The EU draft directive

At the end of June 2012 the European Commission published a draft directive on Insurance Intermediaries and the Sale of Insurance Products (IMD2), which is designed to replace the Insurance Mediation Directive, European Parliament and Council Directive 2002/92/EC (IMD1). The review which has led to IMD2, which included a number of commissioned investigations, is stated to be prompted by the recent turbulence in financial markets, leading to a need for greater consumer protection particularly in the life market, and the uneven implementation of IMD1 across the EU. The effect of IMD2 is to extend the range of intermediaries within its ambit, to reduce conflicts of interest (in particular as regards commission disclosure), to further the prospects of a single market for mediation services and to increase the level of competency required for authorisation.

Scope

Revised art 1, taken with the revised definitions in art 2, retains coverage for insurance and reinsurance mediation activities. It extends the scope to: direct selling without the use of any intermediary; claims management operations on behalf of insurers and policyholders (eg, loss adjusters and expert appraisal); and insurance policies sold ancillary to the supply of services (eg, travel insurance provided by travel agents and motor cover by car rental companies). As seen below, regulatory requirements for these classes are less extensive. The existing exclusion of policies ancillary to the sale of goods if the premiums are less than €500 per annum has been retained but the figure has been raised to €600. One further extension is to “aggregator” websites, the status of which remains uncertain under existing law: the activities identified in revised art 2 bring in persons who provide information on one or more contracts of insurance in response to criteria selected by the customer whether via a website or other means and persons who provide “a ranking of insurance products or a discount on the price of a contract, when the customer is able to directly conclude an insurance contract at the end of the process”. As before, mere incidental advice to a customer in the context of another professional activity is not insurance mediation for the purposes of IMD2.