The European Commission (the Commission) has written to the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) requesting advice on how the Insurance Mediation Directive (IMD) might be revised.
The IMD sets out the principles of the single European passport and basic standards of consumer protection in the area of insurance intermediation. Its aim is to facilitate the freedoms of establishment and the freedom to provide services in relation to intermediaries.
European Member States had until 15 January 2005 to transpose the Insurance Mediation Directive. Although the UK implemented on time, several EU countries took several years to introduce the new regime.
As the Commission acknowledges in its letter to CEIOPS, as a result of minimum harmonisation requirements, there has been wide divergence across the EU in how the IMD has been implemented. Furthermore, certain Member States' 'gold-plating' of implementation requirements (such as those introduced under the FSA regime) as well as the different national requirements applied under the general good provisions have created obstacles to the functioning of the single market for insurance and reinsurance intermediaries.
The aim of the revision of the IMD (which the Commission calls "IMD2") is to improve legal certainty and clarity.
The Commission has requested that CEIOPS provide technical advice on the following areas:
- The legal framework of IMD2. The Commission wants CEIOPS to consider whether IMD2 should be revised into a Lamfalussy Directive whereby a level 1 directive could focus on high level fundamental principles and underlying levels could cover more detailed measures. The Commission believes that the application of a Lamfalussy framework might introduce greater regulatory flexibility.
- Scope of IMD2. The Commission wish IMD2 to guarantee a level playing field between those involved in the selling of insurance products. CEIOPS' advice in this area should take into consideration the distinctions between those selling investments packaged as life insurance policies and those remaining categories of insurance products.
- The international dimension of insurance mediation. CEIOPS are asked by the Commission to consider ways in which to improve the legal certainty surrounding the services offered by intermediaries established in third countries.
- Professional requirements. CEIOPS should provide high level advice on the greater harmonisation of requirements for the knowledge and ability of intermediaries in the European market.
- Cross-border aspects of insurance mediation. The Commission request that CEIOPS consider how the current notification system might be improved. In particular, the Commission asks whether certain provisions in the Luxembourg Protocol should be integrated into IMD2. CEIOPS are also asked to consider how to guarantee the transparent and appropriate use of general good rules.
- Management of conflicts of interest and transparency. As the Commission plans to adopt clear rules on conflicts of interest and transparency in relation to the distribution of investments packaged as life insurance policies, CEIOPS is requested to propose high level principles for the effective management of conflicts, taking into account differences between investment and general insurance products. In addition, CEIOPS should consider how greater transparency can be introduced in the manner in which non-investment product intermediaries are remunerated.
- Reduction of administrative burdens. The Commission have asked CEIOPS to consider ways to reduce the administrative burdens caused by the implementation of the IMD and to consider whether there are any areas of the current regime which have proven to be too costly compared with the intended objective and benefits.
The Commission has asked CEIOPS for initial advice on these issues by summer 2010.
For further information: Request for advice regarding the revision of the Insurance Mediation Directive