Brussels, 01/07/2015 (Agence Europe) - The representatives of the Council of the EU and of the European Parliament have reached an inter-institutional agreement on the revision of the rules on the insurance intermediation profession (see EUROPE 11192 and 11028).
The directive will apply to insurance products (e.g. health insurance) covering potential damage as well as insurance policies which include an element of investment, whereby an investor receives a pay-out at the end of the contract (e.g. life assurance). However, insurance products with a premium of less than €600 a year will not be covered. Policies with a premium of below €200 for a service in place for less than three months (e.g. travel insurance) will also be covered by less stringent rules.
Insurance intermediaries, who are accredited by the competent authority of the country in which they are established, will themselves have to take out insurance to cover any damage caused by professional negligence of at least €1.25 million. They must always have an available financial capacity equivalent to 4% of total annual premiums received, but this may never fall below €18,750.
Contrary to the European rules on the financial instruments markets (MiFID II), insurance brokers will be able to continue to receive commission from insurance companies without being obliged to disclose this information to the clients. This issue has been left up to the judgement of the member states. However, the directive stipulates that the existence of commission of this kind should not lead to customers being steered towards an insurance product which is inappropriate for their personal situation.
In order to make an enlightened choice, consumers should be given simple, standardised and free pre-contractual information on the type of insurance contract they are planning to invest in, with particular emphasis on the risks covered or run. Lastly, the future directive aims to limit related sales of insurance products with the purchase of a service or consumer good.
The European Parliament will rubber-stamp the new rules in September. (Mathieu Bion)