Today, on 18 December 2018, the Belgian law of 6 December 2018 implementing Directive (EU) 2016/97 of the European Parliament and the Council of 20 January 2016 on insurance distribution (the “Insurance Distribution Directive” or “IDD”) has been published in the Belgian Official Gazette (the “Act”). The Act will enter into force ten days after its publication, i.e. on 28 December 2018. The Act can be consulted here in Dutch and French.
The purpose of the IDD has been to create a level playing field among the distributors of insurance products, to strengthen the confidence of customers and to make regulatory treatment of the distribution of insurance products more uniform in order to ensure an adequate level of customer protection across the European Union. The IDD was initially intended to enter into application from 21 February 2018. However, the European Union agreed to postpone the application date by seven months to 1 October 2018 as it appeared that some insurance distributors, particularly smaller ones, were not fully prepared for its entry into force.
The scope of the MiFID rules of conduct have, since May 2015 been extended to the insurance sector in Belgium (commonly known as the “AssurMiFID regime”). As a result, many of the IDD rules are at present, more or less already applicable to insurers and insurance intermediaries active in Belgium. Therefore, the impact of the IDD on the Belgian market is somewhat more limited when compared to other Member States.
Although the IDD is aimed at minimum harmonization, allowing Member States to maintain or introduce more stringent provisions, the Belgian legislator has decided to implement the IDD as literally as possible. For a number of aspects, however, the Belgian legislator has decided to make use of the options in the IDD in order to take into account the specific characteristics of the current AssurMiFID regime in Belgium.
This client alert is limited to highlighting these specific deviations from the IDD in the Act, and does not discuss the additional IDD requirements such as the enhanced product oversight and governance requirements or the Insurance Product Information Document (IPID). Please contact us should you require more information on any of these topics.
Territorial scope of application
The AssurMiFID regime is applicable when insurance products/services are offered in Belgium, and therefore also to foreign insurance undertakings and intermediaries who have a branch or permanent presence in Belgium, and who are active in Belgium on a free provision of services basis.
The IDD, on the other hand, states that when business is pursued in another Member State under the freedom to provide services, the responsibility for ensuring compliance with the obligations of the IDD with regard to the entire business within the internal market remains in principle with the home Member State. In case of the establishment of a branch or permanent presence in another Member State, the responsibility for enforcement of compliance with the obligations affecting the business as a whole and of the rules on information requirements and conduct of business is distributed between, respectively, the home and host Member State.
However, it can be expected that the Act will continue to apply to foreign service providers active in Belgium on the same basis as the AssurMiFID regime, especially since the Act mainly modifies the provisions of the Insurance Act of 4 April 2014, which – at the moment – still qualifies in its entirety as a provision of ‘general good’. The IDD mandates EIOPA to examine in a report, and inform the Commission about, the ‘general good’ rules as published by the Member States. It can be expected that the current Belgian list will be scrutinized, as was already the case in the past. It remains to be see