The long-anticipated draft directive to amend and replace the Insurance Mediation Directive (“IMD”), known as IMD II, was published by the European Commission on 3 July 2012. The directive, likely to be adopted during 2013 with the new regime expected to enter into force in 2015, aims to improve the regulation of the retail insurance market by strengthening policyholder protection and ensuring a level playing field between all parties involved in selling insurance products.
IMD II is intended to do the following:
- extend the scope of the IMD to all parties who sell insurance products, including those who sell directly to customers and those who sell insurance products on an ancillary basis, such as car rental companies;
- address conflicts of interest more effectively, by introducing mandatory disclosure of remuneration by intermediaries;
- apply improved requirements for sales to life insurance products with investment elements;
- permit mutual recognition of professional knowledge and ability;
- introduce special information requirements where products are bundled together; and
- provide guidelines to Member States for the purposes of ensuring effective, proportionate and dissuasive administrative sanctions and measures.
Like the IMD, IMD II will be a minimum harmonisation directive, but the minimum standards will be significantly higher than those under the IMD.