EIOPA publishes second Report on the application of the Insurance Distribution Directive (IDD)

The number of registered intermediaries has further decreased over the past two years, a trend already outlined in the previous report.
The quality of advice and selling methods have improved in some Member States, for example as a result of corrective measures imposed by national competent authorities (NCAs). However, in others, mystery shopping activities have revealed significant shortcomings related to advice and selling methods. For example, NCAs highlighted instances where the demands and needs of the customer have not been properly taken into account by the insurance distributor in the sales process.
Initial evidence from NCAs about the application of the new sustainability rules illustrate challenges for consumers to understand the disclosures and complex concepts introduced by the new rules and for insurance distributors to find appropriate training courses to acquire the necessary knowledge to understand the framework and provide suitable advice to customers.
Supervisory activities by national competent authorities (NCAs) have revealed shortcomings in the application of the rules on remuneration and conflicts of interest, for example in relation to monetary payments conducive to conflicts of interest. In order to address the possible detrimental impact of commissions on consumers, several NCAs have adopted measures at national level to further restrict the payment/receipt of commissions such as commission caps or enhanced disclosure rules.
Both EIOPA’s thematic review on bancassurance and supervisory activities undertaken by NCAs have revealed cross-selling practices potentially causing detriment to consumers. This includes, for example, the sale of mobile phone insurance together with a mobile phone.