Draft provisions for the implementation of the IDD open for consultation
On 6 March 2018 the Ministry of Finance and the Ministry of Justice and Public Security sent draft provisions for the implementation of the Insurance Distribution Directive (IDD) with accompanying legislative acts into Norwegian laws and regulations for consultation. The drafts were prepared by the Financial Supervisory Authority of Norway (FSAN) and the Ministry of Justice and Public Security, and propose both public- and private law provisions, including a restructuring of the Norwegian Insurance Contracts Act.
The European parliament- and council directive (EU) 2016/97 on insurance distribution (IDD) aims to increase consumer protection, strengthen the internal market and facilitate increased competition between distribution channels. The directive implements a new framework for the distribution and sale of insurance and regulates, amongst other things, the designing of insurance products and the pre-contractual information that must be provided to customers.
FSAN prepared a draft for a consultation paper on 23 June 2017 with proposals for new or amended legislative and regulative provisions, as well as necessary miscellaneous changes to implement the IDD in Norwegian law. FSAN's draft was sent for consultation on 6 March 2018 together with a consultation paper from the Ministry of Justice and Public Security, which sets out additional proposals for amendments to legislation. FSAN's draft largely comprises the public law provisions of the IDD, whilst the Ministry of Justice and Public Security's draft encompasses the private law provisions.
FSAN's draft proposes a new act to replace the current Insurance Distribution Act. The new act generally comprises new IDD provisions in addition to the current provisions, with a few other amendments. The draft consultation paper also includes amendments to the insurance distribution regulation, whilst the IDD's requirements for insurance undertakings are proposed implemented in the Financial Institutions Act and its regulations.
In the draft prepared by the Ministry of Justice and Public Security the Insurance Contracts Act (ICA) is proposed amended in accordance with the directive's extended application in relation to distribution channels, as well as the new rules concerning the requirements for pre-contractual information- and advice. In addition, the draft proposes a restructuring of ICA and an inclusion of general rules concerning the burden of proof, company conduct and the company's compensation obligation. This is suggested done by moving the current Act's part C to Chapter 1, which will also be extended to comprise provisions that are common to both life insurance and non-life insurance. This is expected, in the Ministry's view, to contribute to the harmonization of the provisions in the amended ICA and the draft for a new Financial Institutions Act. Additional rules relating to the company's information – and advice obligations are proposed implemented in a new regulation on insurance contracts.
The drafts somewhat overlap and should be read in context to each other. The Ministry of Finance has nevertheless requested that the private law provisions are based on the draft prepared by Ministry of Justice and Public Security, and have therefore not requested comments to the parts of the FSAN's draft that have been covered in the Ministry's proposal. That being said, the Ministry of Finance is open to having some of these provisions included in the public law set of rules if the consultation bodies consider it necessary. The question of whether the implementing provisions will be placed in the private- or public law set of rules will be evaluated after the consultation.
The IDD entered into force on 23 February 2016 and was implemented in the EU on 23 February 2018. On 20 December 2017 the EU Commission proposed to delay of the enforcement date to 1 October 2018, although the implementation deadline remains the same. The IDD is set to be evaluated on an EU-level within 2021.
The IDD is EEA-relevant, but has not yet been included in the EEA-agreement. The Ministry of Finance and the Ministry of Justice and Public Security have requested consultation comments by 6 and 7 June 2018, respectively.
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