Insurance Intermediaries update: the Insurance Distribution Directive and the proposed amendments to the Insurance Intermediaries Act and the Insurance Business Act

B. Tied Insurance Intermediary

A tied insurance intermediary will, under the IDD, be subject to the same requirements applicable to insurance intermediaries. This means that the TII will be subject to the qualifications requirements for amongst others registration and continued professional training. The IDD also introduces new grounds for which TIIs may be struck off the Tied Insurance Intermediaries List.

C. Ancillary Insurance Intermediary

The IDD introduces a new category of intermediary under the IIA which shall be known as the “Ancillary Insurance Intermediary”. The new category of intermediary under the IDD has been carved out from the definition of ‘insurance intermediary’ and therefore such category is not considered to be an insurance intermediary but a specific type of intermediary operating under specific conditions (such as travel agents, car rental companies and motor vehicle dealers). Ancillary Insurance intermediaries shall carry out insurance distribution activities listed in paragraph (5) of the Third Column of the Schedule to the proposed amended IIA. Ancillary insurance intermediaries are not to be confused with tied insurance intermediaries which regime shall be retained. It is being proposed that a person enrolled in the Ancillary Insurance Intermediaries List, is to be prohibited from being appointed and registered in the Tied Insurance Intermediaries List.

The appointment of an ancillary insurance intermediary by an authorised insurance undertaking and insurance agent will be conditional on the completion of a fit and proper test, as well as a knowledge and ability test. The ancillary insurance intermediary, will as a minimum be required to know the terms and conditions of the policies they distribute and, where applicable, rules on handling claims and complaints.

Ancillary insurance intermediaries activities are described as the activities of persons who, for remuneration, take up or pursue insurance distribution activities on an ancillary basis, acting under the full responsibility of authorised undertakings, for the products which concern them, provided that all of the following conditions are met:

• ​the principal professional activity of the natural or legal persons is other than insurance distribution activities;
• the natural or legal persons only carry out insurance distribution activities in relation to certain insurance products that are complementary to a good or service; and
• the insurance products concerned do not cover long-term business of insurance or liability risks, unless that cover complements the good or service which the natural or legal persons provide as their principal professional activity.

D. Exempted insurance-related activities

The new Insurance Distribution (Exemption) Regulations, 2017 will repeal the current Insurance Intermediaries (Exemption) Regulations, 2006, (S.L. 487.05). Limited exemptions will only be made available to ancillary insurance intermediaries. An ancillary insurance intermediary would be exempted from the requirements set out in the IDD should the following cumulative conditions be satisfied:

1. ​the insurance is complementary to the good or service supplied by a provider, where such insurance covers:
   (i) the risk of breakdown, loss of, or damage to, the good or the non-use of the service supplied by that provider; or
   (ii) damage to, or loss of, baggage and other risks linked to travel booked with that provider;
2. the amount of the premium paid for the insurance product does not exceed EUR 600 calculated on a pro rata annual basis;
3. by way of derogation from point (b), where the insurance is complementary to a service referred to in point (a) and the duration of that service is equal to, or less than, three months, the amount of the premium paid per person does not exceed EUR 200.