Impact of EU legislation on Polish insurance brokers

1. 6th Brokers’ Congress Wisla, 30 May 2003 Impact of EU legislation on Polish insurance brokers By Paul Carty Chairman of BIPAR EU Standing Committee By Harald Krauss Director of BIPAR

2. Current or pending EU initiatives concerning our sector • Insurance Mediation Directive • Directive on Distance Marketing • E-commerce/application to our sector • Investment Services Directive • Unfair Trade • … all to be implemented into Polish legislation

3. B I P A RBureau International des Producteurs d’Assurances et de Réassurances • Set up in Paris in 1937  oldest international association in the insurance sector • 1st President: Joseph Grzybowski • Today headquartered in Brussels • 42 national member associations • representing 75,000 self-employed insurance agents & brokers • since 1991: Task Force Eastern & Central Europe

4. Broker Market Share (Non-Life)

5. IMD – The Fundamental Objectives • To enable insurance intermediaries to operate freely throughout the EU • Enhancement of consumer protection by “the co-ordination of national provisions of professional requirements and registration of person taking up and pursuing the activity of insurance mediation.”

6. Commissioner Frits Bolkestein on IMD "This well balanced legal measure will benefit considerably the European insurance market. Insurance intermediaries are a vital link in the process of selling insurance products. The Directive will make it easier for intermediaries to operate anywhere in the European Union they want to. At the same time, it will increase the choice of insurance products available to customers and help ensure they can trust the advice they are getting from intermediaries"

7. Legislative Backdrop - EU • 25 years gestation • 1976 – “Establishment Directive” • Defined Broker and Agent • 1991 – “EU Recommendation” • Defined Dependent and Independent” (Activity based) • 2002 – Insurance Mediation Directive (IMD)

8. A Legislative Backdrop – by Market Market Regulation UK 1977 (repealed in 2000) Germany - France 1976 & 96 Netherlands 1952, amended 91 & 99 Ireland 1989 & 2000 Italy 1984 Spain 1992 Belgium 1995, amended 95 Sweden 1989 Poland 1995

9. What’s in the IMD? • Registration Requirements • Professional Requirements • Information Requirements

10. IMD – Registration Requirements • Intermediaries shall be registered with a competent authority (public authorities or bodies recognised by national law) • Member States may establish more than one register – single information point allowing quick and easy access. • Register(s) – names of all intermediaries, legal persons register required to include names of national persons responsible for mediation business, country or countries in which the intermediary intends to conduct business. • To get on the register intermediaries have to comply with professional requirements.

11. IMD – Professional Requirements • Appropriate knowledge and ability • Good repute • Maintain PI -€1m each and every claim and €1.5m in the aggregate • One or more of the following:- • Monies paid to an intermediary to be treated as having been paid to an insurance undertaking • Financial capacity 4% of APs subject to a minimum of €15K • Segregated bank account • A guarantee fund.

12. IMD – Information Requirements • Prior to the conclusion of any insurance contract, shall provide the following:- • Identity and address • Register in which he is included • Whether he has a holding of more than 10% of the voting rights or capital in an insurer • Whether an insurer has more than 10% of the voting rights or capital in the intermediary • Complaints procedure. • In addition »

13. IMD – Information Requirementscontinued An intermediary shall inform the customer concerning the contract that is provided whether:- • He gives advice based on obligation to provide a fair analysis • He is under contractual obligation to conduct business with one or more insurers • He is not under contractual obligation to conduct business with one or more insurers and does not give advice based on a fair analysis.

14. Fair Analysis • “advise on the basis of an analysis of a sufficiently large number of insurance contracts available on the market, to enable him to make a recommendation, in accordance with professional criteria, regarding which insurance contract would be adequate to meet the customers needs” • Also “prior to” conclusion of the contract the intermediary shall specify “the demands and needs” as well as the “underlying reasons for any advice given”.

15. Impact of IMD • Regulation in all member states by Jan 2005 • Will curb regulatory excess i.e. will establish regulatory “base line” throughout the EU • Will improve consumer protection • Intermediaries will be able to provide their services throughout EU

16.  15 January 2005 BIPAR is - monitoring the implementation - organising information exchange (“benchmarking”) - assisting its member associations

17. Initiatives on remuneration

18. 6th Brokers’ Congress Wisla, 30 May 2003 Impact of EU legislation on Polish insurance brokers By Paul Carty Chairman of BIPAR EU Standing Committee By Harald Krauss Director of BIPAR