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E.U. postpones Directive on insurance distribution

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European Union (E.U.) Directive 2016/97, which regulates the distribution of insurance products and is intended to strengthen consumer protection, in February 2018 was postponed by a few months.

The deadline for implementation, initially set to February 23, 2018, is now pushed back to October 2018. The deadline for transposition into national laws by E.U. Member States is extended to July 1, while the deadline for application is now October 1.

The supplementary delay had to be granted because the European Commission found it impossible to deliver the delegated acts – the decrees implementing a directive – in time, as they were published as late as December, 2017. Since each country has its own distribution system, adapting national rules takes time.

European Insurance Distribution Directives Come and Go as DID Replaces IMD

The Insurance Mediation Directive (IMD) already exists that manages the distribution of insurance products, but it only applies to intermediaries, not to insurance carriers. From now on, companies that sell directly to clients also are affected.

The main purpose of the new Directive is to create conditions for fair competition between distribution channels and to strengthen protections afforded to policyholders. This is considered especially important for life insurance products, which have an investment component.

The directive requires that the entire production and distribution process is well documented in order for customers to be in a position to make informed decisions and purchase the product that best suits their needs.

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