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Management of Distribution Risks and Digital Transformation of Insurance Distribution—A Regulatory Gap in the IDD

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  • Pierpaolo Marano

    (Faculty of Business, Management and Economics, The University of Latvia, LV-1586 Rīga, Latvia
    Department of Legal Studies, The Catholic University of the Sacred Heart, 20122 Milan, Italy)

Abstract

The Insurance Distribution Directive (IDD) aims to regulate insurance distribution in the EU regardless of distribution channels and means. Although new technologies affect insurance distribution, the IDD does not explicitly regulate this digital transformation. Insurers and intermediaries must comply with detailed business conduct rules that aim to counteract distribution risks. However, the IDD exempts ancillary insurance intermediaries from its scope when they meet certain conditions. The article highlights the regulatory framework on insurance, requiring insurers and intermediaries to address distribution risks, and analyses how this exemption affects the management of distribution risks in online distribution from a legal perspective. The focus on online distribution depends on the scale such distribution can achieve. The consideration of the scale allows for challenging the political choice behind the exemption of ancillary insurance intermediaries, which consists of the principle of proportionality. A regulatory proposal to counteract these adverse effects is to remove the exemption from the IDD rules for ancillary intermediaries in online distribution. Such a proposal is compliant with the principle of technological neutrality and is in line with the new legislative proposals in the Digital Services Act and Digital Markets Act.

Suggested Citation

  • Pierpaolo Marano, 2021. "Management of Distribution Risks and Digital Transformation of Insurance Distribution—A Regulatory Gap in the IDD," Risks, MDPI, vol. 9(8), pages 1-11, August.
    • Handle: RePEc:gam:jrisks:v:9:y:2021:i:8:p:143-:d:607067
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    References listed on IDEAS

    as
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    5. Martin Eling & Martin Lehmann, 2018. "The Impact of Digitalization on the Insurance Value Chain and the Insurability of Risks," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 43(3), pages 359-396, July.
    6. Braun, Alexander & Schreiber, Florian, 2017. "The Current InsurTech Landscape: Business Models and Disruptive Potential," I.VW HSG Schriftenreihe, University of St.Gallen, Institute of Insurance Economics (I.VW-HSG), volume 62, number 62.
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    Cited by:

    1. Pierpaolo Marano & Shu Li, 2023. "Regulating Robo-Advisors in Insurance Distribution: Lessons from the Insurance Distribution Directive and the AI Act," Risks, MDPI, vol. 11(1), pages 1-13, January.

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