Impact of EU legislation on Polish insurance brokers

By Paul Carty

Chairman of BIPAR EU Standing CommitteeBy Harald Krauss

Director of BIPAR

6th Brokers’ Congress

Wisla, 30 May 2003

Current or pending EU initiatives concerning our sector

Insurance Mediation DirectiveDirective on Distance MarketingE-commerce/application to our sectorInvestment Services DirectiveUnfair Trade…

all to be implemented into Polish legislation

B I P A RB I P A RBureau International des Producteurs

d’Assurances et de Réassurances

Set up in Paris in 1937 oldest international association in the insurance sector1st President: Joseph GrzybowskiToday headquartered in Brussels42 national member associations representing 75,000 self-employed insurance agents & brokerssince 1991: Task Force Eastern & Central Europe

Broker Market Share (Non-Life)

Brokers Agents Bank Direct otherBelgium 65.9 11.7 7.4 2.9 12.1Netherlands 60 15 20 5UK 70 9 3 14 4Ireland 70 30Germany 19.79 67.27 5.39 1.44 6.11Luxemburg 10 80 5 5Italy 26 70 1 3Spain 18 43 15 20 4Portugal 16 59 4 14 7France 18 35 8 4 35Denmark 15 5 40 40Finland 10 10 80Austria 14 5 77 3 1

Source: BIPAR Member Associations

IMD – The Fundamental Objectives

To enable insurance intermediaries to operate freely throughout the EU

Enhancement of consumer protectionby

“the co-ordination of national provisions of professional requirements and registration of person taking up and pursuing the activity of insurance mediation.”

Commissioner Frits Bolkestein on IMD

"This well balanced legal measure will benefit considerably the European insurance market. Insurance intermediaries are a vital link in the process of selling insurance products. The Directive will make it easier for intermediaries to operate anywhere in the European Union they want to. At the same time, it will increase the choice of insurance products available to customers and help ensure they can trust the advice they are getting from intermediaries"

Legislative Backdrop - EU

25 years gestation– 1976 – “Establishment Directive”

• Defined Broker and Agent– 1991 – “EU Recommendation”

• Defined Dependent and Independent” (Activity based)

– 2002 – Insurance Mediation Directive (IMD)

A Legislative Backdrop – by Market

Market RegulationUK 1977 (repealed in 2000)Germany -France 1976 & 96Netherlands 1952, amended 91 & 99Ireland 1989 & 2000Italy 1984Spain 1992Belgium 1995, amended 95Sweden 1989Poland 1995

What’s in the IMD?

Registration Requirements

Professional Requirements

Information Requirements

IMD – Registration Requirements

Intermediaries shall be registered with a competent authority (public authorities or bodies recognised by national law)Member States may establish more than one register – single information point allowing quick and easy access.Register(s) – names of all intermediaries, legal persons register required to include names of national persons responsible for mediation business, country or countries in which the intermediary intends to conduct business.To get on the register intermediaries have to comply with professional requirements.

IMD – Professional Requirements

Appropriate knowledge and ability Good reputeMaintain PI -€1m each and every claim and €1.5m in the aggregateOne or more of the following:-– Monies paid to an intermediary to be treated as having

been paid to an insurance undertaking– Financial capacity 4% of APs subject to a minimum of

€15K– Segregated bank account– A guarantee fund.

IMD – Information Requirements

Prior to the conclusion of any insurance contract, shall provide the following:-– Identity and address– Register in which he is included– Whether he has a holding of more than 10% of the

voting rights or capital in an insurer– Whether an insurer has more than 10% of the voting

rights or capital in the intermediary– Complaints procedure.

– In addition »

IMD – Information Requirementscontinued

An intermediary shall inform the customer concerning the contract that is provided whether:-He gives advice based on obligation to provide a fair analysisHe is under contractual obligation to conduct business with one or more insurersHe is not under contractual obligation to conduct business with one or more insurers and does not give advice based on a fair analysis.

Fair Analysis

“advise on the basis of an analysis of a sufficiently large number of insurance contracts available on the market, to enable him to make a recommendation, in accordance with professional criteria, regarding which insurance contract would be adequate to meet the customers needs”Also “prior to” conclusion of the contract the intermediary shall specify “the demands and needs” as well as the “underlying reasons for any advice given”.

Impact of IMD

Regulation in all member states by Jan 2005Will curb regulatory excess i.e. will establish regulatory “base line” throughout the EUWill improve consumer protectionIntermediaries will be able to provide their services throughout EU

15 January 2005

BIPAR is - monitoring the implementation- organising information exchange

(“benchmarking”)- assisting its member associations

Initiatives on remuneration

Impact of EU legislation on Polish insurance brokers

By Paul Carty

Chairman of BIPAR EU Standing CommitteeBy Harald Krauss

Director of BIPAR

6th Brokers’ Congress

Wisla, 30 May 2003