Directive 2002/92/EC of the European Parliament on insurance mediation
Insurance intermediaries * are considered as the vital links in the selling of insurance products in the European Union (EU).
This Directive aims to make it easier for insurance intermediaries to avail themselves of the right to freedom of establishment and freedom to provide services and to guarantee a high level of protection for their customers. It also aims to increase the supply of insurance products to consumers.
Registration conditions
Insurance or reinsurance intermediaries are registered by a competent authority in their Member State of origin (where the insurance firm’s registered office is located). They can carry out business in other Member States by way of freedom to provide services or by opening a branch.
Professional requirements
Registration is subject to strict requirements as regards professionalism and competence since intermediaries must have the necessary general, commercial and professional knowledge and ability.
Intermediaries must be covered by professional indemnity insurance for professional negligence. Insurance intermediaries who handle customers’ money are furthermore required to have sufficient financial capacity.
Exchange of information between Member States
The Directive provides rules on the information which intermediaries are required to send to potential customers. It requires that insurance intermediaries provide customers with clear explanations of the reasons underlying their advice when selling a specific insurance product. They must set out in writing in a manner comprehensible to customers why they recommend a particular product, bearing in mind the needs of the interested parties. For instance, the latter need to know whether they are negotiating with an intermediary appointed by one or more firms or whether they are dealing with an intermediary who is advising them on the whole range of products available on the market.
Settlement of disputes
The Directive encourages the Member States to put in place adequate and efficient procedures with a view to out-of-court settlements by using, in particular, the FIN-NET cross-border network.
Information provided by the insurance intermediary
Insurance intermediaries are required to provide certain information upon signature or renewal of the insurance contract:
his identity and address;
his registration number;
whether he has a holding, whether direct or indirect, representing more than 10 % of the voting rights or of the capital in a given insurance undertaking;
whether an insurance undertaking has a holding, whether direct or indirect, representing more than 10 % of the voting rights or of the capital of the insurance undertaking.
Key terms of the Act
Insurance intermediary: any natural or legal person who, for remuneration, takes up or pursues insurance mediation, which consists of introducing, proposing or carrying out other work preparatory to the conclusion of contracts of insurance, or of concluding such contracts, or of assisting in the administration and performance of such contracts, in particular in the event of a claim.
