Online insurance intermediation

Transcription

1 AIDA AIDA World World -- Working Working Party: Party: Distribution Distribution of of Insurance Insurance Products Products Online insurance intermediation Protection Protection via via an an ocean ocean of of information information

2 Obligation of (off)online insurance intermediaries (IIM) to proceed with notification in order to work under FoS in the EU Criteria for the notification in non online (offline) business IIM provides marketing, insurance mediation services or when it is actively seeking business from a customer resident in that MS Examples CEIOPS, DOC-15/07: The IIM asks for and organises, on its own initiative, meetings with clients established in another MS. The IIM gives/sends information on specific products, conditions etc to selected groups of clients established in a given MS / in specific languages of some MS etc (the intention of the intermediary to contact clients in another country is clear) 2

3 Obligation of (off)online insurance intermediaries (IIM) to proceed with notification in order to work under FoS in the EU (cont.) Criteria for the notification in online business Website evidencing IIM s intention to direct its activities in that MS Luxemburg Protocol Indications: The international nature of IIM s activity Use of foreign language/currency with the possibility to conclude a contract in that language/currency Mentioning of itineraries from other MS for going to the place where the merchant is established Mentioning of telephone numbers with an international code The outlay of expenditure on an internet referencing service to facilitate access to the merchant s site of consumers domiciled in other MSs Use of a top-level domain name other than that of the merchant s home MS Mentioning of international clientele from various MS 3

4 Obligation of an IIM to establish in a host MS Criteria for the obligation to establish (FoE) in offline business According to ECJ case law Lasting duration and/or Regularity and/or Periodicity and/or Continuity OR According to EU Commission If IIM cumulative meets the characteristics of a branch/agent, i.e. if IIM representative in the host MS: Is subject to the direction and control of the parent IIM Receives a permanent brief from the parent IIM Is able to commit the parent IIM Criteria to establish in online business EU does not accept establishment for activities conducted exclusively online Fixed ATM type machines/servers do not suffice Needs human management However, applicable rules for establishment could analogically apply if criteria to establish in offline business are met 4

5 Third Country IIM (off)online business in the Union Criteria distinguishing offline services as solicited/unsolicited Offline IIM services are identified as solicited, 3rd country IIMs included under almost the same criteria applicable under FoS transactions in another MS The IIM asks for and organises, on its own initiative meetings with clients established in another MS. The IIM gives/sends information on specific products, conditions etc to selected groups of clients established in a given MS / in specific languages of some MS etc (the intention of the intermediary to contact clients in another country is clear) 5

6 Third Country IIM (off)online business in the Union (cont.) Criteria distinguishing online services as solicited/unsolicited Online IIM services are identified as solicited If the transaction is not conducted under the customer s exclusive initiative Unsolicited services are identified If the transactions are conducted under the customer s exclusive initiative (OECD Guidelines/GATS/MiFID 2,recital 74). However IT evolution impedes a more clear distinguishment between solicited and unsolicited transactions: further criteria should be developed 6

7 - Protection via an ocean of information From a law on insurance intermediation to a law on marketing of insurance products via an ocean of information Precontractual information which insurers have to provide (insurer is also regulated by IMD 2 if he provides direct sales) Information to be given by the insurer - in its capacity as insurer In life insurance (information provided in Solvency II, art. 185) In non life insurance (information provided in Solvency II, art ) Information to be given by the insurer - in its capacity as direct seller of insurances In insurance products without investment element (IMD 2, art ) Marketing (sales) of insurance investment products. Insurer has to draw up (according to PRIPs, art. 5-11) key information in its capacity as manufacturer of the product and to provide it to the insured (PRIPs, art. 1213) and additionally information has to be given (IMD 2, art ) Additional information for the online services (ECD, art. 5,6,10) Additional information for distance marketing of consumer financial services (DMD, art. 3-5) 7

8 - Protection via an ocean of information From a law on insurance intermediation to a law on marketing of insurance products via an ocean of information (cont.) Precontractual information which (off)online professional intermediaries 2, art ) have to provide and additional info. for sales of other than insurers (IMD insurance investment products (IMD 2, art , as well as to provide the KID as manufacturer of such products, PRIPs, art ) Additional information for all DIP: a) in online services (ECD, art. 5,6,10) b) in distance marketing of insurance products (DMD, art. 3-5) Combined application of precontractual info included in IMD 2, PRIPs, ECD, DMD, MiFID 2 A simple insurance subagent who in the same time is an investment company according to MiFID 2 is subject to all the above regulations Entities which undertake the reception and transmission of orders constitute investment companies and can at the same time work as an insurance intermediaries According to greek law IIMs are not qualified to sell insurance investment products unless they possess the same qualitative requirements as professionals who sell investment products and are governed by MiFID (among others to have passed the relevant exams organised by the supervisory Authority - Central Bank of Greece). 8

9 - Protection via an ocean of information From a law on insurance intermediation to a law on marketing of insurance products via an ocean of information (cont.) Six pieces of EU legislation introducing partially overlapping, partially asymmetric information: IMD 2 ECD Pieces of information: 22 for intermediaries, additionally 10 in case of insurance investment products, 11 for insurers additionally 10 in case of insurance investment products. Altogether 53 pieces! (art ). 26 pieces of information (art. 5, 6, 10). 7 pieces of information (art ) Solvency II (non life insurance) 36 pieces of information (art. 185) Solvency II (life insurance) 49 pieces of information (art. 3-5) DMD PRIPs 26 pieces of information (art. 5-11, 12-13) MiFID 2 15 pieces of information (art ) In total: = 212 pieces of information!! 9

10 - Protection via an ocean of information Reaching the coast Results: Customer is protected by valuable information but is overloaded partly with asymmetric and overlapping information By provision of this information the customer is not protected as to the content of the terms and conditions of the insurance product Not all customers are benefited by the same information (fragmentation) Customers remain responsible to take advantage and to evaluate the multitude of information. Legislator should ensure that customers have taken in fact the benefits of this information rather than inserting more information duties 10

11 Special issues: Comparison websites Example of a Greek aggregator: Aggregators which provide IIM Criteria have not been completely formed yet, but characterisation depends on the activities provided via the website According to EIOPA-CP-13/017, if the visitor of the website has the possibility to choose insurance products based on price/features and to conclude the contract online or is diverted via a hyperlink to the insurer s website and then conclude the contract, the comparison website owner might be regarded as an IIM if: The customer is driven to a result, which includes the characteristic of advising i.e. the possibility by means of comparison websites to find out the cheapest/most suitable products Aggregators which do not provide IIM If their activities constitute mere conduit according to ECD (art 12): The service provider does not initiate the transmission The service provider does not select the receiver of the transmission The service provider does not select/modify the information contained in the transmission 11

12 Special issues: The bank as tied intermediary The bank as tied intermediary can sell the main financial product which it has manufactured and ancillary insurance investment product manufactured by the insurer: Crossing an ocean of information Information for its main financial product (art MiFID 2, total number of information pieces: 15) and key information as manufacturer of the product (art. 5-11,12-13 PRIPs, total number of information pieces: 26) Information to be given according to IMD 2 in its capacity as tied intermediary (art total number of information pieces: 22) and additionally information on investment insurance products (art , total number of information pieces: 10) Information on investment insurance products according to PRIPs (art. 5-11, total number of information pieces: 26) whereby the manufacturer in this case is the insurer Additional information for the online services (ECD, art. 5,6,10, total number of information pieces: 26) Additional information for distance marketing of consumer financial services (Directive on distance marketing of consumer financial services, art. 3-5 total number of information pieces: 49) 12

13 Special issues: The bank as tied intermediary (cont.) Particulars not included in the ocean of information! Lack of special information in particular in online sales! Risk of misleading clients! E.g. a bank should warn its clients that it sells insurance products under the liability of the insurer or an other intermediary, as the case may be and not under its liability Bank does not have to rely on confidence clients have to its activities as safeguard of their savings! A bank selling insurance products in its capacity as tied intermediary should warn its clients that the product is not manufactured by the bank! It should not be allowed to banks to title the insurance investment products of the insurer which it sells as bancassurance products of the bank or similar misleading/confusing expressions. A bank selling insurance products/investment insurance products of an insurer must put emphasis to the name of the insurer by using capital and bold letters. Small letters should be used for the name of the bank and emphasise its capacity as intermediary and not as manufacturer of the product. 13

14 Special issues: What distinguishes the border of the online market? Geographical, technological and regulatory means EU/EEA regulation: Insurance intermediaries providing cross-border services in the Internal Market fall under the passporting rules registration in the home country-ms is the passport The register shall indicate the MS/MSs in which the intermediary conducts cross border business The IMD does not: apply to insurance mediation services provided in relation to risks and commitments located outside the EU (1st case) regulate mediation activities carried out in 3rd countries (2nd case) In both cases, geography and technology are the borders as to the conduct of the business, but regulation is the border as to the qualification of the insurance intermediary in the 1st case, taking into consideration that only then the intermediary provides services in risk located both inside and outside the EU. 14

15 Special issues: Online FoS vs traditional FoS? Yes IMD2 specifically submits national restrictions on online passporting intermediaries to the rules of the ECD Insurance intermediaries, unlike insurance undertakings, are not included in the Annex of exceptions to article 3(3) of the ECD The ECD allows limited exemptions and derogations of the freedom to provide information society services: Thus, FoS via traditional means can be subjected to more restrictions than the online services as long as they are dictated by the scope of the general good 15

16 Special issues: Online FoS vs traditional FoS? Yes The following areas could fall within the scope of general good as recognised and interpreted by the ECJ: The list is not definitive and the Court may add to it at any time The national restrictive measure must be taken on a case-by-case basis against a specific financial service provided by a given operator (IIM) 16

17 AIDA AIDA World World -- Working Working Party: Party: Distribution Distribution of of Insurance Insurance Products Products