The European Council has adopted a directive establishing new rules on insurance distribution designed to enhance consumer protection for insurance products.
The directive aims to improve retail insurance regulation for simplifying market integration; and establish the required conditions for fair competition between distributors of insurance products.
It also seeks to strengthen policyholder protection with respect to life insurance products of an investment element.
Plans also include the extension of the scope of application to all distribution channels, including proportionate needs for those who sell insurance products on an ancillary basis.
The new directive intends to identify, manage and mitigate conflicts of interest; strengthen administrative sanctions, as well as measures to improve the suitability and objectiveness of insurance advice.
It plans to make sure that sellers’ professional qualifications match the complexity of the products they sell; and clarify the procedure for cross-border market entry.
The European Union (EU) member states will have two years to interchange the directive into national laws and regulations.
The directive considers rules established for the securities industry in order to ensure consistency between financial sectors.
It will not prevent member states from making stringent consumer protection provisions as per the EU law.