Insurers face tough new Union rules

Date: 16/09/1999

By Renée Cordes

INSURANCE agents would be required to meet tough new EU-wide professional standards under proposals being drawn up by the European Commission.

A draft of the plan, which is due to be discussed by member state experts later this month, would require agents (also known as intermediaries) to have sufficient financial resources before selling their wares. They would also have to disclose certain information to prospective clients, such as whether they were operating independently or acting on behalf of a number of firms and whether they held any shares in an insurance company.

Member states would be allowed to impose sanctions on agents who did not fulfil these requirements and, if necessary, withdraw their licenses.

They would also be free to set national professional requirements which were tougher than those agreed at Union level, but would only be able to impose them on companies established within their own borders.

The proposed legislation, which would supersede a 23-year-old EU directive originally intended only as an interim measure, is part of the Comm-ission's ambitious five-year plan to create a genuine Union single market in financial services unveiled earlier this year.

The insurance industry has welcomed the move, saying new EU-wide professional requirements are long overdue and would eliminate the confusion resulting from a patchwork of national measures.

European consumer lobby group BEUC says increased competition among insurers would also benefit consumers by giving them more choice. But it wants the Commission to do even more to protect consumers. BEUC also wants insurance agents to be forced to disclose at the start what financial penalties their customers would face if they cashed in a life insurance contract before maturity.

Insurance agents would be required to meet tough new EU-wide professional standards under proposals being drawn up by the European Commission.