Federation seeks minimum European standard of disclosure

FERMA announces plans for new pan-European risk management certification

The Federation of European Risk Management Associations (Ferma) has urged the European parliament to ensure that all insurance buyers are entitled to a minimum European standard of disclosure in the revised Insurance Mediation Directive (IMD2).

Ferma’s views are expressed in a position paper to the Parliamentary Economic and Monetary Affairs Committee, which will consider the draft directive before it goes to plenary for a final vote in July.

As the draft currently stands, only individual policyholders and small businesses will be automatically entitled to disclosure of the intermediary’s remuneration. Buyers of insurance for large risks and a new category of professional customers are excluded and would have to depend on voluntary agreements.

Ferma president Jorge Luzzi said: “We asked the legislators to consider business customer concerns and, as a minimum, provide them with a legal basis on which to request information from their intermediary. This would enable them to make fully informed decisions about their insurance coverage.”

Ferma believes that, in principle, large risks and professional customers should be included in IMD2, based on the views of a majority of its 22 national risk management association members. Failing that, all insurance buyers should have an enforceable right to request the information.

A provision in the draft currently allows professional customers to ask in writing for disclosure. There is, however, a proposed amendment to the Economic and Monetary Affairs Committee that even this protection for business should be removed.

Ferma also points out that the threshold for defining large risks and professional customers is quite low. Many medium-sized businesses would be left without a legal right to information about their broker’s remuneration if this proposal is adopted.