We’re ready for the Insurance Distribution Directive

What is the IDD?

It’s new EU legislation which sets out the regulatory requirements for firms designing and selling insurance products. It aims to improve protection for customers who buy products in the insurance sector, including insured pensions, and creates a standard approach for selling insurance.

It also helps us to:

• Create a standard process for designing and developing our products.
• Sell our products through the most suitable channels.
• Consider the needs of vulnerable customers.
• Test customer understanding of our products.
• Monitor our products once they’ve been sold.
• Produce statements of demands and needs.

What products does it relate to?

Products affected by the new legislation include general insurance products, life insurance business (protection and pensions) and insurance-based investment products (such as investment bonds, endowments and trustee investment plans).

How does it affect us?

The key areas that we’re addressing as part of the IDD are:

Target market, product reviews and product approval process

As a product provider, we need to:

• Identify target markets for each of our products, including listing the groups of customers the product isn't suitable for.
• Develop a distribution strategy that’s appropriate for each target market.
• Monitor and regularly review our products to make sure they meet the needs of the target market and the distribution strategy is still appropriate.
• Provide information on our product approval process to distributors, such as advisers.

Demands and needs

All insurance products sold must be consistent with the customer’s demands and needs. Before the contract’s finalised, the company selling the product must identify and specify the customer’s demands and needs using information provided by the customer. This doesn’t apply when a personal recommendation has been given to the customer.

Responsibility for providing the statement of demands and needs to the customer sits with the adviser.

What are we doing in response to the IDD?

• We’ve developed target market statements for our products. You can download these below:

• We already carry out regular product reviews, but we’re extending them. This may involve us collecting additional information from advisers on their sales or experiences with our products.
• We've published a summary of our product approval process.
• We’ve updated relevant wording for advisers to use within our key facts/features documents, which are available in the relevant literature library. These updated versions are dated ‘September 2018.’
  • Pensions literature library
  • Protection literature library

Looking for more information?

If you have any further questions, please speak to your usual Royal London contact.