economic freedom. The next objective of this paper is to evaluate the selected legal act (IDD) in terms of criteria of Better Regulation for Better Results to show the practice dimension of European Insurance Law regulation.

The Necessity for Regulating the Insurance Market Considering the Implementation of the IDD

In 2018, the Insurance Distribution Directive (IDD) was fully implemented by all EU member states. It intends to harmonize the insurance market, provide the right incentives for the agents and protect the consumers. But why? The core business of the banking sector makes it necessary for a prudential authority to intervene and monitor. The question arises if the latest changes in the insurance business require these limitations and monitoring. This paper offers a literature review by compiling findings and setting up profound arguments, why the regulation of insurance companies is relevant. The main arguments for a strong prudential regulation are transparency, information asymmetry and agency problems, wrong incentives, a representation of the policyholder and the inversion of the production cycle. These findings make it necessary to regulate the companies and protect the policyholders. Further research should focus on case studies of insurance companies implementing the changes of IDD into daily business.

Plea for Uniform Regulation and Challenges of Implementing the New Insurance Distribution Directive

This study takes up and evaluates new developments in EU insurance regulation, in particular the new EU Insurance Distribution Directive (IDD-Directive 2016/97/EU). The Directive sets a new European legal framework for insurance distribution with an implementation deadline of 23 February 2018, now postponed 7 months to 1 October 2018. The new IDD attempts to reduce cross-sectoral and cross-border inconsistencies by establishing a more uniform regulatory framework in the European insurance market. For this purpose, minimum quality standards and disclosure requirements are introduced to insurance distribution systems. In contrast, U.S. insurance regulation mostly continues to be the purview of state government, leading to cumbersome and conflicting provisions as well as higher compliance costs. The purpose of this article is to present an overview of the new EU IDD rules, to discuss potential challenges of the transposition of the IDD into national law, and to answer whether the new EU regulatory uniformity could set an example for U.S. regulatory dispersion.

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

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.

Wpływ zmian systemowych i prawnych na poprawę adekwatności produktów ubezpieczeniowych do potrzeb i wymagań klientów

Artykuł opisuje zmianę paradygmatu regulacyjno-nadzorczego oraz przepisów prawnych w aspekcie przeciwdziałania zjawisku nieuczciwej sprzedaży (ang. misseling) na rynku ubezpieczeniowym. Przedstawiono w nim istotę, formy oraz skalę występowania tego zjawiska. Dokonano analizy treści nowych regulacji prawnych, wprowadzonych w związku z transpozycją dyrektywy o dystrybucji ubezpieczeń IDD 2016/97 z 20 stycznia 2016 roku do polskiego porządku prawnego, z punktu widzenia możliwości ograniczenia nieuczciwej sprzedaży i nieadekwatności produktów ubezpieczeniowych do potrzeb i wymagań klientów. W szczególności przebadano przepisy dotyczące obowiązku działania w jak najlepiej pojętym interesie klienta, badania potrzeb i wymagań klientów oraz wynagradzania pośredników ubezpieczeniowych. Wnioski wskazują na głęboką zmianę modelu ochrony klienta na rynku ubezpieczeniowym. Implementacja przepisów dyrektywy IDD nie doprowadzi do ujednolicenia poziomu ochrony pomiędzy kanałami dystrybucji, natomiast wpłynie na ograniczenie konfliktu interesów i poprawi adekwatność produktów. Skuteczność przepisów będzie przede wszystkim zależała od zdolności do ich egzekwowania przez organy nadzoru. Artykuł powstał na podstawie studiów literatury przedmiotu oraz analizy treści przepisów prawnych.

Implementing IDD across the EU—first findings and the way forward

The Insurance Distribution Directive might be dysfunctional in substantial areas of the insurance value chain, ranging from product development to after-sale services. Practical examples are fundamental conflicts with Solvency II, confusion of distribution and claims management, disproportionate complexity for B2B, one-size-fits-all for insurance and investment products, barriers to existing customers, disruption of the digital customer journey, and a monoculture of group insurance contracts. This article provides for a preliminary analysis and identifies potential issues for review at a later stage.

ONLINE DISTRIBUTION OF INSURANCE OF CIVIL LIABILITY OF OWNERS OF VEHICLES, THE EXPERIENCE OF POLAND, OPPORTUNITIES OF UKRAINE

Distribution of insurance services online is practically possible only with respect to unified and simple products. The most massive of them is civil liability insurance of vehicle owners, the terms of which are unified by the state, which allows treating this insurance product as optimal for distribution through the Internet. Such a distribution can significantly reduce the cost of acquiring and servicing this insurance service, which is an additional element of competition for insurance companies. In this paper, the dynamics of Internet access in Ukraine and Poland was investigated. The relationship between the internationalization of Poland and the share of insurance premiums received from online sales in the total number of insurance premiums of non-life companies is determined. The purpose of the research is: substantiation of the distribution potential of civil liability insurance of vehicle owners through the Internet in Ukraine. Method (methodology). In order to realize this purpose, the existing state of online sales of risk insurance services in the Republic of Poland is analysed. For analysis, in particular, methods of analysis of dynamics and correlation were applied. Empirical studies use statistics from MTIBU, KNF, GUS, Internet Live Stats, and KPMG reports. Results. It is substantiated that the growth of sales of insurance through the Internet correlates in geometric progression with the index of internetization. It is determined that in addition to the technical component of distribution through the Internet, a regulatory and legal component plays an important role. The practice of distributing online services of insurance of civil liability of vehicle owners substantiated the need for substantial elaboration of the Ukrainian legislation in the sphere of protection of client interests in such transactions. Practical implications. Taking into account the research results, it is proposed to significantly elaborate the mobile applications of insurance companies, both in Ukraine and Poland in order to ensure the supply appropriate for the countries of Western Europe. The necessity of substantive reform of the current legislation in order to bring it closer to the EU standards, namely, in accordance with the Insurance Distribution Directive, as was the case in Poland, is determined. Value/originality. For the first time, there was a study of opportunities for online distribution of insurance products in Ukraine, which became legally possible from February 2018. Based on the dynamics of the dependence between internetization and online sales of insurance products in Poland, significant prospects for this distribution channel are determined.