New regulatory requirements aimed at improving professional standards in distribution chain

On January 28, IVASS, the supervisory authority for the Italian insurance market, published for public consultation a new draft regulation on the professional requirements of insurance and reinsurance intermediaries. The draft regulation, for the first time, regulates the organisational, technical and professional standards relating to continuous education requirements of insurance intermediaries.

The purpose of the proposed regulation is to strengthen the professional requirements of insurance intermediaries and harmonise existing provisions, currently regulated by the IVASS Intermediaries Regulation and, for call centres, by the IVASS Regulation on distance marketing.

The proposed regulation, in line with the previous structure of the intermediaries regulation, differentiates between:

  • training requirements to be fulfilled before enrolment onto the insurance intermediaries register or, when individual registration is not required, before the commencement of any distribution activity. Such requirements apply to certain categories of intermediaries (i.e. canvassers and sub-intermediaries) and those who are not individually enrolled on the intermediary register (i.e. employees of agents, brokers, banks, investment firms, other financial intermediaries, Poste Italiane, and call centre employees acting on behalf of insurers or intermediaries). Pre-enrolment training requirements are not necessary for insurance agents and brokers, whose licence is directly assigned by IVASS following a specific exam; and
  • updating courses (applicable to any of the above roles including agents and brokers) to ensure professional standards are maintained and intermediaries are up-to-date with new law, regulation or products relevant to the insurance sector.

Furthermore, the proposed regulation introduces some new provisions worth noting. These include:

  • Training can be carried out either by means of distance learning or traditional classroom based courses. Both methods are allowed, but distance learning is subject to more specific and rigorous requirements based on principles of traceability and interactivity.
  • Organisational standards. Greater flexibility in terms of updating professional standards, which are now required on a two-year basis (instead of the previous annual basis) to be calculated based on calendar years starting on January 1 of the year following registration on the intermediaries register or commencement of the relevant activity. The total number of hours can now be distributed on a non-uniform basis over two years provided that at least 15 of the total 60 hours are completed in one year.
  • Contents of the training courses. Training should focus on the adequacy of insurance products for consumer needs and should cover some general thematic areas including legal, technical, management and IT issues. In addition, courses may include further modules providing in-depth analysis of specific subject matters, to be tailored according to the individual (e.g. agent, broker, call-centre operator) or the activities carried out (e.g. distance marketing, reinsurance, claims management).
  • Requirements for trainers. Where training is outsourced, trainers should be adequately qualified (such as the ISO or the UNI certifications), unless training is organised and delivered by parties with demonstrable experience, or by insurers, intermediaries or universities recognised by the Italian Ministry of Education, Universities and Research. Training courses that have been outsourced should only include speakers chosen by university professors, managers or employees of insurers, insurance intermediaries or professional services providers such as lawyers and accountants.
  • Procedures for the verification of the acquired competences. The proposed regulation specifically regulates the procedures for final testing over the level of learning acquired by the persons attending the training sessions.
  • Increased control for insurers over their distribution network. Insurers are given a more active role in defining strategic lines in terms of intermediaries’ training, to be approved by management annually.

The new rules set out in the proposed regulation will enter into force on June 30, 2014, subject to a few exceptions.

Public consultation ends on March 14, after which IVASS will publish comments received and the resolutions adopted.

On the whole, the proposed regulation seems to be in line with its aim of reducing learning and continuous education costs (through the recognition of distance learning) and improving professional standards of persons involved in the distribution of insurance products, thus indirectly increasing consumer protection.