Insurance distribution is much broader than a traditional broker selling a policy across a desk. It includes sales by insurance undertakings, intermediaries and other distributors operating through face-to-face, telephone and digital channels. The IDD establishes a common European framework around those activities.
EIOPA says the IDD regulates how insurance products are designed and distributed in the EU and is intended to harmonise regulation across the single market while improving consumer protection standards.
Core ideas behind the IDD
| Area | What the IDD is trying to achieve |
|---|---|
| Customer interests | Distributors should act honestly, fairly and professionally in customers’ best interests. |
| Clear communications | Information and marketing communications should be fair, clear and not misleading. |
| Demands and needs | Products offered should be consistent with the customer’s insurance demands and needs. |
| Disclosure | Customers should receive specified information about the distributor and product before contracting. |
| Cross-border activity | The framework provides rules for distribution across the EU single market. |
| Investment products | Insurance-based investment products face additional conduct, cost and suitability requirements. |
What does “demands and needs” mean?
Before an insurance contract is concluded, the distributor must identify the customer’s demands and needs based on information obtained from that customer. The proposed contract should be consistent with those needs.
Where advice is provided, the IDD also requires a personalised recommendation explaining why a particular product would best meet the customer’s demands and needs.
Information customers should receive
The directive requires pre-contract information about the distributor, including identity, whether advice is provided, complaint procedures, registration information and whether the intermediary represents the customer or acts for the insurer, where applicable.
For insurance-based investment products, customers must receive additional information on risks, costs and charges. Suitability and appropriateness rules can also become relevant depending on the sale.
Why remuneration matters
The IDD’s conduct principles are designed to prevent remuneration or sales targets from creating incentives that conflict with the customer’s best interests. The goal is not to prohibit every commission model, but to require distribution arrangements that do not undermine the duty owed to customers.
What the IDD means for digital insurance
The principles apply to online distribution as well as traditional channels. A fast digital journey still needs understandable information, appropriate product design and a sales process that addresses customer needs. Automation does not remove the distributor’s responsibilities.
How is the framework evolving?
EIOPA’s third application report, published in March 2026, assessed how the IDD operated during 2024–2025 after more than seven years of application across most Member States. That ongoing supervisory review is important because the market continues to change through digital distribution, embedded insurance and cross-border sales.
A practical compliance lens for distributors
- Can the firm show how it identifies target markets and customer needs?
- Are marketing communications clearly distinguishable and not misleading?
- Are remuneration structures reviewed for conflicts of interest?
- Can customers understand key exclusions, costs and product limitations before purchase?
- Are digital journeys tested for comprehension, not only conversion rate?
- Are complaints and product-outcome data used to improve distribution?
Frequently asked questions
Does the IDD apply only to brokers?
No. It regulates insurance distribution broadly, including relevant activities of insurers and other distributors.
Does the IDD apply to all insurance products?
EIOPA states that the rules apply to the sale of all insurance products, with more prescriptive requirements for products with an investment element.
Is the IDD identical in every Member State?
It is an EU directive implemented through national law, so local requirements and supervisory practice can differ within the common framework.
Sources & further reading
Reviewed against EIOPA material in September 2026. This is a general explainer, not jurisdiction-specific compliance advice.
