The EU Insurance Distribution Directive of 2016 recast the Insurance Mediation Directive of 2002. The Irish government has just published the statutory instrument which will give effect to the Directive. The aim is to improve protection for consumers across all distribution channels. Therefore insurance undertakings, as well as brokers and agents, are now to be subject to a number of requirements in their engagement with consumers.
One of the most notable changes introduced by the Regulations, as part of the information and transparency requirements, is that insurers are obliged to produce an insurance product information document. The Regulations are very specific. Prior to the conclusion of the insurance contract the insurer must provide a consumer (in one short document) with the following information:
- Information about the type of insurance;
- A summary of the insurance cover;
- The means of payment of premiums, the frequency of payments and the duration and number of payments;
- Main exclusions;
- Obligations at the commencement of and during the contract and in the event of a claim;
- The term of the contract including the start and end dates;
- The means of terminating the contract.
Insurers in the Irish market will be aware of the Consumer Protection Code meaning of "consumer" which includes incorporated bodes with an annual turnover of less than €3 million and other unincorporated bodies with a turnover in excess of €3 million. This means that there may be products which may not traditionally be regarded as 'consumer' products which will also require insurance product information documents.
The European Insurance and Occupational Pensions Authority (EIOPA) has prepared template documents in each EU official language using the requisite font type, size and colour and these are available on its website.
Insurers should be well advanced in the process of preparing these documents for each type of policy they distribute to Irish consumers so that they do not fall foul of the legislation from 1 October 2018. Failure by an Insurer to comply with the conduct of business requirements in relation to a (non-investment) product could result in the Central Bank making an order requiring the person responsible for the contravention to cease and desist from the conduct. For an intermediary the sanction could lead to the withdrawal of its registration.
Although not addressed specifically in this note, the consequences for breaches of the specific regulations relating to investment products are even more serious and insurers in that market should ensure that they comply fully with the standards imposed by these Regulations.