Out-Law News | 02 Jul 2015 | 1:16 pm | 1 min. read
Representatives from the European Parliament's Economic and Monetary (ECON) Committee reached agreement with the Latvian presidency of Council of Ministers on the reforms on Tuesday. The agreement on the legal text follows negotiations between the European Parliament, the Council and the European Commission, the Commission said.
The proposed Directive, which seeks to improve the way insurance products are sold, is still subject to "technical finalisation" before a draft can be endorsed by the Council and the ECON Committee, Commission spokeswoman Maud Scelo said. The IDD will only be introduced into law if it is approved in separate votes by the Council and the European Parliament.
The IDD will update the 2002 Insurance Mediation Directive (IMD), which sets out the current framework for regulating EU insurance brokers, agents and other intermediaries.
Insurance expert Alexis Roberts of Pinsent Masons, the law firm behind Out-Law.com, said: "The IDD, when in force, will apply to the wider regulation of insurance 'distributors'. In the UK, the change will not significantly impact the market due to 'gold-plating' of the Insurance Mediation Directive."
"However, the IDD does contain specific information provisions that may add cost and complexity to insurers' direct sales processes," Roberts said. "Given we are now a step closer to its implementation, it is important for UK insurance distributors to consider how these changes may impact their business operations."
The agreement is "good news for European consumers," EU commissioner Jonathan Hill said.
"Consumers will benefit from greater choice and information when they buy insurance products, with more accountability and competition," Hill said.
The IDD was originally referred to as IMD II, but the name was changed in September 2014 to reflect its focus on regulating the distribution of insurance products, including by insurers directly where no intermediation occurs. The existing law is being updated to take into account developments in insurance markets since its implementation.
The directive aims to bring greater transparency and improved, more comprehensible, information to consumers, to help people ensure that they buy products that suit their needs, the Commission said.
Like the IMD, the IDD aims to be a 'minimum harmonising' directive, and EU member states will be able to add their own requirements when implementing it.
An initial draft of the IDD was published in July 2012. It is expected to come into force in 2016/17, and a review is expected after five years.