The Insurance Distribution Directive (Directive 2016/97/EU, commonly called the IDD) has been in force across all EU member states since October 2018. It replaced the Insurance Mediation Directive (IMD) and significantly raised the bar for conduct of business across every distribution channel — brokers, agents, bancassurance, and direct insurers alike.
Despite over seven years of application, IDD compliance remains one of the most common sources of regulatory enforcement action against EU insurance intermediaries. This guide addresses the practical obligations that affect your day-to-day operations, not the theoretical framework.
Scope: Who Is Subject to the IDD?
The IDD applies to all "insurance distributors" — a deliberately broad term covering insurance intermediaries (brokers and agents), ancillary insurance intermediaries (e.g., car rental companies selling travel insurance), and insurance undertakings that sell directly to customers. If you receive remuneration for introducing, proposing, preparing work for, concluding, or assisting in administering insurance contracts, you are an insurance distributor.
Notably, the IDD applies to B2B distribution as well as B2C, although member states may exempt certain large commercial risks under Article 22(2). Check your national implementation — the UK's FCA implementation (prior to Brexit), Germany's VersVermV, and France's L.521-1 approach each handle this differently.
Demands and Needs Assessment: The Documentary Backbone
Article 20 IDD requires that before concluding any insurance contract, you specify — on the basis of information obtained from the customer — the demands and needs of that customer, and provide the customer with objective information about the insurance product in a comprehensible form.
This is more than a pre-sale questionnaire. Your demands and needs assessment must:
- Be personalised, not generic — a template that asks the same four questions for every client is not compliant.
- Document why the recommended product meets the client's stated needs — a rationale, not just a record of needs.
- Be provided in a durable medium (Article 23) before the contract is concluded — not at signature or after.
- For advised sales, meet the suitability standard: the product must be suitable for the customer's specific circumstances, not merely appropriate.
Regulators have found violations where demands and needs documents were completed post-sale, where the stated rationale did not match the product's actual features, or where clients were given the same template document regardless of their circumstances.
IPID: The Insurance Product Information Document
Article 20(8) IDD and the Commission Implementing Regulation 2017/1469 require that customers receive an Insurance Product Information Document (IPID) for non-life products before the contract is concluded. The IPID is a standardised, standalone document with strict format requirements:
- Maximum 2 A4 pages (or equivalent in other formats) — this is a hard limit, not a guideline.
- Must use the standardised template structure prescribed by Implementing Regulation 2017/1469, including prescribed pictograms.
- Must clearly state: what is insured, what is not insured, restrictions, where and how to pay premiums, commencement and expiry, cancellation terms, and how to make a claim.
- Must be product-specific — you cannot use a single IPID for multiple variants of a product.
The IPID is the insurer's responsibility to produce, but as the distributor you are responsible for ensuring the correct, current IPID is provided to the customer. Distributing an outdated IPID — even if you received it from the insurer — is a distributor-level breach. Maintain version-controlled IPID libraries for every product you sell.
Remuneration Disclosure
Article 19 IDD addresses conflicts of interest, and Articles 20(4)–(6) address remuneration disclosure. For insurance intermediaries, the key rule is:
Before the conclusion of a contract, you must disclose to the customer the nature of your remuneration. Specifically:
- Whether you work on a fee basis (paid directly by the client).
- Whether you receive a commission (included in the premium).
- Whether you receive any other type of remuneration (profit-share, volume bonuses, contingent commissions).
- Where the customer requests it, you must also disclose the amount of commission or, where that is not possible, the method for calculating it.
For life insurance sold under an Investment-Based Insurance Products (IBIPs) regime, disclosure obligations are stricter still — full cost and charges disclosure is required under Article 29 IDD and PRIIPs Regulation 1286/2014. See also how these obligations interact with GDPR when you are storing client financial data, as discussed in our GDPR guide for insurance brokers.
CPD: The 15-Hour Annual Requirement
Article 10 IDD requires that persons involved in insurance distribution (not just the "responsible person" but all relevant staff) undertake a minimum of 15 hours of continuing professional development (CPD) per year. This includes:
- Product knowledge training
- Regulatory and compliance updates
- Customer service and conduct skills
- Ethics and anti-money laundering (where relevant)
CPD records must be maintained and may be requested by your national competent authority. Common enforcement findings include CPD records that cannot be produced, CPD claimed for activities that are not genuine learning (e.g., attending internal sales meetings), or gaps caused by staff turnover not being tracked.
Product Oversight and Governance (POG)
Articles 25 and 27 IDD, supplemented by EIOPA Guidelines on POG (EIOPA-BoS-16/071), require both manufacturers and distributors to implement product oversight and governance arrangements. As a distributor your key obligations are:
- Obtain and understand the manufacturer's target market assessment for each product.
- Distribute only to customers within the positive target market — or document why a sale outside the target market still meets the customer's demands and needs.
- Establish a process to flag to the manufacturer any cases where the product appears to be causing harm or performing differently from its design.
- Review your distribution arrangements periodically — at least annually — to ensure they remain consistent with the target market.
What Constitutes an IDD Violation?
Based on published enforcement decisions across EU member states, the following practices constitute IDD violations:
- Failing to conduct or document a demands and needs assessment before sale.
- Providing customers with an IPID after, rather than before, contract conclusion.
- Using an IPID that exceeds the 2-page limit or does not follow the standardised template format.
- Disclosing only the nature but not the amount of commission when the customer explicitly asks for it.
- Failing to maintain 15 hours of CPD per relevant staff member per calendar year.
- Distributing products to customers outside the manufacturer's defined target market without documented justification.
- Failing to disclose a material conflict of interest before sale (e.g., exclusive volume arrangements with a specific insurer).
- Not registering with the national insurance intermediary register (required under Article 3 IDD in every member state where you operate).
- Using automated or AI-assisted recommendation tools without human oversight for advised sales — a growing enforcement area in 2025–2026.
Distribution Channel-Specific Requirements
The IDD contains specific rules depending on how you distribute:
- Cross-border distribution (Freedom of Services): You must register your passporting intention with your home state authority and comply with the conduct-of-business rules of both home and host state.
- Distance selling: IDD applies in full; Distance Marketing of Financial Services Directive (2002/65/EC) may also apply, adding additional pre-contractual information and cancellation rights.
- Online distribution: Demands and needs assessments completed via online questionnaires are valid, but must meet the same substance requirements. ESMA and EIOPA are monitoring robo-advice in insurance for IDD compliance.
How PrizMova Europa Supports IDD Compliance
PrizMova Europa's client workflow module generates timestamped demands and needs assessment records, version-tracks IPIDs by insurer and product, logs CPD hours against staff profiles, and maintains an audit trail of all pre-sale disclosures — giving you the documented evidence needed to respond to any supervisory inquiry. For firms navigating both IDD and DORA obligations, our platform integrates these compliance workflows into a single dashboard. Learn more about DORA obligations in our DORA ICT Risk Management guide.