handshake contract conclusion consulting POS point of saleThe insurance industry faces the Herculean challenge of applying the requirements of the IDD (Insurance Distribution Directive) to company processes. The EU implementing act concerning the IDD has been in effect since 23 February 2018, and all requirements must be fully met no later than October 2018. For insurance companies, besides the sales of insurances, new areas of activity open up in company divisions such as product development, IT, compliance, and legal. For insurance sales, this means mastering the change from product to consultative selling. Full consulting transparency at the Point of Sale (POS).

What are the implications of IDD for insurance companies?

The primary objective of the Directive is to improve consumer protection by guaranteeing needs-based consulting and fulfilling extended documentation obligations. To counteract the negative image of bad consulting and the brokerage of individually inappropriate insurance products, the Europe-wide Directive is meant to lay the foundation for customer-focused consulting and needs assessment. Insurance companies, brokers and agencies must ensure – yes,compliance with the IDD is mandatory! – they provide customers with the insurance products they really need. Consequently, in the future, it must be possible for insurance customers to trace when and why they made a product decision.

With regard to compliance with IDD requirements, insurance companies are confronted by an enormous amount of work. The internal need for action goes far beyond the sale of insurance products. The IDD comprises new subject-related and organisational requirements that must be met across company divisions. Aspects such as the structurisation of internal product approval procedures, staff qualifications and training programmes, adaptation of remuneration systems and disclosure requirements concern virtually all parts of the company. As the IDD is still in its introduction phase at the moment, it will also be necessary in the future to continuously observe and implement regulatory developments.

However, besides all the obligations and efforts, the IDD also offers insurance companies a lot of opportunities. Beyond consumer protection and customer satisfaction, the IDD is the spring board for increased consulting quality and successful brokerage at all levels of consulting. The Directive could serve as an impetus to optimise internal consulting processes and sales channels, adapt existing insurance products or even develop new ones and update supporting consulting systems.

Full transparency at the point of sale

The IDD especially forces the consulting staff at the point of sale to radically change the way they think and act because it is here that from now on full transparency must reign with regard to the obligation to inform customers. Prior to consulting them, consultants must give customers transparent and comprehensive information about the amount of fees, commissions or non-monetary benefits for the provision of brokerage services. Of course, this also includes potential bonuses paid to the consultant.

In addition, the Directive includes additional consulting obligations for sales employees. For instance, consulting, including every single contract offered, must be provided in accordance with the wishes and needs of the customers. As a consequence, any personal recommendation made to customers must be explained accordingly. When recommending investment products, consultants must ensure they take the knowledge and experience of customers, their financial situation, loss-bearing capacity, investment objectives and risk tolerance into account. Moreover, all process steps must be sufficiently documented during consulting in a way customers are able to understand. The extended documentation obligations – a key aspect of the IDD – is a further characteristic of full transparency at the POS.

This means that the IDD is the starting shot for a new age of consulting and documentation. As of now, high-quality consulting and documentation will play an indispensable role at the point of sale.

What exactly are the requirements of the IDD?

A sustainable, IDD-compliant consulting process fulfils the following obligations:

  • Information about the broker: introduction (first information about broker)
  • Obligation to ask questions: wishes, needs, target market (scope of consulting)
  • Obligation to provide consulting: analysis of current coverage, recommendation (analysis of needs)
  • Obligation to state reasons: consulting proposal considering the wishes and needs,suitability and appropriateness, actual situation of the customer and target market
  • Extended documentation obligations: comprehensive documentation and conclusion

IDD, information about the broker, obligation to ask questions, obligation to provide consulting, obligation to state reasons, documentation obligations


In a nutshell: To be able to continue with the legally compliant brokerage of insurance products, it is essential to redesign consulting processes. Up to now, the consulting process at insurance companies has frequently been implemented in very different ways in the individual sales channels. In some cases, only part of the process steps are supported by software. There is no consistency throughout the entire consulting process. To comply with the requirements of the IDD to their full extent and provide customers with needs-based, customised recommendations, it is essential that the full consulting range be consistently supported by software. Such a consulting system helps you to meet all the above-mentioned requirements of the IDD, from the extended documentation obligations and personalised justification of your recommendation to the assessment of suitability and appropriateness. In response to the IDD, iS2 has developed the IDD-compliant consulting system VERA.neo. It complies with all requirements of the IDD and supports the consultant in providing customer-focused, needs-based consulting. VERA.neo can be seamlessly integrated in all processes of the insurance company and connects via data interface with surrounding systems such as CRM and quotation software.

We make your consulting process fit for the IDD

Software solutions for the consulting and sale of insurance products have been part of iS2’s core competencies since the very beginning. In our capacity as an experienced industry specialist for holistic, subject- and product-related consulting in all insurance segments, we support insurance companies with innovative software solutions for successful insurance sales.

Our IDD experts support you in meeting all the current requirements. Together with you, we develop sustainable solutions for qualified, consistent consulting at the POS. Subject-related consulting or technical integration of the IDD provisions in your consulting workflow with VERA.neo – together we will make your consulting process fit for the EU Directive.


Related links

Specialist article “IDD at the point of sale“ by iS2

Expert interview “Consulting 4.0. At eye level with digitalisation“

Insurance company “Bayerische” uses VERA.neo by iS2

LV1871 uses suitability and appropriateness assessment by iS2