Target Market Determination (TMD)

Target Market Determinations (TMDs) are required under the design and distribution obligations (DDO) regime introduced in October 2021. Insurers must prepare a TMD for each insurance product that identifies the target market - describing the class of consumers for whom the product would be consistent with their likely objectives, financial situation, and needs. The TMD must specify distribution conditions (how the product can be sold), review triggers (circumstances requiring reassessment), and reporting requirements for distributors. TMDs help prevent mis-selling by ensuring products reach appropriate consumers. For example, a comprehensive car insurance TMD might specify it's designed for vehicle owners who can afford the premium and want extensive coverage, while excluding those seeking only third-party coverage. Distributors (including brokers, advisers, and comparison websites) must take reasonable steps to ensure products are distributed consistent with the TMD. TMDs are publicly available, typically on insurer websites, allowing consumers to assess product suitability. Breaching DDO obligations can result in significant penalties.