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The City of London released a report on the comparative implementation of the Insurance Mediation Directive which provides a comparative analysis of the process in four countries and finds that EU insurance mediation streamlining has had mixed results.
The report illustrates the sort of problems that can arise due to national differences. Only four of the EU-15 countries transposed the IMD into National legislation in time. All four countries covered in detail in this report, France, Germany, the Netherlands and the UK, have been guilty, to a greater or lesser extent, of “gold-plating” the Directive through the imposition of either additional rules or higher than required standards.
The report suggest that the main reasons for these variations result from the presence or otherwise of statutory regulation before the IMD was introduced, and whether the Member States concerned have single or sectoral regulators.
The most worrying conclusions, however, are that interviewees in all four countries felt that the IMD would increase cost and the regulatory burden which it was feared might drive smaller operators out of the market, and that the cost of implementation itself has varied significantly.
The study has revealed that where a single regulator exists, such as in the UK and the Netherlands, ‘direct selling’ has been captured by the rules, in contrast to the approach of sector-specific regulators in France and Germany which originally focussed on intermediaries.
Ad-hoc automatic re-qualification on new national registers or “grandfathering” was allowed by three of the four states covered.
Available evidence suggests a wide variation in the cost of the implementation of the IMD and compliance with the new rules. It appears that implementation costs were significantly higher in the UK than elsewhere based on the cost benefit analysis performed by the FSA.
Michael Snyder, Chairman of Policy at the City of London said the IMD’s impact on small enterprises was worrying. “It appears that the IMD is increasing cost and regulatory burden to the point where smaller operators could be driven from the market,” said Michael Snyder.
The report finds that in the UK, one of the implications of insurance intermediaries being regulated by the FSA is that other rules contained in the FSA handbook have also been applied, which interviewees view as imposing a greater burden than in other countries.