The European Insurance and Occupational Pensions Authority (EIOPA) has published its Third Report on the application of the Insurance Distribution Directive (IDD), concluding that the directive continues to set EU-wide minimum standards for fair and transparent insurance distribution but that key challenges remain around digitalisation, sales processes, sustainability preference integration and incentives. The report also reviews how market structure and cross-border activity are evolving, how advice and selling practices are working in practice, the impact on small and medium-sized intermediaries, and whether national competent authorities have sufficient powers and resources. Market structure trends seen in earlier reports have continued, with a further fall in registered intermediaries over the past two years linked to consolidation, stricter professional requirements and succession challenges, while the number of intermediaries using an EU passport increased by 12% between 2020 and 2024. Advice and selling methods have improved in some markets, but shortcomings persist in others, including post-sale issues such as very long claims processing times; EIOPA links these weaknesses to findings from its mystery shopping work, which showed limited correlation between more extensive sales processes and better alignment of products with customer profiles, suggesting potential scope to simplify sales journeys. The report also highlights growing use of generative AI tools such as chatbots in digital distribution, noting that the IDD does not comprehensively regulate digital channels or provide detailed guidance on AI-based advice models; on sustainability, it finds disclosures and preference assessments are often poorly understood by consumers and applied inconsistently, with gaps in distributor knowledge and misalignments between frameworks, including differences between SFDR and IDD templates. On inducements, misaligned incentives and insufficient transparency remain a consumer-protection risk in some markets, particularly for life insurance and credit protection insurance, and some national authorities report considering further national restrictions on commissions, including bans or enhanced disclosure requirements. EIOPA intends to use the findings to promote supervisory convergence and to support implementation of the European Commission’s Retail Investment Strategy and the eventual review of the IDD.
European Insurance and Occupational Pensions Authority 2026-03-30
European Insurance and Occupational Pensions Authority’s Third IDD report cites a shrinking intermediary base, 12% growth in passporting and persistent gaps in digital sales, sustainability and inducements
The European Insurance and Occupational Pensions Authority has published its Third Report on the Insurance Distribution Directive, finding that while it still sets EU-wide minimum standards, major challenges persist around digitalisation, sales processes, sustainability preference integration and incentives. The report highlights consolidation and fewer registered intermediaries alongside more cross-border passporting, uneven improvements in advice and selling practices, regulatory gaps for digital and AI-based distribution, and ongoing consumer-protection risks from inducements. EIOPA will use the findings to promote supervisory convergence and support the European Commission’s Retail Investment Strategy and the directive’s future review.