CEIOPS-DOC-19/09
June 2009
The IMD and other intermediaries’ related issues
– practical solutions and examples
Introduction
Directive 2002/92/EC of the European Parliament and of the Council of 9 December 2002
on insurance mediation 1 (hereinafter "IMD") sets out the principles of the Single
European Passport and consumer protection. Its first aim is to facilitate the exercise of
freedom of establishment and freedom to provide services for insurance intermediaries
by a single registration and a simple notification process. Enhanced consumer protection
is guaranteed by clear and extensive information requirements to be given and
professional requirements to be met by insurance intermediaries.
In accordance with its founding texts (EC Decision 2004/6/EC, repealed and replaced by
EC Decision 2009/79/EC, and CEIOPS’ Articles of Association), CEIOPS also contributes to
the common and uniform day-to-day implementation of Community legislation and in
particular its consistent application by the supervisory authorities. The adoption of the
Luxembourg Protocol 2 in 2006 can be considered as the first initiative in convergence of
supervisory cooperation and exchange of information.
“The IMD and other intermediaries’ related issues – practical solutions and examples”
(hereinafter “the IMD-practical solutions”)” are a further step to strengthen CEIOPS’
contribution to supervisory cooperation between supervisors and convergence of their
practices. Consequently, this document is aimed at promoting the emergence of common
approaches in supervising insurance intermediaries. This is also a major concern for the
European Commission, as pointed out in its Communication on Driving European
Recovery of 4 March 2009, Communication on European Financial Supervision of 27 May
2009 as well as its Financial Services Action Plan (FSAP). In its Communication on the
FSAP of 11 May 1999, the EC explicitly recognises the need to provide a clear and
common approach to regulation of insurance intermediaries, thus facilitating the free
provision of services while strengthening consumer protection at a high level.
The IMD-practical solutions are based on the conclusions reached during the meetings of
CEIOPS former Intermediaries Expert Group (IMEG) and current Committee on Consumer
Protection (CCP) and, more in particular, on the important opinions given by the services
of the EC on questions raised by CEIOPS Members and Observers, and the authorities
1
2
OJ L 009, 15/01/2003, P 0003 – 0010.
http://www.ceiops.eu/content/view/19/23/
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that have adhered to the principles of the Luxembourg Protocol 3 . This document is
designed as a record of practical problems that CEIOPS Members have encountered in
their role as competent authorities for the IMD, and the solutions that they found. It is
neither exhaustive of the possible problems encountered in administering the IMD, nor of
the possible solutions to those problems. However, it gives examples of supervisory
scenarios for illustrative purposes.
It has to be emphasized that the interpretations which will follow represent only the
current view of the Commission's services or CEIOPS. They are without prejudice to any
future findings of the Court of Justice of the European Communities, which has the
ultimate competence with regard to the interpretation of Community law.
The EC reminded in its comments that several of the practices and recommendations
contained in this document will be part of the review and revision of the IMD which are
planned for 2010. It therefore cannot be excluded that the provided answers and
clarifications might change after the adoption of the revised amendment to the current
IMD.
In the meantime, “the IMD-practical solutions” will be updated regularly to take into
account further discussions held within CEIOPS’ working group.
Art 1
(2) (f)
IMD
Art 2
(3)
IMD
The term “annual premium” should be understood as “annual gross premium”.
Mediation activities
(1)
Some entrepreneurs offer services aimed at assisting the clients of insurance companies
only in collecting their compensation (for example when an insurance companies
refuses to pay compensation, such an entrepreneur helps in appealing or writing a
complaint or in bringing a civil action before the competent court).
To the question whether those services could be considered as mediation activity within
the meaning of the IMD, the IMEG members agreed that the activity to assist clients to
enforce their claims should fall under the exemptions of Art 2 (3) IMD and therefore
should not be considered as insurance mediation.
(2)
Does the IMD apply to natural or legal persons who prepare or propose insurance
contracts to intermediaries, but who have no contact with the policyholder? These
persons are not insurance undertakings (as defined by the insurance directives) or
employees of such undertakings. Their activity is mandated by one or several insurance
undertakings. The insurance contract is presented to the client by the specialist (agent or
broker) who places the risks in one or several insurance undertakings through these
actors.
This kind of activity is also common in other sectors (legal and medical advice e.g.) and
concerns eventually risk’s analyses. It could be stated that - in accordance with IMD
Recital nr 17, 18, 19, 20, 21, 22 and 23 and Art. 10 (complaints), 11 (out of court
redress) and Chapter III - the IMD only applies when there is contact between the
intermediary and the insured person.
3
http://www.ceiops.eu/media/files/publications/protocols/CEIOPS-DOC-02-06_Luxembourg%20Protocol-ANNEX-IB-NonMembers-and-Observers-Notification.pdf
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Art 2
(3)
IMD
(3)
In case of some technical activities, performed by employees of an intermediary, like
simply the delivery of documents to clients (acting as “postman”) or only collecting the
money (premiums) from clients (acting as “cashier”), a question may appear whether
such technical actions shall be considered as a direct involvement into the mediation
business.
In the lack of a clear provision in the IMD, it seems that the Member States adopted
different solutions. From the knowledge and ability requirements are exempted, for
example, "external auxiliaries", persons working in the back office, persons who do not
have "in depth contacts" with the customer or the "postman" who simply delivers
documents. Instead the activity of the "cashier", which consists in the collection of
money from clients, is considered as a direct involvement in the mediation business "in
some Member States".
(4) Call Centres
Can call-centres (platforms) be considered as intermediaries within the
meaning of the IMD?
Current opinion of the Commission’s Services:
As mentioned in the IMEG meeting of 29 September 2006, this would depend on the
circumstances of the individual case, e.g. on the agreement between the call centre and
the insurance undertakings, whether the call centre is purely submitting personal details
from the customers to the insurance undertaking or whether it is taking a more active
part in the conclusion of the insurance contract. Given the wide definition of insurance
mediation activities in the IMD (see Article 2(3)); call centres are not unlikely to be
considered to fall under the scope of the IMD.
(5) Call Centres
(i) When a call-centre offers the service of introducing and proposing contracts
of insurance, processing clients’ data for an insurer that controls the company
shareholding, due to the outsourcing of this service for managerial
organisation’s reasons, could this be considered as insurance intermediary?
(ii) The same case but the call-centre is independent from the insurer (is an
external service)
Current opinion of the Commission’s Services:
In both cases, with other words dependent on an insurer or performing its activities
independently from him, the call-centre could be considered as an insurance
intermediary within the meaning of the IMD. The circumstance that it processes client's
data for an insurer or acts on its own, has in the EC’s view not the decisive impact on the
legal assessment. On the contrary, the important factor is the definition of insurance
mediation as contained in Art. 2(3) first subparagraph of the IMD as well as that of the
insurance intermediary to be found in Art. 2(5) of the same Directive.
The IMD defines an ´insurance intermediary´ as a natural or legal person who, for
remuneration, takes up or pursues insurance mediation. Even if the wording of Art. 2(3)
first subparagraph implies these activities to be undertaken for remuneration - it does
not mention it expressis verbis.
A positive response to the first question (both situations) fully depends in the EC’s
opinion on the fact whether the call-centre in question is offering services which fall
under the definition of insurance mediation as provided for in Art. 2(3) first subparagraph
of the IMD, meaning performing activities of introducing, proposing or carrying out other
work preparatory to the conclusion of contracts of insurance (we have to have this
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always in our mind - is the aim of these activities a conclusion of an insurance contract or
not?), or of concluding such contracts (there the legislator is more concrete), or of
assisting in the administration and performance (meaning execution) of such (concluded
contracts), in particular in the event of claim. As stated already above, the latter
condition must be always read in conjunction with the definition of an ´insurance
intermediary´ contained in Art. 2(5) of the IMD. So, in this case, to be outright, the
activities of a call-centre would have to be undertaken for remuneration.
Conclusion: If the call-centre (whether dependent or independent from an insurer) fulfils
one of the legal conditions contained in the definition of insurance mediation within the
meaning of Art. 2(3) first subparagraph of the IMD (which is indeed rather wide), and it
is remunerated for it, it can be considered as an insurance intermediary.
However, we should not forget the provision of Art. 2(3) second subparagraph, which
reads as follows: ´These activities (as described above) when undertaken by an
insurance undertaking or an employee of an insurance undertaking who is acting under
the responsibility of the insurance undertaking shall not be considered as insurance
mediation. We have to be therefore careful and think also of a scenario when the
insurance undertaking's employees (especially in the case when the call-centre is
processing client's data for an insurer) are working in the call-centre or actually form its
own staff. Here we would have another situation and consequently be obliged to follow
and respect the pertinent rule set out in the IMD and the response would be negative:
such a call-centre would not qualify as an insurance intermediary. Of course
independently of the provision of Art. 2(5), which would be rather irrelevant in this case.
(6) Call Centres
(i) If a call center offers its service to an insurance intermediary, could it be
considered as an insurance intermediary?
(ii) And could the same knowledge and ability as determined by the home
Member State of the intermediary (e.g. good repute) be requested from the callcentre workers?
Current opinion of the Commission’s Services:
(i) Certainly, only due to the fact that it would offer services to an insurance
intermediary but does not itself qualify for one within the meaning of the IMD.
On the other hand, we should consider that the definition of insurance mediation as
provided in Art. 2(3) first subparagraph of the IMD (forgetting the exemptions from the
´positive´ definition - meaning subparagraphs 2 and 3 of the same article) is pretty
wide, which would allow in practice that one call centre as intermediary (hereinafter
“IM”) 1 is focusing more on the activities of introducing, proposing or carrying out other
work preparatory to the conclusion of contracts of insurance, whereas another as IM 2 on
assisting in the administration and performance of these contracts. So, as we can
theoretically imagine two insurance intermediaries supplementing each other, then per
analogiam should the same apply to call-centres. Of course, a lot would depend on the
individual case and the individual circumstances would have to be assessed carefully.
(ii) According to the IMD, the reply is in principle positive. You can not be qualified as an
insurance intermediary and only profiting from the IMD (e.g. Art. 3(5)). If you fulfill the
conditions of the IMD and fall under its scope, then the requirements imposed by this
Directive would apply also on the call-centres in the given case. Both knowledge and
ability as well as good repute are regulated in its Art. 4. As regards the first requirement,
the basic rule is prescribed in Art. 4(1) of the IMD, stipulating that insurance and
reinsurance intermediaries shall possess appropriate knowledge and ability, as
determined by the Member State of the intermediary. As the IMD is a minimum
harmonization legal instrument (see subparagraphs 2 or 4 of Art. 4(1)), undoubtedly
very much would depend on the concrete case. Nonetheless, the EC´s first reaction to
knowledge and ability is YES.
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As regards the good repute requirement, we refer to Art. 4(2) of the IMD. Here again,
the IMD´s basic rule, as expressed in the first sentence of this legal provision, supports
the fulfillment of the good repute requirement and relating duties (such as the clean
policy record etc.). In any case, the IMD is very clear about one thing, there it is very
rigid: any staff directly involved in insurance and reinsurance mediation must comply
with the requirement of good repute.
(7) Call Centres
(i) If an external call-center could not be considered as an insurance
intermediary, what must be its functions in the activity of selling insurance
products?
(ii) In this case, could it offer its services to several insurance companies or to a
number of insurance intermediaries?
Current opinion of the Commission’s Services:
(i) Its functions relating to the activity of selling insurance products could be limited for
example to pure collection of data without any intention to conclude contracts of
insurance or to be more precise, it would not be able to perform any activity within the
meaning of Art. 2(3) first subparagraph of the IMD (with a special focus on the first part
of the definition) likely to indicate such a direction. Otherwise, the IMD would be violated.
(ii) There is no reason why it should not be able to offer, even if not acting as an
insurance intermediary, its services to other insurance companies or other insurance
intermediaries.
(8)
Taking into account the Commission Interpretative Communication regarding
freedom to provide services and the general good in the insurance sector
(2000/C 43/03), may a Member State (hereinafter “MS”)1 agent receive an
insurance mandate from an insurance undertaking of another Member State
(MS2) operating in MS1 under freedom to provide services? In other words, it is
possible for a MS2 insurance undertaking operating in MS1 under freedom of
services (hereinafter “FOS”) to give insurance mediation mandates to MS1
agents?
Current opinion of the Commission’s Services:
The EC confirms the possibility for a MS2 insurance undertaking operating in Italy under
FOS to give/attribute insurance mediation mandates to an MS1 agent. This agent would,
if all the conditions stipulated by Art. 2(7) of the IMD were met, act as a tied insurance
intermediary for the MS2 insurer, meaning that he would carry on the activity of
insurance mediation for and on behalf of this insurer and under his full responsibility.
Such situation would of course imply a registration of this intermediary in the MS1
register (his home Member State would be naturally MS1) and at the same time a
notification of the MS2 insurance undertaking to operate under FOS in MS1 according to
the transposed insurance directives. If, for example, the MS2 insurer would specialise in
life insurance (authorisation granted according to Art. 5 of the Consolidated Life Directive
for a particular class of assurance as listed in Annex I to the CLD 4 ), the notification
procedure of the intention of this insurance undertaking to carry on business in MS1
under FOS would follow the provisions of Articles 41 and 42 of the CLD.
Art 2
(4)
IMD
Reinsurance mediation
(1)
Art. 2(4) IMD: "reinsurance mediation" means the activities of introducing, proposing
or carrying out other work preparatory to the conclusion of contracts of reinsurance, or of
4
Consolidated Life Insurance Directive (Directive 2002/83/EC of the European Parliament and of the Council of 5
November 2002 concerning life assurance)
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concluding such contracts, or of assisting in the administration and performance of such
contracts, in particular in the event of a claim.
Should all the activities be performed or just a part of them in order to fall
within the scope of the definition?
Current opinion of the Commission’s Services:
For introduction: If you look at the definition of reinsurance mediation as contained in the
above provision of the IMD (Art. 2(4) first subparagraph for precision), it is identical except for one thing - with that of insurance mediation under Art. 2(3) first
subparagraph. The only difference is the type of the contract in question. It is obvious
that reinsurance mediation is focused on contracts of reinsurance.
Reply to question a), first part: Not all the abovementioned activities have to be
performed altogether in order to fall under Art. 2(4) first subparagraph and consequently
under the scope of the Directive. To be more illustrative, already the activities of
introducing, proposing or carrying out other work preparatory to the conclusion of
contracts of reinsurance would in my view fulfill the requirement of the definition to be
qualified as reinsurance mediation. The same applies to the conclusion of these contracts
as well as to the ´simple´ assistance in the administration and performance of such
contracts, in particular (but not only) in the event of claim.
The European legislator was very clear as it has opted for the use of ´or´ to make a
distinction between these activities.
Conclusion: All of these activities, as contained in the definition, can be qualified as
reinsurance mediation.
(2)
Should the activities of gathering the information from the client and sending it
to the reinsurance undertaking without any further activities like concluding the
contract etc. be considered as falling under the scope of reinsurance mediation?
Current opinion of the Commission’s Services:
If an activity fulfils the requirement(s) of Art 2(4) first subparagraph it can be considered
as reinsurance mediation and does not have to consist (or necessarily) result in a
conclusion of the contract of reinsurance (e.g. any work preparatory to its conclusion).
The line can be quite difficult to draw in general or in particular cases but nonetheless
what is considered predominant is the extent to which the person concerned is involved
in the conclusion of the reinsurance contract, or its administration and performance. In
other words, a mere provision of information as such cannot (and should not) in my view
be considered as reinsurance mediation activity. There must always be some connection
between the information given and the conclusion of the contract or its performance and
in addition, the remuneration of the reinsurance intermediary must, at the same time, be
equally linked to the information provided (which is of course related to the concluded,
administered or performed contract).
Art 2
(6)
IMD
Art 2(6) IMD: "reinsurance intermediary" means any natural or legal person who, for
remuneration, takes up or pursues reinsurance mediation.
Does it mean that both insurance agents and brokers are entitled to provide
reinsurance mediation services?
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Current opinion of the Commission’s Services:
The reply is positive; the IMD mentions reinsurance intermediaries and defines them in
Art. 2(6) as either natural or legal persons who, for remuneration (only then of course),
take up or pursue reinsurance mediation activities. It does not differentiate between
agents and brokers in this context.
Of course, when you look at the definition of a tied insurance intermediary as contained
in Art. 2(7), already from the title it is clear that this intermediary is excluded from the
reinsurance business.
Art 2
(7)
IMD
As stated in Recital 10 of the IMD, the definition of a “tied insurance intermediary”
within the meaning of its Art. 2(7) is not intended to preclude Member States from
having similar concepts in respect of insurance intermediaries who, while acting for and
on behalf of an insurance undertaking and under the full responsibility of that
undertaking, are entitled to collect premiums or amounts intended for the customer in
accordance with the financial guarantees laid down by this Directive.
Additional clarification from the Commission’s Services:
It has to be however always considered that this recital serves only as an introductory
measure to the legally binding definition contained in Art. 2(7) of the IMD.
Art 2
(9)
IMD
A MS1 intermediary provides its services only in MS1, only to MS1 clients. For tax
reasons it moves its office to MS2.
Which MS is the home Member State?
Current opinion of the Commission's services:
The IMD is clear when defining the home MS. According to its Art. 2(9),
"home Member State" means:
(a) where the intermediary is a natural person, the Member State in which his
residence is situated and in which he carries on business;
(b) where the intermediary is a legal person, the Member State in which its registered
office is situated or, if under its national law it has no registered office, the Member
State in which its head office is situated.
To determine the home Member State of this particular intermediary it is essential to
clarify whether he is a natural or legal person. Secondly, it needs to be verified whether
he is intending to provide mediation services under FOE or FOS in MS2 or not. From the
wording ´for tax reasons it moves its office to MS2´ it is not entirely clear. We should
furthermore try to avoid situations, considering the wording of the IMD on this point,
where the concept of the registered office would go against the concept of the head office
- pl. compare recital 14 and the above provision of Art. 2(9)(b).
If this insurance intermediary is a natural person and has its residence in MS1, under the
precondition that he carries on business in MS1, his home Member State is MS1. If it
would be a legal person with registered office in Hungary, then again MS1 would be the
home Member State. Only in a situation where he would move his registered office from
MS1 to MS2 (which is not probable in this case), his home Member State would become
MS2. This of course means that he would have to give up his license in MS1 and provide
insurance mediation services in MS1 from MS2 via FOS or FOE (does not sound very
practical).
To conclude, it would very much depend on the given case and its particularities which
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have to be carefully considered.
For insurance companies, the insurance directives (the Post-BCCI Directive 5 ) requires the
head office of the undertaking to be situated in the same MS as the registered office. It
has been suggested by the CCP members that this reasoning could be also used for
intermediaries. The EC has made a similar suggestion.
Art 3
IMD
Registration
(1)
The importance of an easy and free access to on line registers including headings in
English as provided in the Luxembourg Protocol, was stressed by some members. No
advanced mandatory registration or payment of fees should limit the accessibility to the
national registers.
(2)
Insurance and reinsurance intermediaries shall be registered with a competent authority
as defined in Article 7(2) of the IMD, in their home Member State, meaning in the MS
where they have their professional residence.
Additional clarification from the Commission’s Services:
According to its Art. 2(9), "home Member State" means: (a) where the intermediary is a
natural person, the Member State in which his residence is situated and in which he
carries on business; (b) where the intermediary is a legal person, the Member State in
which its registered office is situated or, if under its national law it has no registered
office, the Member State in which its head office is situated.
However, in case of cross-border situations, for supervisory reasons, a test of
practicability makes it possible to prove that the intermediary is able to have his/her
personal residence in one MS while conducting its intermediary-business in another.
Insurance intermediaries registered in one Member State (MS1) and operating in another
MS (MS2) under Freedom of Establishment are allowed to collaborate with sub-agents (of
insurance undertakings) or other collaborators registered in this other MS (MS2). The
intermediary operating under FOE would be subject to the supervision of its home MS
(MS1), whereas its collaborators would be subject to the supervision of their own home
Member State (MS2).
The intermediary operating under FOE should respect the regulation of its home Member
State (MS1) and the general good provisions of the host Member State (MS2), while its
collaborators should respect exclusively the regulation of their home Member State
(MS2).
(3)
According to the provision of Art. 3(1)(3), nothing prevents a Member State to request
that all the natural persons who work in an undertaking and pursue the activity of
insurance or reinsurance mediation should be registered.
(4)
A MS1 insurance undertaking requested a license for a MS2 bank to be its intermediary.
This bank should be selling insurance products of the MS1 insurer to MS2 expatriates in
MS3 and MS4. Who is competent to license this intermediary and to make the
notifications to MS3 and MS4? Should it be the home Member State of the insurance
undertaking to which the agent is tied or the country in which the agent has its
registered office, which is the home Member State according to Article 2(9)(b) of the
IMD?
5
Directive 95/26/EC
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Current opinion of the Commission's services:
It is an obligation of the MS2 competent authority to register the MS2 intermediary (the
bank) if the intermediary fulfils requirements for being registered. Art. 3(1) of the IMD
clearly states that "…intermediaries shall be registered with a competent authority in
their home MS…" In this case, the home MS is obviously MS2. Even if MS2 has chosen
the option provided in Art. 3(1)(2) of the IMD, it is in fact obliged to find a solution if the
intermediary fulfils the requirements for registration. Practically, this would mean that
the MS2 competent authority should cooperate with the MS1 competent authority to find
out whether the intermediary fulfils the requirements and if yes, then the MS2 authority
should register the intermediary.
(5)
In a case of insurance intermediaries acting only on behalf of insurance companies, are
those intermediaries allowed within freedom to provide services or freedom of
establishment to provide mediation services in host Member States for insurance
companies on behalf of which they do not act in home Member State?
Current opinion of the Commission's services:
Principally yes, however we should be very cautious in judging such situations. Even if
the IMD introduced in its Art. 3(5) the European Passport principle according to which all
registered insurance and reinsurance intermediaries shall be allowed to take up and
pursue the activity of insurance and reinsurance mediation in the Community by means
of both FOE and FOS, we should consider at the same the practical consequences of such
case and in particular the definition of a tied insurance intermediary contained in Art.
2(7) of the IMD. The latter provision defines this intermediary as a person who carries on
the activity of insurance mediation for and on behalf of one or more undertakings in the
case of insurance products which are not in competition. We would imagine that in a
standard situation this insurance intermediary is tied to one insurance undertaking in
Member State X (or two, three if the distributed insurance products are not in
competition) and operates via FOS in Member State Y acting for this (these) insurance
undertakings. Its home Member State is of course Member State X. As the above
scenario is not directly mentioned and regulated in the IMD and consequently also not
forbidden, it should be concluded that it is legally possible. The practical consequences of
such situation from the supervisory perspective have to be however in our view taken
carefully into account.
(6)
Another discussion concerned the following example: a MS1 intermediary, working for an
MS1 insurance broker company, has moved its residence to another Member State (MS2)
in order to work for the branch of this MS1 company. The intermediary has its
professional residence in MS2 but it works for an MS1 insurance broker company
registered in MS1. The intermediary does not need to register in MS1, as it has its
professional residence in the MS2. According to the MS2 Law, it is not obliged to register
in the MS2, as it is an employee of a branch.
Some situations are not very clear and require bilateral agreements between the relevant
Competent Authorities.
(7)
A MS1 intermediary applies for a MS1 allowance with the presentation of an MS2
qualification.
The question is whether or not the Directive 2005/36/EC is applicable, since a statement
of the EC Services on Regulated professions from 2 October 2007, concluded: "Moreover,
natural persons fully qualified as insurance intermediaries in a EU Member State wishing
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to take up the same profession in another EU Member State on the basis of permanent
establishment, without keeping their original licence, should also be able to benefit from
Title III, Chapter I of Directive 2005/36/EC as the situation is not covered by Directive
2002/92/EC."
Is the Directive 2005/36/EC applicable to the field of insurance intermediation?
Furthermore, can we understand the marked limitation that in any way the intermediary
had to be registered in his/her home state at any time?
Current opinion of the Commission's services:
As far as the registration requirement is concerned, here the focus should be given on
Art. 3 of the IMD which regulates the registration regime. Its paragraph 1 gives the
answer to the posed question. According to its wording, insurance and reinsurance
intermediaries shall be registered with a competent authority as defined in Art. 7(2) in
their home MS. Despite the fact that the IMD opens via Art. 3(1) third subparagraph the
door to MS not to insist on this requirement in all situations, this scenario is applicable
only in the case of natural persons who work in an undertaking (an intermediary) and
pursue the activity of insurance or reinsurance mediation. The basic principle remains
however the registration in the home MS, what is also stressed in Art. 3(5), which by
introducing the European Single Passport mentions registered insurance and reinsurance
intermediaries while exercising their insurance and reinsurance activities throughout the
Community by means of both freedom of establishment and freedom to provide services.
And here the common "spirit" of both Directives becomes really visible (please compare
again with recital 42 of Directive 2005/36/EC). This however does not exclude a situation
where the insurance intermediary gives up the licence (registration) in his home MS and
changes the place of establishment. In the latter case, if he wishes to continue his
professional activity in the Member State of his new establishment, he is obliged, in order
to benefit from Art.3(5) of the IMD (European Single Passport), to ask once again for a
registration. As a consequence, his home MS will change but the registration requirement
shall remain of course still an obligation.
Art 4
IMD
(1)
What are the professional requirements for local staff recruited in a host Member
State in order to work in a branch of an intermediary from another Member State in that
host state?
Current opinion of the Commission's services::
It follows from Article 4(1) of the IMD that the professional requirements of the home
state are to be applied also on the staff working in a branch in the host state. To make
this work in practice, a pragmatic and co-operative approach will be necessary from both
the home and host supervisors.
(2) Mutual Recognition
The EC provided an extensive explanation on the link between the IMD and Directive
2005/36/EC on the mutual recognition of professional requirements ("General system"):
Even if there is no specific mutual recognition clause in the IMD (as it was the case with
Directive 77/92/EEC), the General system serves as "lex specialis" under the conditions
and circumstances as described below:
1.
a) Natural persons exercising the profession of insurance and reinsurance intermediary
not covered by the IMD [please see e.g. its Art. 1(2) or 2(3)] should nevertheless be able
to benefit from Directive 2005/36/EC both with a view to temporary provision of services
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and in the case of permanent establishment; and furthermore that
b) Natural persons fully qualified as insurance intermediaries in a EU Member State
wishing to take up the same profession in another EU Member State on the basis of
permanent establishment, without keeping their original licence, should also be able to
benefit from Title III, Chapter I of Directive 2005/36/EC as the situation is not covered
by the IMD. (Remark: Title III, Chapter I of Directive 2005/36/EC lays down the general
system for the recognition of evidence of training).
2. Considering the reasoning in Point 1 and having in mind recital 42 of Directive
2005/36/EC, the EC is of the opinion that the latter secondary legislation is applicable to
the field of IMD as "lex specialis" and backs it up. The EC uses this opportunity to repeat
the above recital, as its points out very clearly that
"This Directive (2005/36/EC) applies, concerning the right of establishment and
the provision of services, without prejudice to other specific legal provisions
regarding the recognition of professional qualifications, such as those existing in
the field of transport, insurance intermediaries and statutory auditors…".
On the other hand, even if the IMD does not harmonize the training underlying the
professional qualifications of insurance and reinsurance intermediaries and does not
contain any specific provision on mutual recognition of professional qualifications or
automatic recognition of professional experience (as it was the case in Council Directive
77/92/EEC), the EC would like to recall the wording of Article 2(3) of Directive
2005/36/EC which states that
"Where, for a given regulated profession, other specific arrangements directly
related to the recognition of professional qualifications are established in a
separate instrument of Community law, the corresponding provisions of this
Directive shall not apply".
Art 4
(4)
IMD
Art 4
(4)(b)
IMD
Transfer of premium
When a policyholder hands a nominative cheque issued to the insurance company to the
intermediary, should this be considered as a case covered by Art 4 (4) of the IMD?
This kind of payment should not be considered as a transfer of premium, as the risk for
the policyholder that the insurance intermediary cashes the money of the cheque is
excluded.
In case the insurance intermediary does not send the nominative cheque to the insurance
undertaking through its own negligence, this should be covered by the professional
indemnity insurance.
If the insurance intermediary does not send the nominative cheque to the insurance
undertaking on a voluntary criminal basis, this should be considered as a case of civil
liability and professional indemnity insurance cover should then be excluded.
The term “annual premium” should be understood as “annual gross premium”.
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Art 4
(7)
IMD
Updating amounts
(1)
The EC outlined, considering the wording of Art. 4(7) of the IMD and especially taking
into consideration the wording of its second subparagraph, that it has no legal obligation
to inform about the up-dated amounts. According to Art. 4(7) second subparagraph
these amounts shall be adapted automatically by increasing the base amount in euro by
the percentage change in the European Index of Consumer Prices over the period
between the entry into force of the IMD (15/1/2003) and the first review (due now, after
15/1/2008); or (later on) between the last review date and the new review date and
rounded up to the nearest euro.
(2)
Current opinion of the Commission’s services
(3)
The EC will provide in due time the necessary information on future indexations.
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Art 6
IMD
Notification (General)
Art 6
IMD
Definition of “Freedom of Services” (FOS)
The members also strongly supported that for efficiency and practicability reasons, unless
otherwise agreed, current notifications should be done in an electronic version and in
the format proposed in the Luxembourg Protocol.
An Insurance Intermediary (“IIM”) is operating under FOS if it intends to supply a
policyholder, who is established in a Member State different from the one where the IIM
is established, with an insurance contract relating to a risk situated in a MS different from
the MS where the IIM is established.
The IIM should notify its intention to operate under freedom of services in the sole MS
where the policyholder is established or has his residence, also in the case the
policyholder acts on behalf of different insured and/or risks established or situated in one
or more other MS.
If the IIM already notified its intention to operate under FOS in a MS other than the one
where the IIM has its residence this notification procedure is considered as the legal
proof of its intention to write business under FOS with residents of that MS.
If the IIM did not notify its intention to operate under FOS in another MS, an
intermediary shall nevertheless be considered as having the intention to write business
under FOS with residents of that MS, when it is marketing, providing insurance mediation
services or when it is actively seeking business from a client/consumer resident or
established in that MS.
Non exhaustive lists of examples:
- The IIM asks for and organises, on its own initiative meetings with clients established in
another country.
- Re advertisement: the IIM gives/sends information on specific products, conditions etc
to selected groups of clients established in a given country / in specific languages of
some EU MS etc. Here the advertisement has an active character, the intention of the
intermediary to contact clients in another country is clear.
- Re electronic distance or distance marketing activities: If the content of the website of
the IIM is general and only in the language of the MS of the intermediary, if it is not
addressed to a specific group of clients or clients in specific countries, then the IIM
cannot be considered as actively seeking for these clients and therefore cannot be
considered as having the intention to do FOS in the countries where those clients are
established. If the IIM is contacted by those clients it will not be considered as doing FOS
in the countries of these clients.
Definition of “Freedom of Establishment” (FOE)
The IMEG agreed together with the EC that if an insurance intermediary carries on
business in a Member State for an indefinite period via a permanent (lasting) presence in
that Member State, it is covered in principle by the provisions of the EC Treaty on the
right of establishment. The Court of Justice of the EC has held that: "A national of a
Member State who pursues a professional activity on a stable and continuous basis in
another Member State where he holds himself out from an established professional base
to, amongst others, nationals of that State comes under the chapter relating to the right
of establishment and not the chapter relating to services." 6
6
Case 55/94 Gebhard [1995] ECR 1-4165; Case C-221/89 Factorame [1991] ECR I-3905
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The Commission Interpretative Communication on FOS and general good in the insurance
sector (2000/C 43/03) includes further detailed information on this issue 7 .
(1)
Member States remain free to authorise or not that independent European insurance
intermediaries, which/who passported in an EU/EEA Member State, offer clients, situated
in the Member State of provision of services or of the branch, insurance policies issued
by an insurance undertaking with head office outside of the EU/EEA. This situation does
not fall in the scope of the IMD.
Additional clarifications from the Commission’s Services:
The legal reasoning on the above is to be found in Art. 1(3)(2) of the IMD which
stipulates that the IMD shall not affect a Member State’s law in respect of insurance
mediation business pursued by insurance and reinsurance intermediaries established in a
third country and operating on its territory under the principle of FOS, provided that
equal treatment is guaranteed to all persons carrying out or authorised to carry out
insurance mediation activities on that market.
(2)
The IMD neither states that the Competent Authority of the home Member State can
refuse the notification submitted by the insurance intermediary, nor that Member States
cannot refuse to give notification. As a consequence, according to the IMD, Member
States should be allowed to regulate these aspects according to their own legislation.
Additional clarifications from the Commission’s Services:
Article 6 of the IMD regulating notification of establishment and services in other Member
States does not mention a situation where the competent authorities of the home
Member State would be authorized to refuse to notify the competent authorities of the
host Member State. It is however not excluded that in situations - as described below - a
refusal to notify would seem justified.
According to some Member States, the notification may be refused in exceptional
situations, when the competent Authority is about to remove the intermediary from the
register (for example when the intermediary does not fulfil professional requirements any
longer). This behaviour aims at protecting consumers from other Member States
(3)
A MS1 intermediary (brokerage company) requested whether it could work under the
provisions of the freedom to provide services in another EU Member State through a subbroker being resident in such host Member State. For your information, a sub-broker is a
licensed person working under the responsibility of a MS1 broker, such as an employee.
Is this possible under the freedom to provide services? If yes, where is the professional
residence of such person, the home Member State of the brokerage company or the
Member State where this person carries out his activities?
Current opinion of the Commission's services:
In case the sub-broker is acting under a full responsibility of the MS1 broker, as it
seems to be the case, the MS1 intermediary company would indeed seem to be providing
services in other MS in which the sub-broker is resident. Therefore, the MS1 broker
would have to notify the provision of services.
If the sub-broker would not act under a full responsibility of the MS1 broker but
would be established as independent, his home MS would be the other MS in which he
would have to be registered.
7
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2000:043:0005:0027:EN:PDF
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(4)
According to the Luxembourg Protocol, the notification for opening a branch must
indicate the name of the natural person representing the branch. When the intermediary
intending to open a branch is a natural person, is it possible to indicate as the person
representing the branch another natural person, or should the intermediary representing
the branch in the host Member State be the same person intending to operate under
freedom of establishment?
Art 6
(1)
IMD
Art 6
(3)
IMD
Current opinion of the Commission's services:
The EC confirms the possibility to indicate as the person representing a branch of an
insurance intermediary (natural person) another natural person as the intermediary
itself. It is clear that if an insurance intermediary (natural person) intends to take up and
pursue the activity of insurance (or reinsurance mediation) in the Community by means
of freedom of establishment (FOE) in another Member State as its his home Member
State, such insurance intermediary may designate another natural person to be his
representative in the host Member State. Under normal circumstances, the natural
person of the branch in the host Member State would be an employee of the insurance
intermediary providing insurance mediation under FOE and consequently would have to
comply with the requirements of the home Member State of the intermediary.
`
Regarding the 1-month-term mentioned in its Art. 6(1) third subparagraph, the IMD is
clear about two situations: in case the host Member State wants to be notified, the IIM
should wait 1 month before starting business. If the host Member State does not want to
be informed, the IIM is allowed to start business immediately. After a thorough
examination, the EC commented that the wording of Art. 6(1) second and third
subparagraph leads to the conclusion indicating only 2 possible situations, as emphasized
in particular in the third subparagraph. Consequently, the IMD should not allow an
interpretation supporting a possibility where the host Member State wants to be informed
but does not request the 1 month delay.
Is it possible to insert a clause requiring the local personnel in branches of your (MS1)
intermediaries abroad (MS2) to comply with the requirements of the Member State
(MS2) of the branch?
Current opinion of the Commission's services:
The IMD attributes the main responsibility for the concrete design but also enforcement
of the professional requirements to home Member States of the given intermediary. In
this case this would be MS1. This goes in our view also in line with the European license
established in Art. 3(5) which stipulates that insurance and reinsurance intermediaries
shall be allowed to take up and pursue the activity of mediation in the EC by means of
both FOE and FOS.
Under the notification procedure regulated in Art. 6(3), the competent authorities of the
host Member State (MS2) may take the necessary steps to ensure appropriate
publication of the conditions under which, in the interest of general good, the business
concerned must be carried out in their territories.
Only Art. 6(3) of the IMD would be a legal basis to impose something additional or new
on the foreign intermediary. It is of course clear that we tend to favor a highly restrictive
view in this perspective and do not support unreasoned measures which create obstacles
to the European market of insurance intermediaries.
Art 8
IMD
Is the application of sanctions a matter for the home state or for the host state?
Current opinion of the Commission’s Services:
Sanctions are dealt with in Article 8 of the IMD, which is not very explicit in terms of split
of competence or co-operation and communication between supervisors in case an
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Art 12
(1)
IMD
Others
intermediary does not comply with the legal provisions applicable. To some extent,
inspiration can be drawn from more elaborated provisions in other insurance directives
(see e.g. Article 46 of Directive 2002/83/EC). Sanctions are, as a starting point, a matter
for the home state. However, it follows from Article 8(4) IMD that, as far as breaches of
general good rules are concerned, sanctions should be applied by the host state.
In Art 12 (1) “given” has to be understood as “a well precise” (from the French version
“determiné”).
The question was raised whether an intermediary carrying out cross-border services is
entitled to mediate the products of insurers that do not wish to carry out business by way
of freedom of services in the country.
Ideally, all insurance intermediaries, including brokers, should apply the same rules as
the ones that a tied agent has to respect with regard to the insurance company(ies) it is
representing. Linking the notification procedure of intermediaries to those of the
insurance undertakings is however practically impossible.
The question on the "legality" of a contract offered by brokers for products of insurers
that do not wish to carry out business by way of freedom of services in the country,
remains an issue of civil law. According to the IMEG members the final responsibility lays
upon the insurance companies.
Providing services into the EU through a branch established in a third country
Current opinion of the Commission’s Services:
This situation is outside the scope of the IMD and harmonised Community legislation.
Branches in third countries do not have a passporting right to provide services into the
EU. Whether such activities are allowed is a matter of the national law of the Member
State into which the third country branch intends to provide its services.
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