The European Commission has confirmed plans for insurance companies to be included within the Insurance Mediation Directive.
The idea was first floated during the consultation on Solvency II.
The EC’s consultation paper on the review of the IMD reads: “The current IMD does not guarantee a real level playing field between all participants involved in the selling of insurance products because it directly exempts insurance undertakings (direct writers) and their employees from its scope.”
“As a result, policyholders may receive less information and protection.”
The paper says it appears “logical” that insurance companies should face similar requirements when distributing insurance policies.
The consultation is looking at other problem areas in the 2005 IMD like quality of information, lack of clarity around conflict of interest rules and the possible introduction of remuneration disclosure.
Under current arrangements member states are free to design their own remuneration requirements, leading to a range of national standards, but the paper says the financial crisis has highlighted the need for more comprehensive information and transparency in this context.
The paper says information of varying degrees of quality is being given to consumers as a result of minimum harmonisation – an approach which means the directive sets a minimum level that nations must meet which has also resulted in different standards in different member states.
Another issue is the “unclear wording” and resulting confusion around disclosure and conflicts of interest.
The paper says: “The current wording of the Directive is unclear in relation to conflict of interest and transparency rules. In order to avoid misleading customers, effective rules on conflict of interests should be introduced.”