The forthcoming implementation of the Solvency II Directive is one of the main drivers for the review of IMD I. In addition, IMD I is implemented differently across EU Member States such that:
- EU insurance markets are fragmented;
- there are significant inconsistencies, in particular regarding the information requirements imposed on sellers of insurance products; and
- customers are more likely to misunderstand the risks, costs and features of insurance products.
IMD II extends the scope of IMD I to apply to those selling insurance products, including insurance companies that sell directly to customers. A number of new rules have been proposed that address the risk of conflicts of interest, including a mandate for intermediaries to disclose the nature and structure of their remuneration. There are also a number of improved requirements which will apply to life insurance products that have investment elements. IMD II will allow insurance intermediaries to carry on business in more than one Member State through the establishment of a single EU registry for insurance intermediaries who wish to provide cross-border services.
The European Commission has indicated that the European Parliament and the Council of the European Union are likely to adopt IMD II during 2013. Once it has been adopted work on the level 2 implementing measures will begin. It is expected to come into force in 2015.
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