BIPAR Fédération européenne des intermédiaires d'assurances European Federation of Insurance and Investment Intermediaries

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1 BIPAR Fédération européenne des intermédiaires d'assurances European Federation of Insurance and Investment Intermediaries Avenue Albert-Elisabeth 40, B-1200 Bruxelles Tel: +32/2/ Fax: +32/2/ BIPAR, the European Federation of Insurance and Investment Intermediaries, is a nonprofit European organization grouping professional associations of insurance intermediaries and independent financial advisers in Europe. It presently has a membership of 47 national associations, established in 30 countries, and represents some 80,000 insurance agents and brokers, employing in all about 250,000 people. Founded in Paris in 1937, BIPAR has been established in Brussels since It is today the official and recognised voice of insurance intermediaries with the European Institutions. BIPAR s current Chairman is Hugh Governey, an Irish broker. Its Incoming Chairman is David Harari, a French broker and its Outgoing Chairman is Max Taylor, a British broker. David Harari is chairman of BIPAR EU Committee and Paul Carty, Irish broker, is deputy chairman of BIPAR EU Committee. BIPAR s Director is Harald Krauss. Brussels, October 2005 BIPAR, as the professional federation of European insurance intermediaries, plays an active and major role in the integration of insurance intermediaries in the single market. Its experience and knowledge of national markets has made a valuable contribution to the work carried out by the European Union to attain this objective. European Commissioner Charlie McCreevy Brussels, 27 May 2005 BIPAR response to CEIOPS Consultation Paper n 8 I. Introduction 1. BIPAR is closely monitoring the implementation of the IMD in the EEA and is regularly providing advice and guidance to its professionals on it. In this respect, it welcomes and is pleased to offer the following response to the CEIOPS draft protocol relating to the cooperation of the competent authorities of the Member States of the European Union in particular concerning the application of Directive 2002/92/EC of the European Parliament and of the Council of 9 December 2002 on insurance mediation, which will directly concern the practitioners members of its national associations throughout the EEA. 1

2 2. In item 1.6 of CEIOPS draft protocol it is said that the competent authorities declare that the rules for cooperation set out in this document may show themselves to be inadequate when faced with actual cases. They agree that as a result the rules will be adapted on a bilateral basis as the need arises for as specific case. 3. Many EEA States are late in implementing the IMD. For BIPAR, this unsatisfactory state of implementation is leading to much legal uncertainty and confusion with regard to intermediaries passporting rights granted by the IMD. For intermediaries established in the Member States who are late in implementing the Directive, the IMD mechanism cannot function properly and they cannot avail themselves of the IMD European passport (see Commission document Brussels dated 21 December 2004 SUMMARY OF THE MEETINGS ON THE IMPLEMENTATION OF THE INSURANCE MEDIATION DIRECTIVE ). BIPAR would like to highlight the strategic importance of the IMD: the Single Market for insurance is not possible without a single market for intermediaries. It would be unthinkable to have an insurance Single Market without having a Single Market for insurance mediation. The latter cannot exist without the former and vice versa. The need for a common system of crossborder insurance distribution is the logical result of the establishment of an insurance Single Market, introduced for companies by way of the third generation of Directives of BIPAR is being informed regularly regarding the numerous difficulties that insurance intermediaries established in those Member States who are late in implementing the IMD, are currently facing when trying to use the IMD passport. 5. For example French intermediaries could not benefit from their passport to operate in the UK or in Spain. Their notifications have been refused by the authorities of those two countries although these documents were sent via ALCA (L Association pour la Liste des Courtiers d Assurance) which is, until the IMD implementation in France, the competent authority designated by the French Treasury, to carry out, with the authorities of the other Member States and with brokers registered with it, the notification procedure stated by Article 6 of the IMD and to receive notification from EEA intermediaries wishing to operate in France. 6. It is regrettable that although the CEIOPS Working Group on Intermediaries composed of representatives of the Member States - have met many times, no provisional solutions to this kind of situation have been found (we would have been willing to assist should we have been offered the opportunity to participate in those meetings) and no precise information has been given to practitioners informing them of these impending difficulties. 7. Until all EEA Member States have implemented the IMD, BIPAR strongly urges CEIOPS to agree provisional arrangements to allow all EEA intermediaries to benefit from their passporting rights and to issue, in cooperation with the European Commission, clear and practical information on the consequences of late implementation of the IMD for EEA intermediaries and on provisional solutions found by Member States to limit their negative impact on the cross border activities of intermediaries. 2

3 II. BIPAR s specific comments on the draft protocol Part II. Activity of intermediaries: registration, notification 2.1. Register of intermediaries 8. In Article 2 the Insurance Mediation Directive only refers to three categories of intermediary: insurance intermediary, reinsurance intermediary and tied intermediary. However the categories of dependent agent, tied agent or independent broker referred to in many provisions of the draft CEIOPS protocol (item 2.1.1) are not defined by the IMD. 9. It is interesting to bear in mind that the most important aspect of the IMD is that it will apply to any person who pursues the activities of insurance and reinsurance mediation (bank, post, car dealer). The title (agent, broker, ) under which the person carries out activities on the market does not matter. By extending its scope to any person pursuing these activities, the Directive ensures in this way a level playing field for all and the same level of consumer protection. 10. BIPAR is not at all opposed to Member States establishing different registers depending upon the different categories of intermediaries existing in their markets (as allowed by Article 3.2). It is, however, of the opinion that CEIOPS draft protocol, that is applicable at EU level, should not provide provisions for intermediaries that are not defined in European legislation. 11. According to CEIOPS protocol, the register should indicate the kind of activity notified by the intermediary to work by way of freedom to provide services or by way of freedom of establishment. As the intermediary is also requested to mention the classes of insurance for which he has a licence in his home Member State, BIPAR wonders what CEIOPS means by kind of activity. In this context it is important to underline that the only activity that is defined by the IMD is the activity of (re)insurance mediation (Article 2.3). In addition no reference is made further to the kind of activity in the CEIOPS paragraph on the content of notification. This reference reappears in ANNEX II-A.5 (but not in ANNEX II. B although CEIOPS draft protocol is requesting the information also in the context of freedom of services) where it seems that the only information required is the name and address of the branch and the name of the natural person representing the branch. Again more clarifications and consistency are required. 12. In those EEA countries where insurance intermediaries are also registered in commercial registers, BIPAR suggest that their commercial register numbers as well as the contact details of the commercial registers should be made available in the intermediary s registers. This would allow the consumers to find important legal information on the intermediaries firms. 13. In Item and CEIOPS draft protocol requests that the first name and surname of the intermediary, its address or its registration number be contained in the register. In order to avoid that only that address is mentioned when the register number is also available, BIPAR suggests mentioning the registration number apart from the name and address. CEIOPS may give thought to establishing a register system in order to allow the consumer to identify the intermediary quickly and easily. 3

4 2. 2. Activity Content of the notification made by the authority of the home Member State to the authority of the host Member State 14. According to CEIOPS protocol, the notification should mention the name of the insurance undertaking for which the intermediary is authorised to market insurance products. Such requirement would constitute a heavy administration burden. BIPAR does not see the need for such information to be contained in the register, particularly when, pursuant to Article 12 of the IMD, the information will be provided by the intermediary himself before the conclusion of the contract. For reason of clarity and consumer protection, it is important not to duplicate the information and to provide it in an efficient way. 15. In Item CEIOPS draft protocol states that a dependent or tied intermediary may only market insurance products of the insurance undertaking he represents in a host Member State by way of freedom of establishment, if such undertaking is authorised to sell its products in such Member State by way of freedom of establishment. 16. In Item CEIOPS draft protocol states that a dependent or tied intermediary may only market insurance products of the insurance undertaking he represents in a host Member State by way of freedom to provide services, if such undertaking is authorised to sell its products in such Member State by way of freedom of establishment or freedom to provide services. 17. What is the legal basis for such statements? We are of the opinion that such provision would be the negation of the freedom to provide services or to establish as guaranteed by the EC Treaty. 18. When an insurance intermediary is offering a product within a cross-border framework, the insurance undertaking is not necessarily acting by way of freedom of establishment or freedom to provide services. Indeed, intermediaries and insurance undertakings freedom of establishment and freedom to provide services are not submitted to the same rules and do not have the same scope. The rule is that an intermediary, no matter which category he/she belongs to, can only provide a contract that the insurance undertaking is itself allowed to provide. Part III. Exchange of information and ongoing supervision of intermediaries 19. BIPAR is of the opinion that CEIOPS draft protocol should provide more clarifications on issues applicable to intermediaries carrying out their activities via FOS such as specific questions with regard to conduct of business rules and information requirements. These are issues which could make a failure of the IMD. Indeed it must be repeated here that extensive application of local conduct of business rules may seriously undermine the objectives of the Single Market for insurance mediation. 20. Article 6 of the IMD states that the competent authorities of the host Member States may take the necessary steps to ensure appropriate publication of the conditions under which, in the interest of the general good, the business concerned must be carried out in their territories. The principle is that foreign intermediaries do not have to comply with the host Member States local business rules. 4

5 However, if a given local business or marketing rule can in strictly defined circumstances - be considered as essential to protect the consumer through the criterion set up by the European Court of Justice regarding the application of the "general good" rules in the insurance sector, it has to be complied with by foreign intermediaries. 21. To ensure legal certainty, the manner on how competent authorities of the host Member States will inform intermediaries of the numerous compulsory conditions under which, in the interest of the general good, the business concerned must be carried out in their territories - conduct of business rules should be described in greater clarity. BIPAR would suggest that the Member States and/or their national supervisory authorities should be encouraged to provide lists of marketing rules that they consider as being essential for consumer protection and falling under the scope of the general good. (ECJ criterion). Such lists could be gathered and consulted on a central information site established by CEIOPS. To facilitate an easy understanding of these rules, BIPAR would wish that CEIOPS make sure that all rules contained in the lists be translated into English. In the meantime, BIPAR would consider that it is not possible to oppose local business or marketing rules to foreign intermediaries without informing them of the existence of such rules. 22. To ensure legal certainty, more precise instructions should be given regarding how information on national provisions on information requirements (that are stricter than those of the IMD) will be communicated to consumers and insurance intermediaries (Article ). Again, lists could be gathered and consulted on a central information site established by CEIOPS. To facilitate an easy understanding of these rules, BIPAR would wish that CEIOPS make sure that all provisions contained in the lists be translated into English. It is also important that such lists be regularly updated. 23. Lastly as proposed in CEIOPS draft consultation paper on Developing CEIOPS Medium Term Work Programme and in order to facilitate a common understanding of the national legislations implementing the IMD, BIPAR would very much welcome that CEIOPS collect the national transpositions of the IMD and disclose them in the original language and in English in a single place (website) allowing easy comparison. In addition, as further proposed by CEIOPS, it would be useful that CEIOPS analyse national transpositions in order to identify regulatory gaps and implementation inconsistencies within the jurisdictions. In this respect, BIPAR would be very happy to contribute further to the CEIOPS deliberations in this respect. 5