Opinion of the Economic and Social Committee on the "Proposal for a Directive of the European Parliament and of the Council on insurance mediation"

(2001/C 221/21)

On 3 November 2000 the Council decided to consult the Economic and Social Committee, under Articles 47(2) and 55 of the Treaty establishing the European Community, on the above-mentioned proposal.

The Section for the Single Market, Production and Consumption, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 10 April 2001. The rapporteur was Ms Konitzer.

At its 382nd plenary session (meeting of 30 May), the Economic and Social Committee adopted the following opinion by 77 votes to 14, with ten abstentions.

1. Introduction

1.1. Independent insurance intermediaries play a very important role on the financial services market. According to figures from the International Association of Insurance and Reinsurance Intermediaries (BIPAR), their share of the market in the distribution of insurance products is over 50 % in many Member States(1).

1.2. For insurance undertakings, the internal market in insurance has largely been completed thanks to the legal framework set in place by the Third Directives(2). Since July 1994, each insurance undertaking has been subject to a single regime of official authorisation and prudential supervision by the Member State in which it has its registered office. However, there is as yet no effective and uniform European legal framework for insurance and reinsurance intermediaries. It is not least this absence of a legal framework that prevents full advantage being taken of the freedom to provide services and the freedom of establishment. This is one reason why insurance intermediaries are often unable to meet the wishes of their customers. Examples include liability and risk insurance for motor vehicles and property in another Member State. In the vast majority of cases, such insurance is - and can only be - taken out in the Member State concerned.

1.3. In the explanatory memorandum to the proposed directive, the Commission rightly notes that, while the current Community provisions relating to intermediaries (Directive 77/92/EEC(3) and Recommendation 92/48/EEC)(4) have certainly helped to bring national laws closer together, insurance intermediaries are nonetheless still subject to different legal requirements in the individual Member States, and these requirements isolate national markets and hinder cross-border business.

1.4. It should also be pointed out that Commission Recommendation 92/48/EEC(5) has not yet been transposed in all Member States. Directive 77/92/EEC has proved an inadequate basis for establishing a legal framework which affords freedom to provide services and freedom of establishment, and thus enables insurance and reinsurance intermediaries to engage in cross-border business. In some Member States, intermediaries can still set themselves up in business without any relevant professional training or skills, and the term "intermediary" as a professional title is often not protected.

1.5. The Commission's Proposal for a Directive of the European Parliament and of the Council on insurance mediation reflects the Community's concern - as voiced in the Financial Services Action Plan(6) - to establish a truly integrated retail market in which the interests of customers and suppliers in the field of insurance mediation are properly protected.

2. Content of the proposed directive

2.1. The Commission proposal covers admission to the profession of insurance and reinsurance intermediary for all persons (natural or legal) taking up or pursuing this activity within the Community [Article 1(1)].

2.2. The directive is designed to improve intermediaries' freedom to provide services and freedom of establishment within the Community.

2.3. The directive reflects the fact that insurance intermediaries are an essential link in the sale of insurance in the Community. Their share of the market in the distribution of insurance is over 50 % in many Member States.

2.4. The directive also takes account of the aims of the Financial Services Action Plan(7) - endorsed by the European Council in Cologne in June 1999 and reiterated in Lisbon on 23 and 24 March 2000 - to establish a truly integrated retail market in which the interests of customers and suppliers are properly protected.

2.5. The directive also falls in with the European Parliament's resolution on the Financial Services Action Plan, which states that an overhaul of Community rules on insurance intermediaries is of the utmost importance(8).

2.6. The directive establishes an unprecedented legislative framework designed to ensure a high level of professionalism and competence among all independent intermediaries (Article 4). Insurance and reinsurance intermediaries are only to be allowed to operate in the Member States if:

- they possess appropriate general, commercial and professional knowledge and ability;

- they are of good repute and, in particular, have never committed a criminal offence in relation to the insurance and reinsurance business and have never been declared bankrupt;

- they hold professional indemnity insurance or some other comparable guarantee against liability arising from professional negligence, for at least EUR 1000000 per claim;

- they are subject to safeguards - under customer protection measures set in place by the Member States - to ensure that they transfer premiums to the insurance or reinsurance undertaking and the amount of any claim to the insured party.

2.7. In contrast to independent intermediaries for whom their work is their principal professional activity, Member States may impose lower professional requirements on persons who take up or pursue insurance mediation as employees of an insurance undertaking or of a registered intermediary, or only as a sideline to their main occupation. There is an obligation to provide such persons with relevant basic training and to take on responsibility for their actions (Article 4(1) subparagraphs 2 and 3).

2.8. Moreover, Member States need not apply this directive to persons providing insurance that is ancillary to the supply of a good or service, where no specific knowledge is required, the amount of the premium does not exceed EUR 1000 per year and the duration of the insurance contract is less than a year [Article 1(2)].

2.9. Under the directive, the taking-up and pursuit of the profession of insurance or reinsurance intermediary are subject to registration by the competent authority in the intermediary's home country; there must be easy public access to the register (Article 3).

2.10. The directive stipulates that insurance undertakings may use the services only of registered intermediaries [Article 3(5)].

2.11. In order to guarantee the freedom to provide services and the freedom of establishment, the directive lays down prior reciprocal information requirements between the home country and the host country in cases where an intermediary intends to offer services or establish a branch in a Member State other than his or her home Member State. The competent authority of the host Member State is to be required to inform its counterpart in the home Member State of the conditions under which, in the interest of the general good, the business must be carried on in its territories (Article 5).

2.12. The competent authorities which keep the register of intermediaries must be public authorities, bodies recognised by national law or bodies recognised by public authorities expressly empowered for that purpose by national law (Article 6).

2.13. The proposed directive stipulates that Member States must provide appropriate sanctions against non-registered intermediaries offering or arranging insurance, and against insurance undertakings that use the services of non-registered intermediaries. In the event of infringements, the competent authorities of the Member States are to work together by exchanging information (Article 7).

2.14. Member States are required to set up a facility for registering complaints and machinery for the out-of-court settlement of disputes (Articles 8 and 9).

2.15. Intermediaries must comply with the information requirements laid down in the directive (Article 10).

2.16. Member States must transpose the directive by 31 December 2003 at the latest (Article 13).

3. General comments

3.1. The Economic and Social Committee expressly endorses the Commission's proposal which seeks (i) to ensure a high level of professionalism and competence among insurance and reinsurance intermediaries through the establishment of a legislative framework, (ii) to facilitate the cross-border activities of intermediaries under the freedom of establishment and freedom to provide services by providing a uniform system for their registration and (iii) at the same time, to provide a high level of protection for insurance customers' interests.

3.1.1. The Committee has already made the point that, despite its key importance for the operation of the insurance sector in the single market, the business of insurance agents and brokers is covered by only a single directive, dating from 1976, which ignored aspects such as professional liability, financial guarantees, registration and other business conditions(9).

3.1.2. However, the Committee feels that the proposal for a directive on insurance mediation does not always adequately meet its basic objectives. This applies to:

- the high professional requirements for insurance and reinsurance intermediaries;

- the freedom to provide services and freedom of establishment, and the protection of customers and insured persons.

3.2. According to the Commission's explanatory memorandum, the purpose of the directive is to establish a legislative framework designed to ensure a high level of professionalism and competence among insurance intermediaries(10). However, all professional skills are based on appropriate theoretical and practical training, the experience gained in this process and the knowledge acquired as part of continuing training in the course of one's career. The Commission proposes(11) that the knowledge and ability of intermediaries should be tailored to the functions they perform and to market requirements and that the Member States themselves should decide and lay down the level and content of such knowledge.

3.2.1. In the light of these objectives and reiterating a point already made in Recommendation 92/48/EEC, the first subparagraph of Article 4(1) requires that insurance and reinsurance intermediaries possess appropriate general, commercial and professional knowledge and ability.

3.2.2. The Committee would refer to its opinion on consumers in the insurance market (Single Market Observatory) in which it pointed out that insurance brokers must have the specialist training needed to perform their important task(12). In this regard, the Committee would point to BIPAR's Oporto declaration(13), which leaves it to the Member States themselves to decide the level and content of training, but requires a minimum of 300 hours' theoretical and practical training, although credit may be given for any relevant professional knowledge already acquired.

3.2.3. The Committee proposes that insurance intermediaries who have already acquired experience and knowledge of insurance mediation over a certain period of time should not be required to undergo renewed training under the first subparagraph of Article 4(1), but that an additional provision should be introduced giving them direct access to registration.

3.3. The freedom to provide services under Articles 49ff and the freedom of establishment under Articles 43ff TEC will thus become a reality for insurance intermediaries only if they are able - on the basis of their recognition and registration in their home country - to also offer services in another Member State and/or establish branches there. However, different national rules within the Member States are manifested in the compartmentalisation of the markets up to now. This situation would be perpetuated by the adoption of the Commission proposal - signalled in the last part of Article 5(3) - to make the taking-up of an insurance mediation activity in another Member State subject to conditions that relate to different training practices. The aim should therefore be to lay down a minimum standard for the training required in all Member States under the first subparagraph of Article 4(1), without specifying the content of that training in the directive, and to ensure that the skills thus acquired - which give access to registration in the intermediary's home country - also make it possible (following registration) to take up this activity in another Member State.

3.3.1. The Committee therefore feels that freedom to provide services and freedom of establishment can only be brought about by laying down a minimum level of training for insurance intermediaries wishing to acquire the requisite professional skills, and that such training should culminate in a state or state-recognised examination.

3.4. The Commission proposal also seeks ultimately to improve the protection of customers acquiring insurance products via an intermediary. Such protection is to be provided inter alia by guaranteeing that all persons (natural or legal) taking up or pursuing the activity of insurance or reinsurance mediation have been registered on the basis of certain minimum professional requirements. Initially, consideration was given to making the directive applicable only to intermediaries with a certain turnover, but this was quite rightly rejected in the interests of protecting insurance customers. An intermediary selling only one product a day must be no less skilled than one selling ten. The basic skills required of intermediaries in the interests of customer protection cannot be determined either by the number of products sold or by the amount of time this takes.

3.4.1. Unfortunately, the Commission ignores its own conclusion in this regard(14) in the third subparagraph of Article 4(1), where it is stated that Member States need not apply the requirements set out in the first subparagraph of the same article to intermediaries whose principal professional activity is not insurance mediation. The sale of insurance as a secondary professional activity is found in both Portugal and Scandinavia, but is particularly widespread in Germany where some 300000 people are involved in insurance mediation as a sideline. If the Commission proposal is adopted, however, the opening-up of the market and the freedom to provide services will quickly enable people to take up this sideline in other Member States as well. The issue does not therefore affect just one Member State.

3.4.2. Moreover, the Commission's proposal not to apply the professional requirements to intermediaries for whom this is not their principal professional activity also contravenes the Amsterdam Treaty's consumer protection provisions(15).

3.5. The Committee feels that the insurance intermediary's record-keeping requirements under Article 10(3) are too one-sided and, moreover, will fail to achieve the desired consumer protection if, in the event of a claim, the only records available are those of the insurance intermediary.

4. Specific comments

4.1. Article 1 - Scope

4.1.1. The proposal allows Member States not to apply the provisions on professional requirements (Chapter II) or on information requirements (Chapter III) to persons providing insurance if that activity does not require any general or specific knowledge of insurance [Article 1(2)(a)], does not involve life insurance contracts [Articles 1(2)(b)] and does not cover liability risks [Article 1(2)(c)], but is ancillary to the supply of goods or services as part of those persons' principal professional activity [Article 1(2)(d) and (e)]. The Committee feels that such ancillary contracts should also include, for instance, an insurance contract for a hire car booked together with and for the duration of a holiday. The proposal stipulates that the duration of the insurance contract must be less than a year and that the amount of the premium must not exceed EUR 1000 [Article 1(2)(f)].

4.1.1.1. Since the life insurance contracts and contracts covering liability risks referred to in Article 1(2)(b) and (c) always require specific knowledge of insurance, they are also covered by Article 1(2)(a). It is thus proposed to combine paragraphs 2(a) to (c). The specific mention of liability insurance stems in the case of motor vehicle insurance from the legal requirement to protect potential victims which exists in all Member States and necessitates compulsory insurance. Another reason for amalgamating the three paragraphs is that other insurance contracts also require general and specific knowledge in just the same way as contracts covering life and liability insurance. The following new wording is proposed: "(a) the contracts do not involve products relating to retirement provision or investment funding such as life insurance or pension schemes, do not cover any liability risks and do not require general or specific knowledge of insurance;"

4.1.2. The proposal does not make clear whether the figure given for the premium relates to the total number of insurance contracts concluded per year or to each individual contract. Under the proposed directive, the rules are not to apply only where the mediation involves contracts which cover small risks and are provided ancillary to a main product (e.g. loss of or damage to spectacles and certain household electrical appliances, or in connection with travel contracts); hence, it is appropriate to limit the annual premium to EUR 100 with no restriction on the duration of the contract. The following wording is therefore proposed: "(f) the premium does not exceed EUR 100 per year and contract with no restriction on contract duration."

4.2. Article 2 - Definitions

4.2.1. Article 2 defines the terms used in the application of the directive. Some of these definitions are not clear.

4.2.1.1. Article 2(3) defines insurance mediation as "the activities of introducing, giving information, proposing or carrying out work preparatory to the conclusion of, or in concluding, contracts of insurance, or assisting in the administration and performance of such contracts, in particular in the event of a claim". In the German version of the proposal, the word "Vorschlagen" (proposing) should be replaced by the term "Informationserteilung" (giving information) to bring it more into line with the English version. (Translator's note: The English version already makes a distinction between giving information and proposing.) Furthermore, the definition of insurance mediation should also include the actual provision of advice connected with the conclusion of a contract. The Committee considers that the administration of insurance contracts does not constitute insurance mediation within the meaning of the directive. The directive should clearly state that it is not necessary for all the given criteria to be met before an activity can be deemed to constitute insurance mediation. The following wording is thus recommended: "(3) 'Insurance mediation' means the activities of introducing or carrying out work preparatory to the conclusion of, or in concluding, contracts of insurance, and giving information and advice in connection therewith, and assisting in the performance of such contracts, particularly by providing advice in the event of a claim. It does not include the establishment of contacts with the customer. In order to constitute 'insurance mediation', only one of the given criteria need be met."

4.2.1.2. The definition of "insurance intermediary" in Article 2(5) only covers persons (agents, representatives of one or several firms, brokers etc.) who pursue insurance mediation independently, i.e. not as employees of an insurance undertaking. This clarification obviates the need to exclude from the definition insurance undertakings and their employees. In the light of the proposal for Article 2(3) the following wording is recommended: "(5) 'Insurance intermediary' means any person who, for remuneration or in connection with a product and/or service for which payment is received, takes up or pursues insurance mediation in a self-employed/independent capacity."

4.2.2. In line with the proposal set out in point 4.2.1.2 above, the following amendment is put forward for Article 2(6): "(6) 'Reinsurance intermediary' means any person who, for remuneration or in connection with a product and/or service for which payment is received, takes up or pursues reinsurance mediation in a self-employed/independent capacity."

4.2.3. Since the proposed directive does not define the term "parent undertaking" used in Article 10(1) (c), it is proposed that such a definition be added. The Committee is asked to do this:

4.3. Article 3 - Registration

4.3.1. Given the proposal to delete the third subparagraph of Article 4(1) (see point 4.4.3.4 below), Article 3(2) should be worded as follows: "2. Member States shall ensure that registration of insurance and reinsurance intermediaries is made subject to the fulfilment of the professional requirements laid down in Article 4."

4.3.2. Registration constitutes a legal act of admission to the profession. Conversely, refusal to grant registration impedes such admission and thus touches on a fundamental right - the freedom to choose an occupation. The directive must therefore require Member States to administer the licensing arrangements according to the rule of law, and must also make provision for an opposition and complaints procedure to challenge any rejection or withdrawal of registration. This can be achieved by rewording Article 3(4) as follows: "4. Member States shall ensure that an appeals procedure is available to intermediaries whose application for registration is rejected or whose registration is withdrawn on the basis of a sanction under Article 7. Member States shall also ensure that there is easy public access to the register or registers referred to in paragraph 1."

4.4. Article 4 - Professional requirements

4.4.1. The first subparagraph of Article 4(1) sets out the professional skills required of insurance intermediaries; it does not specify either the duration or the content of the arrangements for acquiring these skills, which give entitlement to state registration as an insurance intermediary. The phrase "appropriate general, commercial and professional knowledge and ability" does not even make reference to the activity of insurance mediation. By leaving the requirements for intermediaries' knowledge and abilities open to wide interpretation, there may be a risk that, in the event of national rules diverging completely, it will be impossible to meet the objective of securing better protection for insured persons - particularly as regards the requirements for intermediaries' professional competence. Unless basic skills are laid down that provide customer protection, major distortions in competition will ensue for intermediaries under the freedom to provide services which this proposal seeks to establish. It would thus seem that the proposed directive still fails to establish the equivalence of national rules on insurance intermediaries sought by Recommendation 92/48/EEC.

4.4.1.1. On the other hand, however, given the very high professional requirements for insurance intermediaries in some Member States, it is also impossible to establish uniform standards for insurance intermediaries' professional training by means of an EU directive. Hence, the Economic and Social Committee would not advocate a directive laying down uniform rules for professional training. However, it would recommend an approach along the lines proposed by BIPAR(16), namely to work out at least a "minimum standard"

on which Member States can build their national training courses and which should lay down a basic number of hours of appropriate theoretical and specialist training. It should be left to Member States - in conjunction with professional associations, insurance undertakings, various types of chambers and workers' representatives - to draw up, provide and implement the training programme and to determine to what extent credit can be given for any relevant professional knowledge already acquired. At the end of the training, an objective final examination should be set by the state or - depending on Member States' national set-ups - by a legally empowered state-recognised body. It is therefore proposed that the first subparagraph of Article 4(1) be worded as follows: "1. Insurance and reinsurance intermediaries shall possess appropriate general, commercial and professional knowledge and ability in the insurance sector, which shall be acquired by completing a total of at least 300 hours' practical and theoretical training. Credit may be given for relevant knowledge acquired by means other than training. The training shall conclude with an examination by a state or state-recognised body."

4.4.2. The Committee trusts that the provisions of the second subparagraph of Article 4(1) are also applicable to banks and savings institutions which take up or pursue insurance mediation in addition to providing financial services, thereby obliging the management of these bodies to meet all the requirements of Article 4 and to be registered. Employees of these undertakings who are directly involved in insurance or reinsurance mediation, must have the product-related knowledge and ability required for the insurance mediation activities they take up or pursue, and must be supervised by the registered management(17).

4.4.3. Under the third subparagraph of Article 4(1), Member States need not apply the professional skill requirements to natural persons taking up and pursuing the activity of insurance mediation whose principal professional activity is not insurance mediation and whose income does not predominantly depend on it, provided a party equipped with the skills under the first subparagraph, or an insurance undertaking, takes on full responsibility for their actions and provides them with appropriate and relevant training.

4.4.3.1. This exemption runs counter to the Commission's intention "to guarantee that all persons (natural or legal) taking up and pursuing the activity of insurance or reinsurance mediation ... (meet) a minimum set of professional requirements(18)". It also goes against the Commission's view that effective protection of policyholders' interests can be achieved only if the directive and the requirements it contains apply to all insurance intermediaries(19).

4.4.3.2. The fact that national rules may require different professional skills from insurance intermediaries, constitutes unwarranted practical discrimination and thus contravenes the principle of equality. It is of no consequence in this regard that responsibility for any non-registered persons working for an undertaking or a registered intermediary is to be borne by their "superiors". This safeguard helps protect policyholders only after damage caused by incorrect advice or mediation has been done, but does not help prevent that damage from occurring in the first place. To do proper justice to customer protection, this directive must seek precisely to avoid incorrect advice being given or a faulty contact being concluded.

4.4.3.3. It is impossible to draw a clear distinction between a principal and secondary activity. Thus, it is a moot point whether two-hours' mediation a day constitutes a secondary activity for a person with no other employment, or whether a person may be considered to be involved in insurance mediation in a secondary capacity if he or she works half-time as an employee and half-time as an independent intermediary.

4.4.3.4. The Economic and Social Committee therefore calls for the deletion of the third subparagraph of Article 4(1).

4.4.4. The Commission proposal makes no transitional arrangements for intermediaries who have already been working independently in the insurance sector for a long time. The Committee feels it is inappropriate that these intermediaries should also be required to undergo training as a condition for registration and thus for carrying on with their work. The Committee would therefore propose that the following grandfather clause be included as the third subparagraph of Article 4(1): "Member States need not apply the requirement referred to in the first subparagraph to persons who, at the time of the entry into force of the national legislation adopted on the basis of this directive, have already been working in the field of insurance mediation for more than three years."

4.4.5. Under the first subparagraph of Article 4(2), one of the requirements for registration is that the insurance or reinsurance intermediary must never have been declared bankrupt. The concept of bankruptcy is not customary in all Member States. In Germany it was abolished under the 1994 insolvency ordinance(20) and replaced by the term insolvency. Apart from bankruptcy and insolvency, however, other punishable offences are also inconsistent with the reliability required of a professional insurance intermediary. These include in particular money-related offences such as embezzlement or misappropriation. To clarify and amplify this point, the following wording is recommended: "... in relation to insurance and reinsurance business, they shall not have previously been declared bankrupt, had insolvency proceedings launched against them in court or been sentenced for offences against the property of a third party, unless they have been rehabilitated in accordance with national law."

4.4.6. In Article 4(4)(b), the Commission proposes that, in order to ensure the transfer of premiums and claims, Member States may require that intermediaries have financial capacity amounting, on a permanent basis, to 8 % of their annual net retained revenue, subject to a minimum of EUR 15000.

4.4.6.1. This provision would not only require a profession to publish its income for the first time, but would also impose a considerable economic burden. The provision is also too vague to be workable. To ensure compliance, the competent authority would have to carry out permanent checks, which would require unforeseeable and unaffordable administrative expense. Moreover, the level of the security to be retained appears arbitrary and is not geared to any actual need for protection.

4.4.6.2. The Economic and Social Committee feels it is enough to require intermediaries to strictly segregate customers' monies from company accounts in order to protect client accounts in the event of bankruptcy, as required under Article 4(4)(c). Moreover, the first sentence of Article 4(4) allows each Member State to take action possible and permissible under national law to protect customers' monies.

4.4.6.3. Since the first sentence of Article 4(4) is very broadly worded, the Committee advocates dispensing with the open-ended list of possible security measures set out in sections (a) to (d), and, in any case, recommends the deletion of Article 4(4)(b).

4.5. Article 5 - Notification of establishment and services in other Member States

4.5.1. Article 5 of the Commission proposal provides for a notification system designed to guarantee the freedom to provide services and freedom of establishment within the Community. This article establishes the procedure to be followed by registered intermediaries wishing to pursue their profession in a Member State other than the one in which they are registered. The procedure requires notification on three fronts: (i) from the intermediary to his or her home-country registration office; (ii) from the home-country registration office to its counterpart in the host country and (iii) from the home-country registration office to the intermediary, informing him or her that the host-country registration office has been notified. Moreover, the competent host-country authority must inform the home-country authority of the conditions under which, in the interest of the general good, the business may be carried on in its territories (Article 5(3)). It is then necessary for the competent home-country authority to forward these conditions to the intermediary. Under the proposed directive, it will take at least three months before an intermediary is able to become established in another Member State or offer services there. It also involves several avoidable layers of red tape.

4.5.1.1. Thus the Commission rightly points out that this procedure could be modernised and that, taking into consideration the interest of the general good, the registers could be published on the website of each competent authority. The Commission proposes discussing such a procedure together with the Member States.

4.5.1.2. The Economic and Social Committee fully endorses the Commission's assessment and would advocate pressing ahead straightaway with the proposed simplification using modern media.

4.5.1.3. The Economic and Social Committee thus proposes that Article 5(1) and (2) be reworded as follows: "1. Any insurance or reinsurance intermediary intending to carry on business for the first time in one or more Member States under the freedom to provide services or the freedom of establishment shall inform the competent authority of the host Member State. The competent authority shall confirm to the intermediary within one month that he or she may take up the activity or become established. Failure to provide confirmation or to provide it on time shall entitle the intermediary to take up and pursue business in the host Member State.

2. The competent authorities of the Member States shall gather together the registers of insurance and reinsurance intermediaries on a joint website and update them regularly."

4.5.2. Article 5(3) of the Commission proposal stipulates that the competent authority of the host country must inform the authority of the home country of the conditions under which, in the interest of the general good, the business may be carried on in its territories. This point makes it clear that the directive will not guarantee either freedom to provide services or freedom of establishment. This, however, is supposed to be the express purpose of the directive. Otherwise, any Member State could isolate its own market by laying down additional requirements that go beyond those set out in Article 4. The directive should therefore make it clear that the conditions set by the Member States may not relate to the training requirements under Article 4(1)(21). The following addition is thus proposed to Article 5(3): "The conditions set by the Member States may not relate to the training requirements under Article 4(1)".

4.6. Article 10 - Information provided by the insurance intermediary

4.6.1. The German version of the Commission proposal states that "before any contact is made" ("vor jeder Kontaktaufnahme") an insurance intermediary is to provide the customer with the information listed in Article 10(1). It is in fact impossible, however, to provide information before any contact is made. The English version states that information must be provided "prior to any initial contract".

The Economic and Social Committee feels that the text must be brought into line with the English version and proposes the following wording: "1. No later than prior to the conclusion of any contract, an insurance intermediary shall provide the customer with at least the following information: ..."

4.6.2. Under Article 10(1)(e), the intermediary is required to provide information on the parties who may be held liable in the event of a claim. Apart from the insurance intermediary and his/her firm and/or partners, the only other parties to whom this may apply are generally the insurance intermediary's liability insurance and the company with which the insurance contract is established. The Committee therefore recommends that the paragraph be reworded as follows: "(e) the natural or legal persons (the intermediary's partners or firm, his/her liability insurance or that of his/her partners or firm and the name and address of the insurance company for which he/she operates) to be held liable for any negligence, misconduct or inappropriate advice by the intermediary in relation to the insurance mediation".

4.6.3. Article 10(3) of the Commission proposal obliges insurance intermediaries, prior to the conclusion of any insurance contract, to specify in writing the demands and the needs of the customer and to clarify the underlying reasons for their advice. (Translator's note: the words "in writing"

- in German: schriftlich - do not appear in the English version of the proposal). In most cases, this requirement is neither useful nor practicable. People take out third-party motor vehicle insurance when they buy or register a motor vehicle. They take out travel cancellation insurance to cover the risk of illness that might prevent them travelling. In most cases, contracts are consistent with the clear, unambiguous will of the party taking out the insurance, so that recording the customer's intention must be considered more as burdensome red tape than useful consumer protection. The Committee therefore feels that insurance intermediaries should only be obliged to record these details if the customer so desires. Customers should in that case also be required to inform insurance intermediaries in writing of their wishes. In the event of any claim, it is only possible to assess fault if written records are available from both parties. Intermediaries should however be required to point out their own obligation to keep records. Hence, the Committee proposes that Article 10(3) be reworded as follows: "3. The insurance intermediary shall inform the customer that, at the customer's request, the insurance intermediary is obliged to specify in writing the reasons and needs underlying the conclusion of a contract or the advice provided in that connection if the customer also informs the intermediary in writing of his/her wishes and needs."

4.6.4. The Economic and Social Committee proposes that Article 10(4) be expanded as follows: "The information referred to in paragraphs 1, 2 and 3 need not be given when the insurance intermediary mediates in the insurance of large risks, nor in the case of mediation by reinsurance intermediaries or insurance intermediaries tied to a specific firm in so far as they carry out insurance mediation only for that firm."

4.7. Article 13 - Transposition

4.7.1. The Commission proposes that Member States bring into force the laws, regulations and administrative provisions necessary to comply with this directive by 31 December 2003 at the latest and that they inform the Commission thereof forthwith.

4.7.2. The Economic and Social Committee feels that, in addition to that, Member States should also inform the Commission about the content and duration of the arrangements they set in place to meet the training and skill requirements under the first subparagraph of Article 4(1). It is therefore proposed that the following sentence be added to the first subparagraph of Article 13: "They shall in particular inform the Commission forthwith about the duration and content of the national arrangements made for the acquisition of the skills referred to under the first subparagraph of Article 4(1)."

Brussels, 30 May 2001.

The President

of the Economic and Social Committee

Göke Frerichs

(1) The statistics on market shares of the various channels of distribution set out on page 3 of COM(2000) 511 final have been expanded by Bipar to include data from the Scandinavian countries - see appendix.

(2) Directive 92/49/EEC (Third Non-Life Directive), OJ L 228, 11.8.1992, p. 1. Directive 92/96/EEC (Third Life Directive), OJ L 360, 9.12.1992, p. 1.

(3) OJ L 26, 31.1.1977, p. 14.

(4) OJ L 19, 28.1.1992, p. 32.

(5) OJ L 19, 28.1.1992, p. 32.

(6) COM(1999) 232 final, 11.5.1999.

(7) See footnote 6.

(8) Resolution A5-0059/2000, point 11.

(9) Own-initiative opinion on consumers in the insurance market, OJ C 95, 30.3.1998, p. 72.

(10) COM(2000) 511 final, point 1.2, paragraph 1, explanatory memorandum.

(11) COM(2000) 511 final, point 2, comments on Article 4, explanatory memorandum.

(12) OJ C 95, 30.3.1998, p. 72.

(13) BIPAR resolution (Oporto declaration), 7.10.1992, Germany: Insurance mediation 1993, p. 69.

(14) COM(2000) 511 final, point 2, comments on Article 1, paragraph 5, explanatory memorandum.

(15) OJ C 340, 10.11.1997, p. 32, Article 2.17.

(16) BIPAR resolution (Oporto declaration), 7.10.1992, Germany: Insurance mediation 1993, p. 69.

(17) cf. also comments made by Commission representatives at the insurance mediation study group meeting of the ESC Section for the Single Market, Production and Consumption, 20 February 2001.

(18) COM(2000) 511 final, point 1.3, first paragraph, explanatory memorandum.

(19) COM(2000) 511 final, comments on Article 1, explanatory memorandum.

(20) German insolvency ordinance (Insolvenzordnung), 5.10.1994, (Federal Law Gazette BGBl. I. p. 2866).

(21) Footnote 17 also applies here. See point 1.3 of the explanatory memorandum to the proposed directive.

APPENDIX

to the Opinion of the Economic and Social Committee

Market shares of the various insurance distribution channels in some countries of the European Union

>TABLE>

Source:

BIPAR 2001