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More than a quarter (27%) of brokers are still completely unaware of the Insurance Distribution Directive (IDD) despite needing to be fully compliant by 1 October 2018.
With the October deadline just days away, fresh research from specialist insurer Ecclesiastical has revealed that less than a third (31%) of brokers feel fully prepared to meet the requirements of the IDD. At this late stage, 17% admitted they are not ready to comply and a further 52% said they still required further training in key areas such as governance, product terms and conditions, and assessing customer needs.
The new directive, which replaces the Insurance Mediation Directive, was written into UK law in February 2018. However, brokers were given a six-month reprieve when the deadline for application was pushed back to 1 October 2018.
Worryingly, since Ecclesiastical last quizzed brokers about IDD nine months ago, those that said they were aware of the legislation but had very little or no knowledge has almost trebled from 13% in December 2017 to 37% in August 2018, suggesting that attempts to educate brokers about IDD have been unsuccessful. While in the same period the percentage of brokers that said they ‘knew everything they needed to’ in order to prepare their businesses for IDD has increased by just 1% (from 7% in December 2017 to 8% in August 2018).
The IDD places emphasis on transparency, openness, staff training and development. It also contains an industry wide commitment to professional development. However, brokers remain split on whether the legislation will have a positive impact on their business. In the latest research, almost three quarters (73%) said that it will have no impact at all or that they simply do not know what impact it will have.
Those that believe the impact will be positive (just 15%) said that the IDD would raise professional standards and staff capability and provide greater clarity for customers about insurance products. While the 13% who felt the IDD will have a negative impact on their business, cited the burden of complying with requirements and the associated costs as areas of concern.
Adrian Saunders, Commercial Director, at Ecclesiastical said: “The burden of new regulation should not be underestimated. The large scale changes that GDPR and IDD have bought to the sector this year create real challenges for brokers of all sizes.
“With the 1 October less than a week away, the majority of brokers still do not feel ready to comply with the new regulation and, a large percentage are still unaware of the new directive. This has to be a concern for the whole industry.”
To help brokers prepare for the IDD, Ecclesiastical has collaborated with RWA, one of the leading suppliers of compliance, regulatory and business consultancy to the UK general insurance market, to provide more information on the changes and implications for brokers as well as the wider industry.
Brokers can find this information on the Ecclesiastical website.