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This week, the European Parliament has adopted new rules on sales of insurance within in the European Union by a large majority in Strasbourg. The aim is improve the protection of consumers. The intention is that the rules will not only concern insurance intermediaries and companies but also all market participants selling insurance policies. Hence, in future, consumers shall also be protected for example when buying a policy at a travel agent or when taking out renting vehicle insurance.

The adopted proposal states the following points:

  • Insurance intermediaries shall be registered at the competent authority of the Member State in which there place of abode is registered.
  • Insurance companies and intermediaries have to inform customers of their identity, contact details and the register, in which they have been entered.
  • Insurance intermediaries have to take out liability insurance of at least €1.25 million against professional negligence claims applying to each claim and of in aggregate €1.85 million for all claims.
  • Insurance intermediaries have to provide permanent financial capacity amounting to 4 % of the sum of all annual premiums received (but no less than €18,750). This is to ensure customers can be paid a premium or a refund without suffering a loss.
  • Insurance companies have to inform customers about the type of the distributor's remuneration for selling insurance products and also about the overall costs of the insurance contract including advice and service charges.
  • In addition, prior to signing an insurance contract (which is not a life policy, for which comparable rules already exist) customers have to receive a product information document containing standard information on the type of insurance, obligations under the contract, risks insured and excluded as well as other elements.
  • Exempt from this tightening of rules are insurance policies, which are complementary to the supply of goods or services and which cover the risk of damage or theft. These rules also do not apply when the amount of the premium paid for the insurance product does not exceed €600 per year (pro rata calculation on an annual basis).

EU Financial Services Commissioner Jonathan Hill commented that this Directive would on the one hand give consumers a better understanding of what product they were purchasing and on the other hand make intermediaries more aware of what insurance product they offer and sell.

It is now up to the Member States to agree to these new rules. Afterwards, they have to be implemented within 24 months.

Further Information:

Adopted Directive text (German only)

Adopted text