Insurance Distribution Directive (IDD)
Published: 17 Jan 2018
The Insurance Distribution Directive (IDD) was due to come into effect in February 2018. What does this mean for you as well as us here at Aviva?
What is IDD?
The Insurance Distribution Directive or IDD is new legislation which was due to come into force on the 23 February 2018. It has been designed to ensure that customers have a greater understanding of the insurance they are purchasing, and who they are purchasing from to enable them to make informed decisions.
It’s also just been proposed by the European Commission to delay the application of IDD to 1 October 2018, although at this point the proposal has not yet entered into law. Therefore we’re following developments closely to understand what this means in practice and will update you further when this becomes clear.
This legislation requires both insurers and intermediaries to review their current practices and implement new processes to ensure they remain compliant. For insurers some of the key requirements are the production of Insurance Product Information Documents (IPIDs), and target market statements. This should be used by intermediaries to help explain the salient points to their customers, both at the initial sale and renewal of the contract, unless the customer has received the IPID previously.
Regardless of the potential delay, we still believe IPIDs are beneficial to small businesses and consumers. Therefore we have made the decision to make these available to you.
What is the IPID and when is it used?
An IPID or Insurance Product Information Document is a simple summary of the products benefits, terms and key exclusions. The template designed by the European Insurance and Occupational Pension Authority (EIOPA) to be consistent across insurance providers, is provided to enable customers to easily compare products from different providers and enables them to make an informed decision.
Therefore it is required to be provided prior to the conclusion of the contract. It must be provided for annually renewable products such as health insurance both at quote stage, and also included in pre-renewal information.
It is the duty of whoever is conducting the sale at this point to provide this document along with other regulatory requirements such as demands and needs, and status disclosures.
How many IPID’s are there?
Aviva Health UK has created IPIDs for all our UK domestic Consumer and SME Company policies - including legacy products. These will be available to you on www.healthcarezone.co.uk. We are currently working to add all the documents at relevant points across the site. For now, you can access them as follows:
Details of the Healthier Solutions, Speedy Diagnostics and Solutions documents can be found here:
Whilst we do not currently offer these products to new business, we are also required to produce IPIDs for legacy products. As such we have produced 22 IPIDs for all of our legacy products (including Cash plans). You can find these documents here under each product name.
Is the IPID Dynamic?
At present our IPID documents are not dynamic. As our benefit limits are standard and do not flex for each individual customer we do not believe there is a requirement to change these.
As the customer has not usually determined the start date of the policy at pre-contractual stage, we have not included this dynamic element.
The FCA’s second Policy Statement for IDD also confirmed that personalised IPID information could be provided in a generic way, for example cross referring to another document, which supports this position. We will continue to monitor any future regulatory developments
Where can I find the IPID?
We have produced all the IPIDs in PDF format which are available by clicking the links above, They can also be accessed by clicking here and visiting each product link.
When will the IPID’s be available to access and download?
The IPIDs are available immediately via the Healthcare Zone via the above links.
What is a ‘target market’?
Target market is simply a statement of who the product was designed for. It is the duty of the insurer to provide this information to distributors, and for distributors to take this into account when selling the product to ensure that the product is sold to those it was intended for.
In many cases for healthcare as a mass market offering this will be the majority of your clients. However, we have also ensured that we included key considerations where applicable to highlight where a product may not be suitable or where greater care should be taken to truly understand the customer’s needs. We will continue to validate these as we have a duty of care as well as the distributor to ensure that the product is sold correctly. These target market statements will be available soon. We will notify you to confirm their online location. Please therefore read the relevant target market statements when they become available.
What should I be aware of as an intermediary?
As an intermediary you are required to comply with the requirements of the IDD this includes activities such as:
- Reading the target market statement for the product you are selling and ensuring that you follow the guidelines when considering it for your client.
- Ensuring you provide the correct information to enable your customer to identify your role in the sales process and what remuneration if any, you will receive. Other conduct of business rules are published in the directive, and whilst many are in line with current regulation it is important you review these with your own compliance officers to ensure you remain compliant.
- Ensuring that you capture and play back the customer’s requirements and why you are recommending the specific product (where appropriate).
- Ensuring they are provided with the correct IPID for the product you are selling.
What is the ‘Status Disclosure’ and when is it used?
This enables your client to understand your status, and relationship with the insurance provider whose product you are recommending. For example whether you are acting as introducer or an intermediary, whether you are a tied agent, and what nature of business and remuneration you will receive for the sale of the product as well as other pre contractual disclosures mentioned above.
You must provide full status disclosure prior to the conclusion of the contract, and also should you make any changes to the product on your client’s behalf.
This requirement is simply building on your existing processes.
What if I process an online non-advised application with Aviva?
It would be your responsibility to comply with IDD for any applications you process via Healthpoint, whether this is on an advised or non-advised basis.
Where can I go for more information?
Further information will be made available here, on our Intermediary website www.aviva.co.uk/healthcarezone in coming weeks.
Are all parts of the Aviva UKI taking the same approach to the implementation of IDD?
All parts of Aviva UKI are working together to deliver a consistent approach. However each product area will have slightly different requirements, as such there will be some degree of adaptation to reflect this.
If you have any questions, please contact your usual account manager.
Can we help you?
Think of us as part of your team.
Find the right details on our Contact Us page