On 20 January 2016, the European Council adopted the Insurance Distribution Directive (IDD). The purpose of this directive was 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 original transposition and entry into force deadline was 23 February 2018. In March 2018, the European Parliament delayed the transposition deadline until no later than 1st July 2018, and the entry into force deadline until 1st October 2018 at the latest.
Belgium, however, has not been able to implement the IDD into national law within these deadlines.
A directive is only completely transposed/implemented into national law when all the objectives set out in the directive have been met. Belgium in the meantime adopted one
Act and one Royal Decree (the Act of 31 July 2017 amending the 2 August 2002 Act on financial sector supervision, with respect to whistle-blowing, and the Royal Decree of 5 September 2017 approving the FSMA Regulation on the same). Those legislations are far from adequate to satisfy the objectives of IDD.
What, then, are the consequences of this delay?
When a directive is not implemented on time, its articles are granted ‘direct vertical effect’. This means that, on certain conditions, individuals can rely on it in relations with the government. Individuals cannot invoke the articles of the directive against insurers, since they are not part of the government.
The Insurance Act of 4 April 2014 and the AssurMiFID regulations remain in force until the Belgian legislator modifies them.
The European Commission could launch an infringement procedure against Belgium. We admit such a risk is rather unlikely as the new IDD provisions are expected to enter into force during the month of October.
