Insurance Directive Delayed: what the IDD timeline means for the sector
by Heat Recruitment
By Tom Webster
The insurance sector is facing a far greater range of regulatory and legal challenges than ever before. GDPR is set for implementation in May of this year, MiFID II has been in place since January 3rd and new regulatory reviews are continually being put in place for a range of topics – including assessing the future of autonomous vehicles in the UK.
As an insurance specialist, you would be forgiven for thinking that the foot would not be removed from the metaphorical accelerator pedal. Today, however, insurance brokers have something to be thankful for. The European Union has now officially delayed the launch of the Insurance Distribution Directive – otherwise known as the IDD.
The IDD technically came into force on February 22nd of 2016 as an update to the Insurance Mediation Directive (IMD) 2002. In theory, from the aforementioned date in 2016, EU member states had two years to ratify the changes into national laws and regulations – upon which point the IMD would be repealed in favour of the IDD.
In practice, the IDD would make it far easier for firms to trade across borders whilst strengthening policyholder protection, increasing the baseline of requirements specified in the IMD. So, why has the policy been delayed?
Speaking at the close of 2018, Kareline Daguier, Director at PwC, confirmed that: “In some areas the FCA is gold plating the IDD and seeking to align it with MiFID II requirements. Insurers and insurance brokers have a few more months to prepare for IDD implementation and those efforts are expected to continue well into 2018.”
The issue comes from within those “few more months to prepare”. Despite having nearly two years to ratify these changes, insurers were only given the near final rules for implementation from the Financial Conduct Authority (FCA) in January 2018 – giving them just under one month to actually implement it.
According to David Sparkes, Head of Compliance and Training at the British Insurance Brokers’ Association (Biba): “This so called two-year window for implementation didn’t actually happen … You are talking about a month to implement something that requires technical changes.”
For insurance specialists, this means that instead of having three weeks to come to terms with fairly wide-ranging regulation, they now have until October 1st 2018.
Sparkes continued, stating that: “I think there is a mixed bag. Brokers have been worried because a number of insurers got ahead of the game and produced documents but there have been some that wanted to wait for the rules … Some brokers have said that 90% have developed the documents they need but 10% haven’t.”
The extended deadline, whilst welcomed by the insurance industry as a whole, would appear to have left the FCA with something of a dented reputation. As with GDPR, however, those insurance firms that were fully compliant with the IDD’s predecessor would only need to make minor changes to their operations. For those operating a more carefree business model, greater changes will be needed before compliance can be achieved.
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