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November 2017

Update on IDD Implementation Deadline

The European Commission proposed delaying the application date of the Insurance Distribution Directive (IDD) to 01 October 2018. In response to this proposal HM Treasury announced that the government will delay transposing the IDD into UK law until after the outcome of this proposal has been confirmed. Firms must comply with the FCA’s final rules from this date.

Zurich has interpreted the above to mean that there is no certainty that the implementation date will be postponed until 01 October 2018 and that the European Commission could select any date from 23 February 2018. We will continue to review our approach whilst awaiting confirmation of a new deadline.

It is therefore our expectation that brokers will continue to implement the IDD requirements where possible as the final implementation date is not guaranteed. This approach allows us to fix any issues at the earliest opportunity and maximises the chances of fully complying with the directive once it is implemented.

We are aware there are some delays with SWHs implementing the IPID documents. This will be addressed shortly. All of our Zurich IPIDs are available to download from our websites if you want to issue IPIDs in the meantime.

Finally, the Financial Conduct Authority’s view is that the IDD provides consumer protection that is similar to, or greater than, its current requirements and that firms should be able to comply early if they choose to do so. Zurich has taken this approach to ensure the best possible service for our customers.

On 23 February 2018, the Insurance Distribution Directive (IDD) comes into effect. This is a European directive that aims to improve consumer protection within the distribution of insurance

Here are the key requirements of the IDD:

  • Product oversight and governance – ensuring that documents are reviewed periodically and that every product has a clear target market.
  • A new policy summary, the Insurance Product Information Document (IPID) to help consumers understand what’s included in their cover.
  • Ensuring professional competency of staff advising on and selling insurance products, including an ongoing commitment to training on the products.

Who is impacted?

The IDD applies to all companies and individuals who distribute insurance to customers. Broadly, this means firms who sell, advise on, or conclude insurance contracts, and those who assist in administering or performing insurance contracts. Customers of these firms range from individuals to multinational corporations, and it covers both Life Insurance policies and General Insurance policies.

How will the IDD apply in the UK?

IDD requirements will be transposed into UK legislation mainly via FCA rules and guidance – the FCA are currently consulting on their proposals to implement IDD. We expect the FCA’s proposals to take effect alongside the Directive on 23 February 2018.

What are we doing?

To make sure that Zurich is ready (and as advised by the FCA and Association of British Insurers); we’ve set up project teams to understand the impacts of the Directive and likely changes required

One significant change will be the Insurance Product Information Document (IPID). This only applies to general insurance products.

The current Zurich approach is to implement the IPID for all our personal lines products. We are also reviewing our SME and Commercial products to understand whether an IPID (or similar) would benefit these customers.

The IPID is a stand-alone document that will need to be provided to consumers before the conclusion of the general insurance contract to allow them to easily compare different product offerings and to make an informed choice about the product they are buying.

What can you do?

As an FCA-registered firm you should be reviewing the IDD and FCA consultations to understand your responsibilities as brokers.

Do we need to issue an IPID to commercial customers?

Under the IDD IPIDs are not required for commercial customers although FCA guidance suggests manufacturers should consider their use where this may benefit a commercial customer. Zurich has concluded that there is currently no compelling benefit to our commercial customers in issuing IPIDs and that similar information is already provided in the policy summary and other similar documents. This meets the FCA guidance and expectations. We will monitor this aspect on a regular basis.

If you have any questions about how Zurich is implementing the IDD please contact your relationship manager.

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