| EU passporting for insurers |
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The EU commission has opened up ‘passporting’ for insurance intermediaries following the adoption of a proposal on 25 September. The propo sed Directive applies to banks, investment intermediaries, life assurers and funds. The intermediaries include reinsurance brokers, and a distinction is proposed between rules governing reinsurance and corporate brokers, and brokers dealing with retail customers. The move could open up a new area of insurance-related business for the IFSC.
The Commission said the proposal would increase ‘the supply of insurance products in the European Union while guaranteeing proper protection of consumers’ interests.’ It added that ‘adoption is one of the priority objectives of the Financial Services Action Plan.’
The Directive would replace a 1977 Directive, and’ become the only binding Community instrument for insurance intermediaries’.
The aim of the proposal for a Directive is to guarantee that all persons (natural or legal) taking up and pursuing the activity of insurance or reinsurance mediation have been registered on the basis of a minimum set of professional requirements.
EU member states will be allowed to add to the professional requirements laid down in the Directive, but only for the intermediaries that they register themselves.
The proposal also sets minimum requirements as regards the arrangements for, and content of, the information which insurance intermediaries must make available to their potential customers. However, this part does not concern reinsurance intermediaries or insurance intermediaries where they are covering industrial and commercial risks.
Internal Market Commissioner Frits Bolkestein said that ‘The aim of the proposal is to make it easier for insurance intermediaries to avail themselves of the freedom of establishment and freedom to provide services and to guarantee a high level of protection for the interests of the customers who deal with insurance intermediaries.’
Paul Carty of the Irish Brokers Association welcomed the proposal saying that ‘brokers and consumers should be very pleased that the EU Commission has decided to act.’ He added that the IBA brokers intend to develop international contacts to provide greater choice to clients.
Market shares: Introducing the draft Directive, the Commission commented that ‘insurance intermediaries are an essential link in the sale of insurance in the Community’. It produced a table which show that ‘the market share held by intermediaries in the distribution of insurance is over 50% in many Member States.’ |
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| Article appeared in the October 2000 issue.
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