04 July 2012

Insurance Insight: Commission disclosure overhaul could hit Germany hardest

The revised IMD draft proposed making commission disclosure mandatory for general insurance brokers after a transitional period of five years.

"The Directive proposes much more stringent rules on disclosure of actual amounts of commission than are currently required. Presently, disclosure is only required for certain products (e.g. life, health and disability) and only as an aggregate amount of all set-up and distribution costs (including commission). There are currently no statutory requirements for disclosure for non-life products", said Andreas Börner, partner at Norton Rose in Germany. "German law is so far relatively light touch on conflicts of interest and is likely to be affected by the measures delegated to the Commission", he added.

The Netherlands is also likely to be affected, though to a lesser impact the firm said: "The scope of the Directive will be broader in that it will clarify that activities such as operating insurance comparative websites and selling insurance products by travel agents and car rental companies will be considered mediation. Also, the remuneration disclosure requirements will increase in the Netherlands and also other conflicts of interest transparency provisions will be more stringent than under current Dutch legislation", commented Otto Klaassen of counsel at Norton Rose in the Netherlands.

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