The Insurance Distribution Act, which has been in force since 1 December 2018 and is based on the European directive known as the Insurance Distribution Directive (IDD), has tightened the rules for insurance companies and insurance intermediaries when selling insurance products.
Requirements for distribution network controls
Are you an insurance company or insurance intermediary and wondering how to ensure insurance distribution controls? Are you grappling with how to meet the strict legal requirements while optimally allocating your resources? Do you want to make sure that you meet the demanding expectations of the Czech National Bank?
The central point of the law and the European Directive is to strengthen consumer protection. In practice, this means that you need to pay even more attention to the quality of your insurance distribution set-up. This is not possible without regular and effective controls. According to the Czech National Bank, such controls include:
- on-site inspections within the distribution network;
- inspections of client files;
- follow-up telephone calls ("welcome calls") and feigned interest in arranging an insurance product ("mystery shopping");
- checks on the compliance of the insurance intermediary's actual business conduct with the declared information; and
- monitoring and evaluation of production indicators.
Functioning controls are essential to ensure that you are offering appropriate insurance products to those who need them and that you are acting properly and with professional care.
Effective control solutions
BDO helps financial institutions implement a practical and cost-effective system of insurance distribution controls. Understanding the client's internal and external environment, the insurance products they offer and the distribution channels they use is the foundation of every solution.
We are happy to support you in the following areas:
- IDD gap analysis/audit
- Setting up controls and processes and preparing related documentation
- Conducting controls, including on-site controls within the distribution network
- Providing "welcome calls" and "mystery shopping"
- Analysis and evaluation of data collected by the client
- Receiving and investigating infringement notifications
BDO has long supported international and Czech insurance companies and insurance intermediaries in auditing and consulting. Our dedicated team consisting of experts from various fields (financial, legal, IT) is ready to provide you with first-rate services.