14 September 2012

Eurofinas observations on Commission proposal for a revised Insurance Mediation Directive

Eurofinas welcomes in particular the differentiated approach taken by the Commission in its Proposal, especially with regard to those intermediaries that distribute less complex products on an ancillary basis

The core business of consumer credit providers across Europe is to lend. However, in addition to the provision of consumer credit, companies represented by Eurofinas distribute a small number of insurances on an optional basis. These are simple types of insurance coverage that are available to consumers when they conclude a credit agreement. The main categories of insurance distributed by credit providers vary from country to country but generally include the following:

• Insurance linked to the asset financed:
  • Guaranteed asset protection (GAP insurance)
  • Motor insurance (Third Party liability [compulsory cover], driver coverage and extended warranty)
  • Legal protection insurance
• Insurance linked to the loan:
  • Loan protection insurance.

Not all these products may be offered by all consumer credit providers. These products offer a high level of protection for the consumer in case of unforeseen events affecting his/her ability to repay a loan, litigation or damages to the asset financed. Protection products in particular also play a key role in preventing consumer over-indebtedness. The offers made to consumers reflect their expectations in terms of protection. This explains why insurance products are distributed by consumer credit providers and offered at the same time to their customers.

Most consumer credit providers do not cover insurance risks themselves but work in partnership with insurance companies. This means that a consumer credit provider distributes the insurance products of its insurance partner and in this context acts as an intermediary. The Insurance Mediation Directive provisions therefore directly apply to consumer credit providers.

Hence, Eurofinas represents a specific part of the insurance mediation sector that is very different from the traditional insurance mediation brokerage.

In turn, consumer credit providers offer these insurance products through their distribution channels including at the point of sale. In the latter situation, insurance products will be distributed by retailers or motor dealers that will act as the credit providers’ own intermediaries. These partners of consumer credit providers are therefore another type of insurance intermediaries that is here again very different from the traditional insurance mediation brokerage.

The Commission’s Proposal provides a good basis to discuss the issues at stake further in a European context. Eurofinas believes that an efficient, fair and high-quality regulatory framework for insurance intermediaries requires avoiding at all costs a “one-size-fits-all” approach by adapting statutory requirements to the different existing distribution channels, i.e. insurance distributors’ different levels of responsibility, types of products on offer and material ability to adapt to changes of regulatory requirements.

Eurofinas therefore welcomes, in particular, the differentiated approach taken by the Commission in its Proposal, especially with regard to those intermediaries that distribute less complex products on an ancillary basis. In this response, the Federation would like to draw attention to a number of key concerns for the industry that Eurofinas represents.

Full response

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