New framework for insurance distribution – SPS Advogados

On 20 January 2016, the Directive 2016/97 – concerning insurance distribution – was adopted by the European Parliament and the Council. The Insurance Distribution Directive (IDD) provided a harmonised legal framework for this activity.

It was revolutionary in that it regulated the distribution of insurance irrespective of the distribution channel, and evolutionary in the sense it specified principles and rules of conduct already present in former regulations, all with the purpose of providing a greater degree of consumer protection.

Following the approval of the IDD – which entered into force on 23 February 2016 and set a deadline of 23 February 2018 for Member States to apply its provisions – the commission adopted two ‘delegated regulations’ supplementing IDD relating to product oversight and governance requirements for insurance undertakings and insurance distribution.

The regulations also concerned information requirements and conduct of business rules applicable to the distribution of insurance-based investment products (IBIP Regulation).

Due to the adoption of those ‘delegated regulations’ and considering the time needed for the implementation of the technical and organisational changes required by said regulations, the need arose for the extension of the deadline for the application of the laws, regulations and administrative provisions required for the full compliance with IDD as well as a deferral of the transposition deadline, which were set respectively for the 1 October 2018 and the 1 July 2018.

The deferral of the transposition and application of IDD provides an added opportunity for insurance market players to conform to the new demands of the regulatory framework that, despite placing an added financial and organisational burden, introduces clear and coherent rules regarding behaviour, information, transparency and conflict prevention guidelines. This allows for a greater degree of predictability regarding the compliance of the organisational and operational framework of the insurance market players, while reinforcing the rules and proceedings that assure the adequacy of the distributed insurance product to the needs of the consumer.  

An equal opportunity is granted to the member states to review their corresponding transposition decrees in order to allow the adequate adaptation of the European regulation to the idiosyncrasies of their respective economies, an opportunity that should not be wasted.

Filipe Jorge Guerreiro is a senior associate at SPS Advogados. He can be contacted at