Download Proposal for a Directive on insurance mediation

A Broker’s View
By Paul Carty
Deputy Chairman BIPAR EU Standing Committee
Director, Head of Broker Services, Coyle Hamilton
Coyle Hamilton (Established 1903)
Ireland’s largest Broker - 550 employees
 Life and Non-Life business
 Established in Dublin, Cork, Belfast,
Limerick and London.
 Has a Lloyds Broker as a subsidiary

Irish Market
Life and Non-Life
2000 Key Data
Gross Premium
Income (€m)
Premium Income
GDP(%)
Premium per
capita (€)


Life
€7600
Non-Life
Total
€2693
€8241 €10293
7.35
2.60
9.95
-
€2010
€711
-
€2721
Average annual growth of the domestic life sector
in the 5 years 1996-2000 was 31.4%
Average annual increase in non-life premiums for
1996-2000 was 11.8%
Non-Life Premium Income by
Class
Category
Private Motor
Commercial Motor
Household
Commercial Property
Employers' Liability
Public Liability
PA & Travel
Other
Total
IR£m
781.3
323.2
249.8
255.9
140
148.4
31.1
191.3
2121
Non-Life Premium Income 2000
1%
9%
7%
37%
7%
12%
12%
15%
Ireland’s is a Brokers Market
Competition from: Financial
Institutions
 Post Office
 Directwriters
(Life/Pensions)
(Motor)
(Motor)
The Economy I
Ireland
Real Growth ( GDP
at constant 1996
prices )
( IR£ billion )
Real Growth ( GNP
at constant 1996
prices )
( IR£ billion )
Consumer Price
Index (% change)
Unemployment Annual Average
(%)
Population ('000s)
Insurance
Premiums
( IR£ billion )
Annual
Change
1996 2000
1996
1997
1998
1999
2000
IR£bn
€bn
44.719
49.564
58.830
59.671
66.511
84.458
10.4%
39.557
43.286
46.705
50.514
55.772
70.128
9.0%
1.6
1.5
2.4
1.6
5.6
-
2.8%
11.5
9.8
7.4
5.5
4.1
-
-
3626
e 3661
e 3705
e 3745
e 3787
3.367
4.010
4.934
6.491
8.116
e = estimated Source: CSO
1.1%
10.306
24.6%
Economy II
GDP at current market prices per
head of population
Year
1997
1998
1999
2000
D
107.8
106.1
105.6
104.7
2001 103.8
2002 103.3
2003 103.4
F
99.0
98.8
98.9
98.3
IRL
103.6
105.7
112.1
118.8
NL
112.4
115.2
115.1
116.0
S
102.2
101.5
102.3
102.9
UK
102.5
103.4
103.3
104.1
US
150.7
151.7
152.7
153.8
98.8 121.6 116.1 101.7 104.6 152.6
98.8 122.5 116.1 101.2 104.9 150.6
98.4 124.4 115.7 100.7 105.1 150.7
Market Concentration (2000)
Total
€2,693m 100%
AVIVA
 AXA
 Allianz
 RSA
 Eagle Star
€669m
€407m
€346m
€323m
€216m

25%
15%
12.9%
12%
8%
73%
Regulated by the Central Bank
In the process of becoming a Single
Regulator
 The Ingredients:
 Investment
Services Directive
 Capital Adequacy Directive
 Investor Compensation Directive
+ some Irish “spice”
= Regulation in Ireland!
Regulation by Activity
Key Elements
Professional Requirements
 Information to Clients
 “Best Advice”
 Registration

Professional Requirements
General Knowledge and ability (EU & IRL)
 PI Cover
(EU & IRL)
 Good repute
(EU & IRL)
 Financial Capacity
(EU & IRL)

 Segregated
Client Account
 Premiums paid to an intermediary is deemed
paid to the insurer
 Capital Adequacy
 Contribute to Compensation Fund.
Information to Clients
Terms of business must be given to each client prior to
providing the first service,
a) the name & address etc
b) a copy of the firm’s Status;
c) a description of the services provided;
d) a statement of the basis on which an Intermediary is to
charge for its services;
e) details of the commissions structure(s), if any, through
which the Intermediary is or may be remunerated;
f) policy in relation to conflicts of interest;
j) confirmation of membership of a compensation scheme etc.
EU’s “Best Advice” is Ireland’s
“Client’s Best Advantage”

An Intermediary must ensure that it acts to
the best advantage of its clients. Arising
from this requirement Intermediaries must,
taking all relevant factors into account,
recommend for each client the most suitable
product available, regardless of whether or
not the Intermediary holds an appointment in
writing from the relevant product producer.
“Reason Why”
Before recommending a transaction to a client,
an Intermediary must take all reasonable steps to
ensure the client understands the risks involved.
An Intermediary should prepare a statement of
the reasons why a product is considered suitable
for the client and why a transaction is considered
to be in the best interests of the client. A copy of
this statement should be given to the client and
the firm should retain a copy. The Intermediary
should endeavour to have the client sign this
statement.
What are the lessons?
The EU will shape your Regulatory
environment
 Giving information to clients is not a
problem and can be positive
 the Single Market whilst a legal reality has
not become a reality for most clients
 The EU experience is a shared experience
