Revision of Insurance Intermediaries Directive

Posted by Mike on July 13, 2012

On 3rd July 2012 the European Commission tabled its proposal for the revision of the Insurance Intermediaries' Directive (2002/92/EC). The proposal will, as it stands, may have an impact for legal protection insurers.

The most crucial provisions are:
1.    Obligation of intermediaries to disclose all kinds of remuneration: contrary to previous lobbying through RIAD with the urge to exclude non-life insurance (and in particular legal protection insurance) from the full disclosure requirement of intermediaries' remunerations, the new Directive will require that intermediaries of non-life insurance as well as sales employees of insurance undertakings disclose the basis and amount of remuneration. This will be applicable to non-life insurance after a transitional period of 5 years (see Article 17 of the draft directive).

2.    Prohibition that insurers pay fees or commissions to independent brokers: according to Article 24 (5.) of the draft insurance brokers (any intermediary who provides advice on an independent basis) will no longer be able to receive fees, commissions or any monetary benefits paid or provided by the insurance undertaking (third parties).

3.    Possible impact on legal protection insurance sold as add-on: if insurance products or services are offered together with another service or product as a package, Article 21 (2.) of the draft obliges intermediaries and insurance undertakings to offer and inform customers that it is possible to buy the products or services separately and what it would then cost. Moreover, making the simultaneous purchase of two products or services obligatory (tying and bundling practices are defined in Article 2 (19) and (20) of the draft) will be prohibited.
The Commission's proposals will force insurers and intermediaries in some Member States to change their practices while the impact may be minor in other Member States.

The proposal will now go through the legislative procedure which involves the Council of Ministers and the European Parliament and it is possible to push for changes of the proposed text. For this it will be necessary to lobby in the Parliament and/ or with national governments which are represented in the Council of Ministers.

The full text of the proposal and related documents are available  here.

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