Online insurance intermediation Sydney, 18 September 2013 Prof. Dr. I. Rokas © IKRP (Athens) Law...

Online insurance Online insurance intermediationintermediationOnline insurance Online insurance intermediationintermediation

Sydney, 18 September 2013Sydney, 18 September 2013

Prof. Dr. I. Rokas

© IKRP (Athens) Law Firm

Prof. Dr. I. Rokas


Protection via an ocean of informationProtection via an ocean of information

AIDA World - Working Party: “Distribution of Insurance Products”AIDA World - Working Party: “Distribution of Insurance Products”

Sydney, 18 September 2013AIDA World - Working Party: “Distribution of Insurance Products”

Prof. Dr. I. Rokas

© IKRP (Athens) Law Firm 2

Obligation of (off)online insurance intermediaries (IIM) to proceed with notification in order to work under FoS in the EU

Obligation of (off)online insurance intermediaries (IIM) to proceed with notification in order to work under FoS in the EU

Criteria for the notification in non online (offline) business

IIM provides marketing, insurance mediation services or when it is actively seeking business from a customer resident in that MSExamples CEIOPS, DOC-15/07: The IIM asks for and organises, on its own initiative, meetings with clients

established in another MS. The IIM gives/sends information on specific products, conditions etc to

selected groups of clients established in a given MS / in specific languages of some MS etc (the intention of the intermediary to contact clients in another country is clear)

Online Insurance intermediationOnline Insurance intermediationOnline Insurance intermediationOnline Insurance intermediation


Prof. Dr. I. Rokas


Obligation of (off)online insurance intermediaries (IIM) to proceed with notification in order to work under FoS in the EU (cont.)

Obligation of (off)online insurance intermediaries (IIM) to proceed with notification in order to work under FoS in the EU (cont.)

Criteria for the notification in online business

Website evidencing IIM’ s intention to direct its activities in that MS – Luxemburg ProtocolIndications: The international nature of IIM’ s activity Use of foreign language/currency with the possibility to conclude a contract in

that language/currency Mentioning of itineraries from other MS for going to the place where the

merchant is established Mentioning of telephone numbers with an international code The outlay of expenditure on an internet referencing service to facilitate access

to the merchant’s site of consumers domiciled in other MSs Use of a top-level domain name other than that of the merchant’s home MS Mentioning of international clientele from various MS



Prof. Dr. I. Rokas


Obligation of an IIM to establish in a host MSObligation of an IIM to establish in a host MS

Criteria for the obligation to establish (FoE) in offline business According to ECJ case law

Lasting duration and/or Regularity and/or Periodicity and/or Continuity

OR According to EU Commission If IIM cumulative meets the characteristics of a branch/agent, i.e. if IIM representative in

the host MS: Is subject to the direction and control of the parent IIM Receives a permanent brief from the parent IIM Is able to commit the parent IIM

Criteria to establish in online business

EU does not accept establishment for activities conducted exclusively online Fixed ATM type machines/servers do not suffice Needs human management However, applicable rules for establishment could analogically apply if criteria to

establish in offline business are met



Prof. Dr. I. Rokas


Third Country IIM (off)online business in the UnionThird Country IIM (off)online business in the Union

Criteria distinguishing offline services as solicited/unsolicited

Offline IIM services are identified as solicited, 3rd country IIMs included under almost the same criteria applicable under FoS transactions in another MS The IIM asks for and organises, on its own initiative meetings with clients

established in another MS. The IIM gives/sends information on specific products, conditions etc to

selected groups of clients established in a given MS / in specific languages of some MS etc (the intention of the intermediary to contact clients in another country is clear)



Prof. Dr. I. Rokas


Third Country IIM (off)online business in the Union (cont.)Third Country IIM (off)online business in the Union (cont.)

Criteria distinguishing online services as solicited/unsolicited

Online IIM services are identified as solicited If the transaction is not conducted under the customer’s exclusive initiative

Unsolicited services are identified If the transactions are conducted under the customer’s exclusive initiative

(OECD Guidelines/GATS/MiFID 2,recital 74). However IT evolution impedes a more clear distinguishment between solicited and unsolicited transactions: further criteria should be developed



Prof. Dr. I. Rokas


Precontractual information which insurers have to provide (insurer is also regulated by IMD 2 if he provides direct sales) Information to be given by the insurer - in its capacity as insurer

In life insurance (information provided in Solvency II, art. 185) In non life insurance (information provided in Solvency II, art. 183-184)

Information to be given by the insurer - in its capacity as direct seller of insurances In insurance products without investment element (IMD 2, art. 15-21) Marketing (sales) of insurance investment products. Insurer has to draw up

(according to PRIPs, art. 5-11) key information in its capacity as manufacturer of the product and to provide it to the insured (PRIPs, art. 12-13) and additionally information has to be given (IMD 2, art. 22-25)

Additional information for the online services Additional information for distance marketing of consumer financial

services

From a law on insurance intermediation to a law on marketing of insurance products via an ocean of informationFrom a law on insurance intermediation to a law on marketing of insurance products via an ocean of information

(ECD, art. 5,6,10)

(DMD, art. 3-5)

Online Insurance intermediation - Online Insurance intermediation - Protection via an ocean of informationOnline Insurance intermediation - Online Insurance intermediation - Protection via an ocean of information


Prof. Dr. I. Rokas


From a law on insurance intermediation to a law on marketing of insurance products via an ocean of information (cont.)From a law on insurance intermediation to a law on marketing of insurance products via an ocean of information (cont.)

Precontractual information which (off)online professional intermediaries other than insurers

Additional information for all DIP: a) in online services b) in distance marketing of insurance products

Combined application of precontractual info included in IMD 2, PRIPs, ECD, DMD, MiFID 2 A simple insurance subagent who in the same time is an investment company according to

MiFID 2 is subject to all the above regulations Entities which undertake the reception and transmission of orders constitute investment

companies and can at the same time work as an insurance intermediaries According to greek law IIMs are not qualified to sell insurance investment products unless they

possess the same qualitative requirements as professionals who sell investment products and are governed by MiFID (among others to have passed the relevant exams organised by the supervisory Authority - Central Bank of Greece).

(IMD 2, art. 15-21) have to provide and additional info. for sales of insurance investment products (IMD 2, art. 22-25, as well as to provide the KID as manufacturer of such products, PRIPs, art. 12-13)

(ECD, art. 5,6,10)(DMD, art. 3-5)



Prof. Dr. I. Rokas


Six pieces of EU legislation introducing partially overlapping, partially asymmetric information:

From a law on insurance intermediation to a law on marketing of insurance products via an ocean of information (cont.)From a law on insurance intermediation to a law on marketing of insurance products via an ocean of information (cont.)

Pieces of information: 22 for intermediaries, additionally 10 in case of insurance investment products, 11 for insurers additionally 10 in case of insurance investment products. Altogether 53 pieces! (art. 15-25).

26 pieces of information (art. 5, 6, 10).

7 pieces of information (art. 183-184)

36 pieces of information (art. 185)

49 pieces of information (art. 3-5)

26 pieces of information (art. 5-11, 12-13) 15 pieces of information (art. 24-25)

IMD 2

ECD Solvency II (non life insurance) Solvency II (life insurance) DMD PRIPs MiFID 2

In total: = 212 pieces of information!!



Prof. Dr. I. Rokas


Results:

Customer is protected by valuable information but is overloaded partly with asymmetric and overlapping information

By provision of this information the customer is not protected as to the content of the terms and conditions of the insurance product

Not all customers are benefited by the same information (fragmentation)

Customers remain responsible to take advantage and to evaluate the multitude of information. Legislator should ensure that customers have taken in fact the benefits of this information rather than inserting more information duties

Results:

Customer is protected by valuable information but is overloaded partly with asymmetric and overlapping information

By provision of this information the customer is not protected as to the content of the terms and conditions of the insurance product

Not all customers are benefited by the same information (fragmentation)

Customers remain responsible to take advantage and to evaluate the multitude of information. Legislator should ensure that customers have taken in fact the benefits of this information rather than inserting more information duties

Reaching the coastReaching the coastOnline Insurance intermediation - Online Insurance intermediation - Protection via an ocean of informationOnline Insurance intermediation - Online Insurance intermediation - Protection via an ocean of information


Prof. Dr. I. Rokas


Special issues: Comparison websites Special issues: Comparison websites

Example of a Greek aggregator:http://www.insurancemarket.gr/

Aggregators which provide IIM Criteria have not been completely formed yet, but characterisation

depends on the activities provided via the website According to EIOPA-CP-13/017, if the visitor of the website has the possibility to choose

insurance products based on price/features and to conclude the contract online or is diverted via a hyperlink to the insurer’s website and then conclude the contract, the comparison website owner might be regarded as an IIM if:

The customer is driven to a result, which includes the characteristic of advising i.e. the possibility by means of comparison websites to find out the cheapest/most suitable products

Aggregators which do not provide IIM If their activities constitute „mere conduit“ according to ECD (art 12): The service provider does not initiate the transmission The service provider does not select the receiver of the transmission The service provider does not select/modify the information contained in the

transmission


http://www.insurancemarket.gr/


Prof. Dr. I. Rokas


Special issues: The bank as tied intermediarySpecial issues: The bank as tied intermediary

The bank as tied intermediary can sell the main financial product which it has manufactured and ancillary insurance investment product manufactured by the insurer:

Crossing an ocean of information Information for its main financial product (art. 24-25 MiFID 2, total number of information pieces: 15)

and key information as manufacturer of the product (art. 5-11,12-13 PRIPs, total number of information pieces: 26)

Information to be given according to IMD 2 in its capacity as tied intermediary (art. 15-21 total number of information pieces: 22) and additionally information on investment insurance products (art. 22-25, total number of information pieces: 10)

Information on investment insurance products according to PRIPs (art. 5-11, 12-13 total number of information pieces: 26) whereby the manufacturer in this case is the insurer

Additional information for the online services (ECD, art. 5,6,10, total number of information pieces: 26)Additional information for distance marketing of consumer financial services (Directive on distance

marketing of consumer financial services, art. 3-5 total number of information pieces: 49)



Prof. Dr. I. Rokas


Special issues: The bank as tied intermediary (cont.)Special issues: The bank as tied intermediary (cont.)

Lack of special information in particular in online sales! Risk of misleading clients! E.g. a bank should warn its clients that it sells insurance products under the

liability of the insurer or an other intermediary, as the case may be and not under its liability

Bank does not have to rely on confidence clients have to its activities as safeguard of their savings! A bank selling insurance products in its capacity as tied intermediary should warn

its clients that the product is not manufactured by the bank! It should not be allowed to banks to title the insurance investment

products of the insurer which it sells as “bancassurance products” of the bank or similar misleading/confusing expressions. A bank selling insurance products/investment insurance products of an insurer

must put emphasis to the name of the insurer by using capital and bold letters. Small letters should be used for the name of the bank and emphasise its capacity as intermediary and not as manufacturer of the product.

Particulars not included in the ocean of information!Particulars not included in the ocean of information!



Prof. Dr. I. Rokas


Special issues: What distinguishes the border of the online market? Geographical, technological and regulatory meansSpecial issues: What distinguishes the border of the online market? Geographical, technological and regulatory means

EU/EEA regulation: Insurance intermediaries providing cross-border services in the Internal Market fall under the passporting rules registration in the home country-MS is the passport

The register shall indicate the MS/MSs in which the intermediary conducts cross border business

The IMD does not: apply to insurance mediation services provided in relation to risks and

commitments located outside the EU (1st case) regulate mediation activities carried out in 3rd countries (2nd case)

In both cases, geography and technology are the borders as to the conduct of the business, but regulation is the border as to the qualification of the insurance intermediary in the 1st case, taking into consideration that only then the intermediary provides services in risk located both inside and outside the EU.



Prof. Dr. I. Rokas


Special issues: Online FoS vs “traditional” FoS ? YesSpecial issues: Online FoS vs “traditional” FoS ? Yes

IMD2 specifically submits national restrictions on online passporting intermediaries to the rules of the ECD

Insurance intermediaries, unlike insurance undertakings, are not included in the Annex of exceptions to article 3(3) of the ECD

The ECD allows limited exemptions and derogations of the freedom to provide information society services:

Thus, FoS via traditional means can be subjected to more restrictions than the online services as long as they are dictated by the scope of the general good



Prof. Dr. I. Rokas


The following areas could fall within the scope of general good as recognised and interpreted by the ECJ:

The list is not definitive and the Court may add to it at any time

The national restrictive measure must be taken on a case-by-case basis against a specific financial service provided by a given operator (IIM)

Special issues: Online FoS vs “traditional” FoS ? YesSpecial issues: Online FoS vs “traditional” FoS ? Yes


Sydney, 18 September 2013Sydney, 18 September 2013AIDA World - Working Party: “Distribution of Insurance Products”AIDA World - Working Party: “Distribution of Insurance Products”

Prof. Dr. I. Rokas


Prof. Dr. I. Rokas


Online insurance intermediation Sydney, 18 September 2013 Prof. Dr. I. Rokas © IKRP (Athens) Law...

Documents

Transcript of Online insurance intermediation Sydney, 18 September 2013 Prof. Dr. I. Rokas © IKRP (Athens) Law...