There are different ways for insurers to market their products and services. For example, through direct sales or through an intermediary. This so-called distribution system also has to do with issues of sustainability and other social developments.
Commission ban for complex and impactful products
If the customer purchases financial advice for complex financial products such as a mortgage, the customer pays the advice and distribution costs himself. Before the introduction of the commission ban, advisers received commission (e.g. a bonus) from the relevant insurer when selling a financial product. This financial incentive did not always lead to the best advice for the customer. That is why the commission ban was introduced in 2013, partly on the initiative of the Dutch Association of Insuers. This legislation applies to both financial advisors and insurers.
In 2018, the commission ban was evaluated in 2018 on the basis of two studies, one on market effects and the other on consumer behaviour. On that basis, the Minister of Finance has concluded that the ban is effective.
Active commission transparency in the Netherlands
For complex and impactful financial products, the introduction of the commission ban is a major step towards making the distribution system future-proof. The Association believes that in the case of non-life insurance, the commission should be made actively nominal (the exact amount in euros) transparent. The Council of State sent the draft decision back to the Ministry of Finance in May 2023. Should the Ministry incorporate the criticism of the Council of State into a new decision, the Ministry must resubmit this proposal to the Council.
European regulations
Since 1 October 2018, European market parties must comply with the Insurance Distribution Directive (IDD). The IDD is set out in the Financial Supervision Act (Wft). The IDD allows member states to introduce a commission ban.
As of 2 August 2022, new sustainability requirements will apply to the IDD. Insurers must take these new requirements into account in product development. For example, the sustainability preferences of the customer must be inventoried when advising on Insurance-Based Investment Products (IBIPs).
