Are insurance brokers and other types of market intermediary subject to regulation?

Insurance & Reinsurance

Japan Small Flag Japan

Unless otherwise permitted by any other laws, the Insurance Business Act prohibits any person from acting as an agent or intermediary to solicit insurance contracts, an activity which falls under the definition of “insurance solicitation” under the Act.

In the case of a life insurance company, only registered life insurance agents (ie, officers and employees of a life insurer; or life insurance agencies (agents) as well as their officers, employees and other personnel) may conduct “insurance solicitation.” In principle, in the current legal system, life insurance agents operate within the so-called “one-company exclusive system”, meaning they may deal with the insurance products of only one insurance company. However, by fulfilling the prescribed legal requirements (such as enrolling two or more life insurance agents), it is possible to deal with the insurance products of multiple insurance companies, with quite a number of independent agencies currently doing so.

The situation involving non-life insurance companies (including reinsurance companies) is as follows:

  • Officers (other than auditors) and employees of a non-life insurer may engage in “insurance solicitation” without being registered nor any notice thereof.
  • Registered non-life insurance agencies as well as their officers (with the exception of auditors) and employees may engage in “insurance solicitation.” No officers or employees of non-life insurance agencies are required to be registered, but they are required to give notice of such a fact.

Registered insurance brokers may also engage in “insurance solicitation” (limited to mediating conclusions of insurance contracts). The Insurance Business Act has assigned special duties to such insurance brokers, including the duty to deposit a security guarantee (JPY20 million at the time of commencement of their business, which payment can be exchanged for an insurance brokers' liability insurance policy), the duty to disclose fees and commissions, the duty to prepare bought and sold notes, the duty of loyalty (the duty of “best advice”), and other special duties that have not been imposed on insurance agents.

Australia Small Flag Australia

Insurance brokers and intermediaries do not fall within the regulation of the IA nor the LIA in Australia. While this means they do not need to obtain an authorisation or registration to conduct an insurance business, they are still a provider of financial services as they advise on insurance products. This means they are subject to Chapter 7 of the Corporations Act, and in most cases are required to obtain an AFSL from ASIC.

An exception to this general requirement is where an intermediary solely conducts reinsurance activities. As reinsurance is excluded from the definition of “financial products” in the Corporations Act, these intermediaries are exempted from the requirement to obtain an AFSL in respect of provision of financial services for reinsurance.

Denmark Small Flag Denmark

Insurance brokers, agents and other types of intermediaries are regulated by the Danish Insurance Mediation Act, and they must be recorded in a public register. In brief, the Act sets out certain educational requirements, and a license issued by the Danish Financial Supervisory Authority (DFSA) is required to do business in Denmark. Intermediaries established in other EEA countries may generally passport their license through their home country regulator.

The authorised supervisory body is the DFSA, which is an authority under the auspices of the Minister for Economics and Business Affairs. The primary task of the DFSA is supervision of financial businesses in Denmark, including insurance companies and insurance intermediaries doing business in Denmark.

Poland Small Flag Poland

Insurance brokers and other insurance intermediaries (insurance agents) are currently regulated by the Polish Act of 22 May 2003 on Insurance Intermediation (the “Insurance Intermediation Law”). Intermediation activity is subject to supervision by the KNF, which maintains a register of insurance agents and a register of insurance brokers as well as oversees their activity.

An insurance agent acts for and on behalf of an insurer on the basis of an agency agreement, and performs its activity through individuals (persons performing agency activity), who must meet specific regulatory requirements and be entered into the relevant register of insurance agents.

An insurance broker acts for and on behalf of the policyholder, and performs its activity through individuals (persons performing agency activity), who must meet specific regulatory requirements.

As of 1 October 2018 the Insurance Intermediation Law will be replaced by a new regulation – the Act of 15 December 2017 on Insurance Distribution (the “Insurance Distribution Law”), which implements in Poland Directive (EU) 2016/97 of the European Parliament and of the Council of 20 January 2016 on insurance distribution (the “IDD”).

The Insurance Distribution Law regulates the activity of both insurance brokers and insurance agents. It also introduces a new type of intermediary, i.e. an ancillary insurance agent. Additionally, following the IDD, it also regulates the distribution of insurance products directly by insurance undertakings.

As is the case under the current regulations, under the Insurance Distribution Law insurance intermediaries will be supervised by the KNF. According to the new law, insurance agents and ancillary agents shall act for and on behalf of insurers on the basis of agency agreements. Insurance brokers shall act for and on behalf of the policyholders.

Turkey Small Flag Turkey

In Turkish Law, market intermediaries are the agent and the broker and their structure and activities are also regulated. Activities of both agents and brokers are subject to a license Undersecretariat. There are specific requirements regarding the shareholding and management structure of insurance brokers. Shareholders, board members, auditors, authorized representatives and employees of insurance companies, insurance agents and survey companies shall not perform brokerage activities, become board members, auditor or shareholders of brokerage companies, be remunerated by brokerage companies for any work. Such requirements shall also apply to children of these persons. Insurance and Reinsurance Brokers Regulation no. 26913

Insurance agents shall also be registered in the Register maintained by the Union of Chambers and Commodity Exchanges of Turkey. Under the Article 23/4 of IA, an insurance agent can be deregistered in case that it no longer complies with the requirements. In the same way with the brokers, board members, auditors and authorized representatives of insurance companies, insurance brokers and expertise companies, insurance brokers and expertise companies cannot become board members, auditors, authorized representatives or shareholders of insurance agents or be remunerated by insurance agents for any work. Insurance Agents Regulation no. 28980 determines principles and requirements of agents’ establishment and operations.

United Kingdom Small Flag United Kingdom

Various activities undertaken in relation to contracts of insurance (including arranging a contract of insurance or assisting in the administration and performance and advising on contracts of insurance) are regulated under FSMA. Accordingly, authorisation must be sought from the FCA to act as an insurance intermediary (note that the PRA does not regulate insurance mediation).

It is also possible for an entity to become an appointed representative of a regulated firm in order to carry out mediation activities without itself being regulated, on the basis that the regulated principal has full responsibility for the actions of the appointed representative.

Sweden Small Flag Sweden

All individuals or companies who undertake professional insurance mediation activities in Sweden are subject to regulation, such as the Insurance Mediation Act (SFS 2005:405) and the Insurance Mediation Ordinance (SFS 2005:411). The establishment, operations and supervision of insurance intermediaries' businesses are also governed by several regulations, recommendations and guidelines issued by the Swedish Financial Supervisory Authority (FSA).

Please note that the Directive (EU) 2016/97 (the Insurance Distribution Directive or "IDD") will be implemented through the new Insurance Distribution Act. The new act is proposed to enter into force on 1 October 2018, with the Insurance Mediation Act and Insurance Mediation Ordinance consequently being repealed as of the same date.

Germany Small Flag Germany

German law distinguishes between insurance brokers (Versicherungsmakler) acting for and representing the interests of the policy holder and insurance agents (Versicherungsvertreter) acting on behalf of the insurer. Pursuant to Section 34d of the German Commercial Code (Gewerbeordnung, GewO), both brokers and agents in general need to obtain authorisation from the Chamber of Industry and Commerce (Industrie- und Handelskammer, IHK) of the intermediary's registered seat. BaFin does not directly supervise brokers and other intermediaries, but, due to certain statutory provisions such as Sections 23, 26 and 48 VAG, BaFin is authorised to monitor insurers' sales activities. This includes, but is not limited to, supervision of contractual agreements between insurers and insurance intermediaries.

Norway Small Flag Norway

Insurance mediation in Norway is governed by the Act on Insurance Mediation (2005:41), which is based on Directive 2002/92/EC on insurance mediation. The Insurance Mediation Act governs two kinds of insurance mediators, insurance brokers and insurance agents. Insurance brokers act as true brokers on behalf of the clients (policyholders) whereas insurance agents act for and on behalf of an insurance undertaking.

Insurance broking is subject to a soft licensing requirement in Norway. The main conditions are that:

  • The company is established as a public/private limited company, general partnership, limited partnership or sole proprietorship.
  • The company is not subject to bankruptcy proceedings or debt negotiations.
  • The company has taken out statutory liability insurance.
  • The person(s) being in charge for the insurance brokering activities are fit and proper to hold such position(s).

EEA-based and licensed insurance broker undertakings can provide the same activities in Norway through a branch or on a cross-border basis, subject to a notification procedure. There is also a limited possibility for non-EEA based insurance brokers to establish a branch in Norway, although to date this has not been used.

Insurance agent activities are not subject to license requirements but shall be registered in a publicly available register that shall be held by the principal insurance undertaking. Fit and proper requirements apply. The FSAN requires that insurance agents representing EEA-based insurance companies must be registered with the FSAN, not with the foreign insurance company, unless the insurance company's home state legislation itself requires that local insurance companies register their insurance agent with a publicly available register.

The Norwegian legislation regarding insurance intermediaries applies to direct insurance mediation as well as reinsurance mediation, save for certain disclosure requirements which do not apply for reinsurance intermediaries.

Mexico Small Flag Mexico

As a general rule, intermediation in insurance contracts is reserved exclusively to insurance brokers as set forth in Article 91 of the LISF.

An insurance broker requires the prior authorisation of the National Insurance and Bonding Commission (“CNSF”) to intermediate. For purpose thereof, an application must be filed with the CNSF.

The CNSF may grant an authorisation to intermediate to either individuals with an employment relationship with the insurance company or individuals that are independent from the insurance company and act through an agency agreement, or to legal entities (insurance brokers), which must be incorporated as limited liability stock companies pursuant to the Regulation of Insurance and Surety Brokers. Insurance brokers shall perform the intermediation activities solely through individuals certified by the CNSF to intermediate insurance contracts. The authorisation granted by the CNSF to individuals to intermediation insurance is valid for three years and may be renewed. Insurance brokers incorporated as entities may be authorised to act as such for an indefinite period of time.

As an exception, standard-form insurance contracts may be promoted and distributed by legal entities, without the intervention of an insurance broker or agent, provided that the insurance company and the legal entity enters into a services agreement previously registered with the CNSF, and that the employees, representatives or officers of the legal entities involved in the promotion of insurance products receive the training and/or certifications from the CNSF required under Articles 102 and 103 of the LISF.

Reinsurance intermediaries are the only entities authorised to provide reinsurance intermediation services as set forth in article 106 of the LISF. To incorporate and operate a reinsurance intermediary, the prior authorisation of the CNSF is required and for purposes thereof, an application must be filed with the CNSF. The application must comply with the requirements set forth in Chapter 35 of the Sole Insurance and Surety Regulation (the “Circular”). The reinsurance intermediary must be incorporated as a limited liability stock company and have its corporate domicile in Mexico.

Under Mexican law, insurance claims adjusters require the prior authorisation of the CNSF to perform activities related to the adjustment of insurance claims. The requirements for such authorisation are those set forth in article 111 of the LISF.

UAE Small Flag UAE

Brokers are specially regulated pursuant to IA Resolution No. 15 of 2013 and IA Decision No. 58 of 2013, which collectively set forth the licensing and capital requirements for brokers, as well as restrictions upon their activities. Brokers are not permitted to combine their role as a broker with the role of insurance agent, consultant, loss adjuster, or actuary. Likewise, while brokers may engage in personal insurance and funds accumulation on one hand, and property and liability insurance on the other, they must have separate employees and systems for each business unit.

Third party claims administrators (TPA) of medical insurance claims are also separately regulated pursuant to IA Resolution No. 9 of 2011, as amended by Resolution No. 7 of 2015. This regulation sets forth minimum capital requirements, management requirements, and limitations upon the extent of a TPA business. For example, a TPA is limited in the scope of its activities, and may not sell or market insurance products or have any ownership or managerial interest in a medical provider.

In order to establish a brokerage, TPA, or other insurance industry provider (other than insurer, as discussed below), in “onshore” UAE, a commercial license must also be obtained from the relevant Emirate’s department of economic development. Ownership of such an entity must be held at least 51% by a UAE or GCC national or juristic person, as per the UAE Commercial Companies Law.

The IA has also issued regulations relating to the licensing and conduct of Insurance Agents (Resolution No. 8 of 2011), Actuaries (Resolution No. 22. of 1985, and expanded draft Regulations proposed in 2016) and Surveyors and Loss Adjusters (Resolution No. 6 of 2010).

As noted under Query 1, the UAE has, in addition to those “onshore” entities established pursuant to its Commercial Companies Laws, various “free zones”, where companies engaged in certain insurance industry activities may be established under separate free zone regulatory schemes. These are the Dubai International Financial Centre (DIFC) and the newer Abu Dhabi Global Market (ADGM), which was established in late 2015. An advantage of these free zones is that they allow 100% foreign ownership of corporate entities, unlike an “onshore” UAE set-up which requires a majority of local ownership. The big disadvantage, however, is that a free zone entity is generally prohibited from conducting business outside of the free zone in which it is located, which greatly limits the services that it can provide in the UAE.

Nevertheless, many intermediaries that primarily deal in the reinsurance market have established themselves in the DIFC, where they have gained valuable exposure to the overall UAE market. Additionally, reinsurers may establish themselves directly within the DIFC. Establishment of a primary insurer in the DIFC is more problematic, as unlike reinsurers, primary insurers doing business in the UAE require an IA license (see query 6 below) and the market for primary insurance products within the confines of that permitted by the DIFC is very limited.

United States Small Flag United States

All states require agents, brokers and other market intermediaries to be licensed in order to sell, solicit or negotiate insurance and prohibit anyone without a license from performing these activities. An insurance license is generally required for a person to receive commissions or other compensation for the sale of insurance, which may not be shared with unlicensed persons.

State insurance laws refer to licensed persons as agent, broker, producer or combinations of the foregoing. A common difference between agents and brokers is that agents work on behalf of the insurer while brokers represent the insured. Generally, an agent, but not a broker, has to be appointed by an insurer and such appointment has to be filed with the state insurance department.

States generally grant agent or broker licenses to individuals and corporate entities, but an entity license usually requires an individual associated with the entity to be licensed in an individual capacity. Licensing laws may contain narrow exceptions (for example, employees of licensed insurers), but generally anyone who interacts with an insurance consumer or potential insurance consumer has to pass a licensing examination to receive a license from each state in which such person acts as an agent or broker.

States may have separate licensing requirements for life, health and property/casualty agents and brokers and some licensing laws distinguish between personal lines and commercial lines licenses. States may also require license applicants to satisfy pre licensing educational requirements before being eligible to take a licensing examination and many have continuing professional education requirements.

The licensing process requires an applicant to disclose general background information, including detailed information about character, experience and financial responsibility. A criminal background check is often conducted by the state insurance department.

State insurance commissioners regulate insurance market intermediaries through monetary penalties and the ability to suspend or revoke a license. Permissible grounds for such actions are generally set forth in state insurance laws and include violations of any insurance law or order, criminal convictions, being subject to enforcement by another state, engaging in fraudulent or dishonest business practices, or demonstrating incompetence. In most cases, the licensee has a right to a hearing regarding the administrative action before it is taken.

Other insurance market participants, such as reinsurance intermediaries, insurance consultants, adjusters and/or third party administrators are usually subject to state insurance regulation, including licensing requirements in each state where the relevant insurance activities take place.

Austria Small Flag Austria

Insurance broking is a regulated trade pursuant to the Trade Regulation Act (Gewerbeordnung; GewO). Insurance mediation can either be carried out by insurance agents or insurance brokers, depending on their relationship to the insurer. Both insurance brokers and insurance agents have to be authorised under the GewO (cf. Question 4).

The brokerage of insurance services itself is governed by the Broker Act (Maklergesetz, MaklerG).

Chile Small Flag Chile

Insurance and reinsurance brokers’ activities are extensively regulated. In order to be included in the corresponding Registry of the Regulator, they have to comply with several requirements.

Insurance brokers need to prove that they have impeccable commercial antecedents, as well as knowledge of insurance and reinsurance (for which they have to approve a written test before the Regulator). In addition, they have to present a guarantee to the Regulator.

In respect of reinsurance brokers, in order to obtain their registration, they need to present the legal antecedents regarding the formation of the company, and present a policy for professional indemnity without deductible or coinsurance, in an amount equal to 1/3 of the premium intermediated in Chile in the previous year, but no lower than 20,000 Unidades de Fomento (the “UF”, is a unit of indexation), and according to rates on 16 April 2018, this figure amounts to approximately USD 906,000).

If the broker is foreign, in addition to the above they shall appoint a representative with residence in Chile, as well as evidence that the company has been duly formed in its country of origin, that it currently exists, and that it is authorised to intermediate risks ceded from abroad.

Switzerland Small Flag Switzerland

Intermediaries doing business in Switzerland are subject to regulation in accordance with Art 40 to 45 ISA in combination with Art 182 to 190 ISO.

Brokers (i.e. intermediaries who are not legally or economically tied to an insurance company) have to register themselves in FINMA’s public intermediaries’ register, Art 42, 43 ISA.

The broker has to meet the following prerequisites to get registered in accordance with Art 44 ISA, 184 et seq ISO:

  • Professional qualification evidenced by an exam or equivalent proof.
  • Personal integrity, i.e. no criminal or debt records.
  • PI insurance or equivalent financial security.

Intermediaries are deemed tied intermediaries and exempt from the duty to register if they:

  • Realise commission payments in the course of 1 calendar year predominantly from one or two insurance companies
  • Receive remuneration from an insurance company that could affect their independence or have a cooperation agreement with an insurance company that could impair their independence
  • hold a participation in an insurance company that exceeds 10 per cent, are in the management of an insurance company, or can influence the business of the company by any other means.

The exemption applies accordingly if an insurance company holds more than 10 per cent of the share capital of the intermediary’s operation, or if the company can influence the business of the intermediary by other means.

Intermediaries are subject to certain obligations concerning information towards their customers, Art 45 ISA, 190 ISO.

Peru Small Flag Peru

According to the General Law, the SBS authorizes and regulates the activities of insurance intermediaries and keeps a record of them. The registry specifies the services of the branches of insurance in which each one can operate, as appropriate. The denomination of insurance intermediaries comprises insurance and/or reinsurance brokers.

The SBS previously authorizes the accomplishment of the intermediation and other activities complementary to these in the contracting of insurance.

India Small Flag India

Yes, all insurance intermediaries (including insurance brokers) are subject to the regulations issued by the IRDAI. Insurance intermediaries are required to be licensed/registered in accordance with the applicable regulations for that form of intermediary and are required to comply with, inter alia, the specific code of conduct prescribed by the IRDAI. Only licensed/registered insurance intermediaries are permitted to distribute insurance products for Indian insurers.

Singapore Small Flag Singapore

Generally, insurance brokers are subject to regulation under the IA.

Entry into insurance intermediation business in Singapore is fairly regulated and supervised. In Singapore, insurance agents are to be registered with the General Insurance Association of Singapore ('GIA') and insurance brokers are to be registered with MAS.

Brazil Small Flag Brazil

Insurance brokers are subject to the supervision of SUSEP and also to a self-regulatory body recently created by law (Brazilian Institute for Self-Regulation of the Brokerage Market for Insurance, Reinsurance, Capitalization and Open Complementary Pension Plans – IBRACOR). Moreover, insurance brokers are the only intermediaries entitled to receive commissions on the basis of insurance.

Israel Small Flag Israel

The Control Law and the Contract Law deal also with insurance brokers. According to the Control Law, an insurance broker must be licensed. In addition, the Control Law prohibits brokers from acting as intermediaries in an insurance transaction between an insured and an unlicensed insurer.

The Contract Law deals with the status of the insurance broker in the insurance transaction, and determines that generally the broker will be considered as the agent of the insurer for the purpose of negotiations towards an insurance contract and its conclusion; for the purposes of knowledge of material facts, for the purpose of receiving premium, and for the purpose of receiving notifications.

Belgium Small Flag Belgium

Yes, they are. The Insurance Act sets out three categories of insurance intermediaries which are all subject to the Act: insurance brokers, insurance agents and insurance subagents (Article 262).

Within the category of insurance agents, the MiFID-legislation introduced the category of “tied agent”. A tied agent is an insurance agent who exercises insurance intermediation activities in the name and on behalf of either one insurer or several insurers, as long as the insurance contracts of those insurers are not in competition with each other (Article 257, 5° of the Insurance Act). Insurers working with tied agents are entirely responsible for the acts and omissions of their tied agents and their compliance with the MiFID-rules of conduct.

Brokers and non-tied agents have to ‘personally’ fulfill all MiFID-rules of conduct.

Finally, it must be noted that insurance agents (tied and not tied) are also subject to Book X of the Belgian Economic Code (‘CEL’), on commercial agency.

France Small Flag France

The four categories of insurance intermediaries listed in the French Insurance Code (brokers, insurance agents, tied agents, tied subagents) must be registered with ORIAS, the French Register of Insurance Intermediaries. They must be of good repute and meet certain minimum requirements regarding their professional qualifications. Insurance intermediaries must also be insured for their professional liability and meet financial guarantee requirements.

Though they are also regulated by the ACPR, like insurers, unlike insurers, insurance intermediaries are not subject to capital, governance or accounting requirements.

The new Insurance Distribution Directive, which is currently scheduled to come into force on 1 October 2018, should introduce important changes to the French insurance intermediation industry, specifically in relation to:

  • intermediaries’ duties to inform potential insureds and provide advice on insurance products, which will now have to meet more exacting standards, and
  • transparency, which is further promoted by new rules intended to provide policyholders with a greater degree of information regarding intermediaries’ remunerations and intended to prevent conflicts of interests.

Canada Small Flag Canada

Yes, the regulation, licensing and supervision of insurance agents, brokers, adjusters and other intermediaries in the distribution of insurance products is the responsibility of provinces and territories. In some jurisdictions, this supervision and licensing is delegated to local councils or other self-regulatory organizations which typically issue licenses, oversee proficiency of individuals and administer disciplinary sanctions.

Ireland Small Flag Ireland

A person (or firm) cannot undertake, or claim to undertake, insurance mediation activities unless they are registered with the Central Bank pursuant to the European Communities (Insurance Mediation) Regulations 2005 (the “2005 Regulations”) or are passporting into Ireland on a freedom of establishment or freedom of services basis.

Insurance undertakings and intermediaries that manufacture any insurance product for sale to customers are required to implement product oversight and governance procedures prior to distributing or marketing an insurance product to customers. A target market must be identified for each product to ensure that the relevant risks to that target market are identified, assessed and regularly reviewed. In addition, insurance intermediaries are required to disclose the nature of any remuneration received in relation to an insurance contract to the customer.

Under the 2005 Regulations, “insurance mediation” means “any activity involved in proposing or undertaking preparatory work for entering into insurance contracts, or of assisting in the administration and performance of insurance contracts that have been entered into (including dealing with claims under insurance contracts)….”. The broad definition of insurance mediation contains important carve-outs excluding certain activities from that definition for the purposes of the 2005 Regulations. For example, activities specifically excluded from the definition include an activity: (a) that is undertaken by an insurer or an employee of such an undertaking in the employee’s capacity, (b) involves the provision of information on an incidental basis in conjunction with some other professional activity, so long as the purpose of the activity is not to assist a person to enter into or perform an insurance contract, or (c) involves the management of claims of an insurance undertaking on a professional basis; or (d) involves loss adjusting or expert appraisal of claims for reinsurance undertakings.

In Ireland, the 2005 Regulations captures most activities that insurance agents engage in other than limited back office claims management. However, the definition of insurance mediation in the 2005 Regulations refers to activities that include ‘dealing with claims’ and not the management of such claims. Therefore, it is the generally accepted understanding that insurance undertakings who engage solely in the administration of insurance claims, without assisting the insured with regard to claims are not governed by the 2005 Regulations.

On applying to the Central Bank to be registered as an insurance intermediary, the applicant must satisfy a number of criteria for authorisation, which include:

  • the good reputation of directors;
  • the knowledge and ability of senior management and key personnel;
  • the holding of minimum levels of professional indemnity insurance; and
  • maintenance and operation of client premium accounts.

The Central Bank maintains a register of authorised insurance intermediaries in Ireland and is responsible for supervising their compliance with regulatory requirements by way of advertising monitoring, themed inspections, general inspections and mystery shopping. Intermediaries are generally ranked as ‘Low Impact’ under the Central Bank’s supervisory framework, the Probability Risk and Impact System (“PRISM”). Therefore, intermediaries are subject to a lower level of supervision than imposed by the Central Bank on insurers and reinsurers.

The Irish Investment Intermediaries Act 1995 (the “IIA”), has not been disapplied and continues to govern the regulations of intermediaries despite the 2005 Regulations. As such, two pieces of Irish legislation govern intermediaries operating in Ireland. In practice, however, the Central Bank treats the provisions of the IIA as having been formally disapplied, although this is not strictly accurate. As such, technically the IIA is still inforce and insurance intermediaries should continue to comply with the IIA as well as the provisions of the 2005 Regulations.

The Insurance Distribution (Recast) 2016/97 (the “IDD”) was required to be transposed into Irish law by 23 February 2018, at which point the provisions of the 2005 Regulations were to be repealed. However, owing to discussions held at European level, the transposition date of the IDD has been postponed to 1 October 2018. Like its predecessor, the IDD is a 'minimum harmonising' directive. The IDD creates a minimum legislative framework for the distribution of (re)insurance products within the EU and aims to facilitate market integration and enhance consumer protection. The IDD introduces general consumer protection principles for all insurance distributors to act honestly, fairly and professionally and in accordance with the best interests of the customer.

The EU Regulation on Key Information Documents for Packaged Retail and Insurance-based Investment Products (EU1286/2014) (the “PRIIPs Regulation”), supplemented by the PRIIPs Regulatory Technical Standards 2017 (Delegated Regulation 2017/653) (“RTS”) came into effect on 1 January 2018. The PRIIPs Regulation is a key piece of legislation; which aims to enable retail investors to understand and compare the key features and the potential risks and rewards of investment products, funds and investment-linked insurance policies. The objective of the PRIIPs Regulation is to ensure that a common standard for Key Information Documents (“KIDs”) is established in a uniform fashion so as to be able to harmonise the format and the content of those documents.

A PRIIP means “an investment product where the amount repayable to the retail investor is subject to fluctuations because of exposure to reference values or to the performance of one or more assets which are not directly purchased by the retail investor; or an insurance product which offers a maturity or surrender value and where that maturity or surrender value is wholly or partially exposed, directly or indirectly, to market fluctuations”.

The PRIIPs Regulation applies to persons who: (i) manufacture PRIIPs for sale to retail investors in the EEA or make changes to an existing PRIIP including, but not limited to, altering its risk and reward profile or the costs associated with an investment in a PRIIP (“PRIIP Manufacturer”); or (ii) advise on or sell PRIIPs to retail investors in the EEA.

The wide scope of PRIIPs Regulation means that all PRIIP Manufacturers and financial intermediaries that distribute PRIIPs to retail investors fall within its scope. Certain products, including non-life insurance products and pension products, are specifically excluded from the PRIIPs Regulation and UCITs are not obliged to comply with PRIIPs until 1 January 2020.

Spain Small Flag Spain

Yes. Insurance intermediaries are regulated in the Insurance and Reinsurance Mediation Act
2006, which generally regulates insurance mediation activities of insurance brokers, agents
bank-assurance operators, as well as those of "external collaborators" (third parties other than intermediaries assisting the latter in the distribution of insurance products).

It should be noted that, in Spain, there are basically two types of insurance intermediaries
(insurance agents –which includes bank-assurance operators- and insurance brokers). Whilst
agents are linked to the insurer (to which they represent) through the agency contract, brokers are independent and cannot enter into contracts with Insurers which may hinder such obligation of independency.

The law mentioned before regulates access requirements (training, knowledge and skill, financial and other requirements) for intermediaries (brokers and agents) to be licensed/registerd in Spain and their mediation activities (both for local and EU intermediaries operating in Spain).

Portugal Small Flag Portugal

Insurance intermediation is also a regulated activity in Portugal which is only accessible to duly authorized intermediaries. The legal framework governing insurance and reinsurance mediation in Portugal is currently that set forth in Decree-Law 144/2006 of 31 July. However, it is expected to replaced upon the implementation of Directive (EU) 2016/97 of the European Parliament and of the Council of 20 January 2016: the Insurance Distribution Directive. This directive must be implemented by 1 July 2018 and the new regulation must come into force by 1 October 2018.

Currently the three main categories of insurance intermediaries are (i) tied insurance intermediaries (who carry on their activity in the name and on behalf of one or more insurance undertakings or as a complement to their professional activity), (ii) insurance agents (who carry on their insurance mediation activity on behalf of one of more insurance undertakings or of another insurance intermediary), and (iii) insurance brokers (who carry on their activity with total independence from the insurance undertakings, so as to provide clients with an impartial evaluation of the insurance products available in the market in order to present them with the product that best suits their interests).

The new regulation is expected to eliminate the first category of intermediaries, but the distinction between insurance agents and insurance brokers is expected to subsist. A new category of intermediaries carrying on their activity on an ancillary basis is expected to be created under the new framework.

Insurance intermediaries are also under the supervision of ASF.

Updated: May 21, 2018