Determinants of the Behaviour of Entities on the Insurance Market in the Light of Changes Introduced by the IDD Directive

Abstract

One of the most significant legal acts concerning the sale and management of insurance risk was issued on January 20, 2016, based on Directive (EU) 2016/97 of the European Parliament and of the Council of 20 January 2016 on insurance distribution (IDD Directive). The adoption of European IDD principles aims to enhance transparency in the operations of insurance distributors and improve the standards of their business practices. Its protective scope encompasses all individuals and entities involved in the sale of insurance products. The aim of the article is to ascertain the regulatory authorities’ impact on the insurance market, consideration of consumer protection, in light of the changes introduced by the IDD directive. The primary entities under examination, in the mentioned context of consumer protection, are distributors and supervisory authorities. The discussion includes an overview of the scale of the insurance market and its fundamental applications, as well as compliance within the framework of behavioural economics theory. Additionally, the paper addresses the aspect of threats posed to consumers by the analyzed changes in the European insurance distribution market. In this segment, the authors concentrate on the economic and social ramifications of IDD implementation for entities operating within the insurance market. The concluding section outlines the potential for development and the future prospects of financial intermediation concerning IDD utilization.