The Council of Ministers has given a green light in the first round to the Draft Law on the Distribution of Insurance and Reinsurance in adaptation to the new European standards and which reinforces the protection of the insured through obligations of transparency and conduct for insurance distributors. The client must be informed of all the costs, expenses and risks assumed in the investment products based on insurance, and will have access to a periodic evaluation of their suitability. Sanctions for non-compliance with information obligations are tightened and so-called cross-sales are regulated for the first time, that is, those that add auxiliary products or services to the insurance contract. The text must obtain the corresponding opinions and will return to the Council of Ministers to be approved as a Bill and to start the parliamentary process.
Directive 2016/97 of the European Parliament and of the Council of January 20, 2016, on the distribution of insurance, has introduced a series of amendments to Directive 2002/92 / EC of the European Parliament and of the Council of 9 December 2002, on insurance mediation. This seeks to guarantee the same level of protection for customers, regardless of the channel through which an insurance product is acquired and its transfer to national provisions regarding access and exercise of the insurance and reinsurance distribution activity. .
Insurance and reinsurance distributors are considered not only to mediators, as up to now, but also to insurance and reinsurance entities, as well as other market participants that distribute products on an auxiliary basis (such as travel agencies or companies car rental), which will be considered as complementary insurance brokers. Likewise, the concept of insurance distribution includes the activity carried out through the so-called insurance comparators.
Within the insurance broker categories, insurance banking operators are configured, from a regulatory point of view, as insurance agents (exclusive or related), although with certain particularities. The limitations regarding the making available to a single insurance-banking operator of the networks of credit institutions or financial credit institutions are removed, without prejudice to maintaining incompatibility so that the transferred networks can operate simultaneously, in all or in part, as commercial collaborators of other insurance brokers of different kinds.
The APL provides that insurance brokers may use remote marketing websites or other techniques through which the client is provided with information comparing prices or coverage of a certain number of insurance products from different companies.
The organization and professional competence requirements are also reinforced, as well as the information obligations and rules of conduct that insurance distributors must follow. The obligation is established for all insurance mediators to prove that the funds belonging to clients are transferred through accounts completely separate from the rest of the mediator's financial resources.
The duty of informing the client of insurance products is widely regulated in the APL establishing additional requirements in relation to the distribution of investment products based on insurance, seeking to avoid or, where appropriate, prevent potential conflicts of interest. Regarding the information obligations for users of insurance-based investment products, it is established that all associated costs and expenses shall be reported, including the cost of advice, where applicable, the cost of the insurance-based investment product, and the way in which it can pay it, as well as any payment related to third parties. The risks associated with insurance-based investment products or certain proposed investment strategies should be warned; and finally, for situations in which advice is offered, an obligation is created to provide a periodic assessment of the suitability of the investment product.
The concept of cross sales is introduced, with the obligation for the insurance distributor to inform the client, when the insurance contract is offered together with auxiliary services or products, if the different components can be purchased separately, and the corresponding supporting documents for the costs. and expenses of each component. Product governance requirements are established, particularly in their design, approval and control.
Regarding offenses and sanctions, its regime is strengthened, establishing adapted financial penalties and in line with the general framework established by Directive 2016/97.