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The European Parliament has published the latest draft text produced by ECON for a revised Insurance Mediation Directive (or “IMD2”). The European Parliament is scheduled to vote in the plenary session held between 24-27 February 2014.
This latest iteration of IMD2 contains a number of significant changes to the original proposal. The text has been subject to considerable negotiation before this latest draft was published. The consumer protection, legal and economic and monetary affairs committees of the European Parliament have all made a number of proposals to amend the text originally drafted by the European Commission.
The significant points to note about this text are:
That mandatory disclosure of the amount of commission being paid has been removed from the directive will be welcomed. As will the fact that claims managers and loss adjusters fall outside the regime. However, the text which has been published is clearly the result of extensive negotiation between competing interests. Unfortunately, agreement seems to have been reached at the cost of clarity. The purpose of the revision of the original IMD was to ensure that there was greater harmonisation across the EU. The draft IMD2 text, although peppered with references to ensuring a “level playing field” and minimising differences in national regimes, allows for extensive Member State discretion. This would therefore seem to undermine the very point of revising the original directive.
Furthermore, the text is poorly drafted with definitions missing and several areas of the text which do not make sense. One of the criticisms of IMD1 was that it lacked legal clarity. Unless more work is done to ensure the text is better drafted there is little hope that IMD2 will do much to improve the legislative clarity for insurers and intermediaries wishing to operate across EU borders.
The plenary session in which the European Parliament will consider the proposal to amend and replace the Insurance Mediation Directive is expected to take place between 24-27 February 2014.
Once IMD2 has been adopted, the European Commission and EIOPA are expected to work on technical measures prior to implementation. Implementation is likely to take place in 2016.
It is anticipated that MiFID2 will expedite the introduction of a number of provisions for the regulation of designated investment business into the existing insurance mediation text prior to IMD2 being adopted.
You can read ECON's draft IMD2 text here.
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