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With the implementation of the Insurance Distribution Directive less than six months away, now is the time to put preparations in place, especially on training and competence.
As with most regulation, the best way to tackle this challenge is to think about what you do already, and whether or not that lives up to regulatory expectations.
A lot of focus has been on the new requirement on everyone involved in selling insurance to do a minimum of 15 hours training a year. However, the more important principle, enshrined in the legislation, is that staff should ‘possess appropriate knowledge and ability’ to perform their roles adequately.
This sounds like an easy requirement to live up to, but as our jobs become more complex, gaps continually appear – for example around GDPR and data management. What kind of monitoring and training do we do to understand new regulatory requirements and market developments, and to fill these knowledge gaps?
My guess is, once you work out how much time you spend reading and doing refresher courses and seminars to maintain competence, you will have much more than 15 hours’ worth of activity.
If that is the case, all you have to do to comply with the IDD is to record all this activity, for you and your staff. The IDD requires brokers and insurers to show that the have implemented all the ongoing training needed to satisfy competence in the following areas:
· Terms and conditions of policies offered
· Regulation
· Claims handling
· Complaints handling
· Assessing customer needs
· The insurance market
· Business ethics, and
· Financial competency
All you need to do is to make sure that amount of time you and your staff spend on training and competence maps across to these categories.
For very small firms, this recording requirement will be straightforward. For larger ones, it may be worth using some simple software to keep track of which of the IDD categories is being covered off by ongoing training.
Whatever system you use, the best way to comply is to follow the spirit of the rules, and then simply ask yourself what you need to do to provide evidence to the regulator that covers what you have done. If you do this now, six months will be plenty of time to prepare for the IDD. If you leave this thought process for the last minute, however, it will be too late to put the right systems in place.
