Insurance distribution rules adopted, bringing improved consumer protection
The Council adopted on 14 December 2015 a directive establishing new rules on insurance distribution, improving consumer protection for insurance products.
The directive seeks to:
- improve retail insurance regulation in a manner that will facilitate market integration;
- establish the conditions necessary for fair competition between distributors of insurance products;
- strengthen policyholder protection, in particular with regard to life insurance products with an investment element.
The text recasts and repeals directive 2002/92/EC on insurance mediation. It clarifies a number of that directive's provisions.
Intermediaries play a central role in the distribution of insurance and reinsurance products. Agents, brokers and insurance undertakings can all be involved, though distribution varies from one member state to another.
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.
In order to ensure consistency between financial sectors, the directive takes account of rules established for the securities industry under a directive and regulation on markets in financial instruments. Member states will not be prevented from applying more stringent consumer protection provisions, providing they are consistent with EU law.
Agreement with the European Parliament
The directive was adopted at first reading after an agreement was reached with the European Parliament on 30 June 2015. The Parliament approved the agreed text on 24 November.
It was adopted without discussion at a meeting of the Agriculture and Fisheries Council.
Member states will have two years to transpose the directive into national laws and regulations.