Insurance: IDD implementation

The Law of 10 August 2018 implementing Directive (EU) 2016/97 of 20 January 2016 on insurance distribution ("IDD") into Luxembourg law ("IDD Law") will enter into force on 1 October 2018. This Directive replaces the first Directive in relation to the distribution of insurance products, the Insurance Mediation Directive 2002/92.

The purposes of the Directive are mainly to promote a level playing field and competition on equal terms between intermediaries and to strengthen the protection of the clients, regardless of the channel through which they buy insurance products. The following points of the Directive and IDD Law can be outlined:

• Insurance/reinsurance distributors shall ensure that the products they distribute meet the interests and needs of the client;
• The information of the client is strengthened, among other things through pre-contractual standard documentations, the Insurance Product Information Document (IPID) for non-life insurance products and the Key Information Document (KID) for insurance-based investment products;
• New rules are imposed on insurance intermediaries in relation to conflicts of interest and remuneration transparency vis-à-vis the client;
• The scope of the definition of insurance distribution is extended, with the result that more insurance players will have to provide proof of their professional competence to operate in the insurance sector. In addition, each intermediary and employee of an insurance company shall attend at least 15 hours of professional training and development annually;
• A new status of ancillary insurance intermediary is created, when its principal professional activity is other than insurance distribution and the insurance product offered to clients is complementary to goods or to a service. Except where exempted, registration in the distributor register is required, as well as the proof of its honourability and professional knowledge.