Insurance Distribution Directive

The Insurance Distribution Directive — overview

The Insurance Distribution Directive (Directive 2016/97/EU), known as the IDD, is the European Union's legislative framework governing the distribution of insurance products. It replaced the Insurance Mediation Directive (IMD) of 2002 and entered into force on 1 October 2018. The IDD applies to all parties involved in the distribution of insurance products — not only brokers and agents, but also insurers selling directly and ancillary insurance intermediaries.

The directive's primary objective is to create a level playing field across the EU insurance distribution market while strengthening consumer protection. It was transposed into Belgian law through the Act of 6 December 2018, monitored by the Financial Services and Markets Authority (FSMA).

Who does the IDD apply to?

The IDD significantly broadened the scope of EU insurance distribution regulation compared to its predecessor. It applies to:

• Insurance intermediaries — brokers, agents, and sub-agents registered to distribute insurance products.
• Insurance undertakings selling directly to customers without an intermediary.
• Ancillary insurance intermediaries — businesses offering insurance as a secondary activity (e.g. travel agencies, car rental companies, banks).
• Reinsurance intermediaries and reinsurance undertakings.

What is excluded?

The IDD does not apply to claims handling, loss adjusting, or the provision of insurance services on a purely occasional or ancillary basis below defined thresholds. Large commercial risks are subject to lighter requirements under the directive.

Core obligations under the IDD

1. Registration and professional requirements

All insurance distributors must be registered with the competent national authority. In Belgium, this is the FSMA. Distributors must meet minimum professional knowledge requirements and complete at least 15 hours of continuing professional development (CPD) per year.

2. Conduct of business rules

The IDD introduced a general principle that distributors must always act in the best interests of the customer. Distributors must avoid conflicts of interest and, where they cannot be avoided, must disclose them clearly to the customer before the conclusion of the contract.

3. Insurance Product Information Document (IPID)

For non-life insurance products, the IDD requires the provision of a standardised Insurance Product Information Document (IPID) before the conclusion of the contract. The IPID must be a concise, plain-language summary of the product's key features, coverage, exclusions, and obligations.

4. Demands and needs assessment

Before selling an insurance product, the distributor must conduct a demands and needs assessment to ensure the product is suitable for the customer's specific situation. For investment-based insurance products (IBIPs), a more extensive suitability or appropriateness assessment is required — similar to MiFID II requirements for investment products.

5. Remuneration disclosure

Insurance distributors must disclose the nature of their remuneration — whether they receive a fee paid by the customer, a commission from the insurer, or a combination of both. This transparency requirement aims to reduce the risk of commission-driven advice.

Transposition and application in Belgium

Belgium transposed the IDD through the Act of 6 December 2018 on insurance distribution, which amended the existing Act of 4 April 2014 on insurance. The FSMA is responsible for the registration, supervision, and enforcement of insurance distribution rules in Belgium.

FSMA registration

All insurance intermediaries operating in Belgium must be registered with the FSMA. The public register of insurance intermediaries is available on the FSMA website and allows consumers to verify that their broker or agent is duly authorised. The register distinguishes between insurance brokers, insurance agents, and ancillary insurance intermediaries.

The Belgian insurance landscape

Belgium has a mature and well-developed insurance market. The sector is supervised jointly by the FSMA (conduct of business) and the National Bank of Belgium (NBB) (prudential supervision). Assuralia, the professional association of insurance companies, represents the sector and publishes annual market statistics.