Directive 2002/92 on Insurance Mediation (IMD) lays down rules for the taking-up and pursuit of the activities of insurance and reinsurance mediation by both natural and legal persons which are established, or who wish to become established, in a Member State. The Directive does not distinguish between different classes or types of intermediaries such as agents and brokers. Various types of persons or institutions can distribute insurance products under the remit of the IMD.
Chapter III of the Directive covering articles 12 and 13 deals with information requirements for intermediaries and adopts a minimum harmonisation approach to the rules on the disclosures to customers which must be made by all intermediaries. Due to the fact that the Directive imposes minimum requirements, disclosure on remuneration requirements differs
by Member State leading to a broad range of national standards and an unequal treatment of this type of disclosure throughout the EU.
The Commission believes that the current level of consumer protection in the IMD is not transparent enough and there was also the need for a level playing field for customers throughout the EU when purchasing insurance products. As a result it requested EIOPA for technical advice leading to a review of the framework IMD with one of the points being the improvement of the transparency of remuneration for intermediaries involved in the selling of insurance products.
EIOPA provided its advice in November 2010. Members put forward three possible options for regulating the disclosure of remuneration. Remuneration includes commission information. The first option is the 'On request' regime whereby there is disclosure of remuneration only if the customer asks for the information. The current recommendation allows for the possibility for Member States to introduce further requirements should they deem it necessary. The second option provides for the full disclosure regime, whereby customers are always provided with information on remuneration irrespective of the type of product or market.
The third option foresees a mandatory risk-based disclosure regime where the duty to disclose only exists for products of high importance which protect against existential risks, or which entail higher risks of misselling for instance in the case of Life insurance and occupational disability.
The new proposed regime would therefore be of benefit to the customer base as it provides more transparency and as a result increased competition between intermediaries across the EU. This would lead to more competitive pricing to the benefits of the public.
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