On 23 March 2021, EIOPA published a series of questions and answers (Q&A) on its interpretation of certain Insurance Distribution Directive (IDD) provisions and its implementing measures. Answers to eight questions were provided by the European Commission (the Commission).  The Q&A are part of a joint process involving EIOPA and the Commission to help ensure that European regulation is applied consistently and effectively across all EU Member States. 

The Q&A addresses several issues relating to the application of product oversight and governance requirements.  These include:

• what constitutes a “significant adaption of an existing product”;
• whether testing and product review are required for existing products; and
• the extent of a manufacturer’s responsibility for adequate product oversight and governance arrangements. 

The responses provided by the Commission should give some helpful clarity to product manufacturers. 

Among the other issues addressed by the Q&A are the appropriateness assessments conducted by insurance distributors, the retrospective application of the IDD and, interestingly from an Irish perspective, the application of the IDD to captive (re)insurance undertakings.  The question raised concerned an Irish authorised entity. The Commission’s response confirmed that the IDD must be interpreted as applying fully to captive (re)insurance undertakings, as there is no indication in the IDD of the legislator’s intention to provide otherwise. 

(Re)insurers and (re)insurance intermediaries, supervisors and other industry stakeholders can use the Q&A process to submit questions to EIOPA and/or the Commission on the interpretation of European law and EIOPA Guidelines. More generally, the responses to the Q&A process are made publicly available on the EIOPA website. They can be a useful resource to help clarify a particular issue.  Although it is important to note that the Q&As have no binding force in law, because their purpose is to achieve a level playing field across Member States, their application will be rigorously challenged by EIOPA and supervisory authorities.
    
View full details of the Q&A here.

If you have any questions on the Q&A or the Insurance Distribution Directive, please contact any Insurance team member of our Insurance Team or your usual William Fry contact. 

Contributed by Catherine Carrigy