Brussels, 24/11/2015 (Agence Europe) - On Tuesday 24 November, the European Parliament set in stone the inter institutional agreement reached in July on revision of the rules framing the profession involved in selling insurance (see EUROPE 11348).
The future directive will apply from 2018 and will affect insurance products covering potential damages (e.g. health insurance) or those including an investment factor (e.g. life assurance). Nonetheless, insurance products for which the premium is less than €600 on an annual basis will not be covered, whilst policies including a premium less than €200 and linked to a service covering a period of less than three months (e.g. travel insurance) will be subject to less strict rules.
Insurance intermediaries will themselves have to take out insurance contracts to provide cover of at least €1.25 million against professional negligence claims applying to each claim and in aggregate €1.85 million per year for all claims. To protect clients against the financial inability of an insurance intermediary to transfer a premium or a claim between the insurer and the customer, intermediaries will have to take appropriate measures. Such a measure could for example be a permanent financial capacity amounting to 4% of the sum of all annual premiums received but no less than €18,750. Insurance intermediaries will also have to follow appropriate training.
Insurers brokers will be able to continue to receive commissions from insurance companies. During a debate on this dossier during the EP plenary session, Werner Langen, the rapporteur on this dossier, stated, “there is no obligation to publish premiums. Nonetheless, we have looked at several possibilities for strengthening obligations on providing information, with the possibility, in specific cases, of imposing a ban”. The directive also specifies that the existence of commissions should not lead or guide a customer towards an insurance product that is not adapted to their personal situation.
In an effort to make an informed choice, consumers will benefit from simple pre-contractual information, containing free standard information regarding the kind of insurance contracts they are planning to invest in, as well as the guaranteed or incurred risks. Finally, the future directive aims to limit sales related to insurance products when the purchasing of a service or consumer good is involved.
Jonathan Hill, the commissioner for financial services, pointed out that the directive followed the lines of minimum harmonisation built upon respective national systems. He also explained that the revised European legislation “will make sure that those selling a product understand the product they are selling and those buying have a better understanding of what they are buying”. (Original version in French by Mathieu Bion)