Insurance Distribution Directive (IDD)
A European framework harmonizing insurance distribution: pre-contractual information, duty to advise, continuing training and remuneration transparency. For a broker offering borrower insurance, the IDD sets a baseline of duties toward the client, supervised by the ACPR.
Key points
- European directive harmonizing insurance distribution rules across the EU.
- Imposes a documented duty to advise before any borrower insurance subscription.
- Requires transparency on the distributor's remuneration toward the client.
- Requires annual continuing training for all insurance distributors, including brokers.
Frequently asked questions
How does the IDD concretely change the practice of a borrower-insurance broker?
Before the IDD, the formalism of insurance distribution was less structured. Since its transposition, the broker must systematically collect the client's demands and needs, keep a written record, and justify that the recommended product matches them. They must also disclose their remuneration by type (commission, fees, or combination) before subscription, thus making the pricing relationship more transparent.
Why is IDD continuing training important for a credit broker who incidentally distributes insurance?
As soon as a broker offers borrower insurance, even in delegation, even incidentally, they are subject to IDD continuing-training obligations. Failing to meet this annual hourly requirement is a violation that may be identified in an ACPR inspection. Since most mortgage brokers distribute borrower insurance, IDD training is not reserved for insurance-specialist brokers alone.
What is the difference between the IDD and the MCD for the mortgage broker?
The MCD (Mortgage Credit Directive) frames the distribution of mortgage loans: ESIS, APRC, APR calculation, credit advice duty. The IDD frames insurance distribution: coverage advice duty, IPID product information document, IDD training. For the broker who does both, both directives apply simultaneously, each in its own domain, with neither substituting for the other.
In practice
During a consulting interview, a broker collects in writing the insurance requirements of a client with type 2 diabetes: they note the specific needs for death, total and irreversible loss of autonomy, and total permanent disability cover, take the AERAS agreement into account, and select a delegation contract meeting these criteria. They disclose their commission in the advice document before any subscription, in compliance with the IDD.
Official sources
- Article L511-2 Insurance Code (distributor requirements) · Légifrance
- Article L519-1 of the Monetary and Financial Code · Légifrance
- Prudential supervision and resolution authority · ACPR (Banque de France)