The directive will enable increased policyholder protection, enhance the quality of information provided to customers and establish improved conduct of business rules for the distributors of insurance.
The text repeals directive 2002/92/EC on insurance mediation, recasting it as a directive on insurance distribution. It seeks to improve retail insurance regulation in a manner that will facilitate market integration, and to establish the conditions necessary for fair competition between different types of distributors of insurance products. It also sets out to strengthen policyholder protection, in particular with regard to life insurance products with an investment element.
Intermediaries play a central role in the distribution of insurance and reinsurance products. Various types of persons and institutions distribute insurance products, such as agents, brokers and insurance undertakings. Application of directive 2002/92/EC has shown a number of provisions to require greater precision.
More specifically, the new directive is aimed at:
- extending the scope of application to all distribution channels, including proportionate requirements for those who sell insurance products on an ancillary basis;
- identifying, managing and mitigating conflicts of interest;
- strengthening administrative sanctions, as well as measures to be applied in the event of a breach of key provisions;
- enhancing the suitability and objectiveness of insurance advice;
- ensuring that sellers' professional qualifications match the complexity of the products they sell;
- clarifying the procedure for cross-border market entry.
The directive will not prevent member states from applying more stringent provisions to protect consumers, providing that such provisions are consistent with EU law. And in order to ensure consistency between financial sectors, it takes account of rules established for markets in financial instruments.
The agreement must still be confirmed by the Council once the text is finalised. The directive will then be submitted to the European Parliament for a vote at first reading, and to the Council for adoption.
Under the agreed text, member states will have two years to transpose the directive into national laws and regulations.