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BIPAR UPDATE - November 2007, no 15Editor:BIPAR Secretariat In this issue
Sector inquiry into business insurance: final reportOn 26 September 2007 the Directorate-General for Com-tition of the European Com-mission published its final report on its inquiry into competition in the business insurance sector.The report raises concerns about three main areas: co- and re-insurance, insurance brokers and Block Exemption Regulation. In the co- and reinsurance market, the Commission is concerned that there seems to be in many cases a de facto alignment of premiums and other conditions. It believes that the sharing of pricing information may amount to an unlawful exchange of information and price fixing. The Commission has invited the industry either to justify the business practices concerned from a competition law standpoint or to reform it. Regarding insurance intermediaries, the report highlights conflicts of interest and a lack of transparency in the way that insurance intermediaries are remunerated. The Commission believes that in some cases this could lead to less competition, less choice and higher prices, especially for SMEs. In respect to the Block Exemption Regulation (BER) - the EC Treaty prohibits anti-competitive agreements, but the BER grants an exemption for certain forms of insurance and reinsurance cooperation agreements- which will expire on 31 March 2010 unless it is renewed and although the industry supports it, the Commission does not see at present any compelling reasons for renewal. Next steps In its report, the Commission invites the parties concerned by the various issues identified to carry out their own assessment and to engage in a dialogue with a view either to clarifying or to reviewing the practices in question. No deadline is given for such action. With regard to insurance mediation in particular, the Commission intends to look at these issues in the framework of the review of the Insurance Mediation Directive, but also invites Member States and industry participants to review the Commission's findings and propose appropriate action themselves. BIPAR has contacted DG Competition and DG Market and informed them that it will - as an industry - actively study the findings of the report and inform them about its own assessment and reactions. A representative of both DG Competition and of DG Market will be present at BIPAR's mid-term meetings in March and this will be an occasion to make a provisional "state of the nation" of the situation with all national associations. Together with its member associations, BIPAR is working on possible actions on these flagged issues. Two working parties have been set up on transparency and on the co-insurance market issues. Update on IMD implementation and planned revisionFurther to the publication of its Luxembourg Protocol relating to the cooperation of the competent authorities of the Member States of the EU concerning the application of the IMD and its report on the IMD implementation, the Expert Group on insurance mediation (IMEG) of the Committee of European Insurance and OccupationalPensions Supervisors, (CEIOPS), chaired by Victor Rod, has now received the mandate from the European Commission to issue a report on a possible revision of the IMD. It is therefore now working on possible amendments to the IMD, its report being expected end of March 2008. BIPAR has been discussing the issue with IMEG and has already strongly requested that any revision or amendments that may be considered by the European Commission or CEIOPS be first properly assessed so that they do not lead to unjustifiable costs on market practitioners and ultimately, consumers. The consolidation phase is of crucial importance. Member States must be given the appropriate time to properly implement and enforce the IMD. The revision of the IMD had been announced in the Commission Green Paper on retail financial services issued in April 2007 with the aim of ensuring that the IMD is achieving its objectives of protecting consumers while promoting the Single insurance market. In its comments on the Green Paper, BIPAR said that as the IMD has just been implemented, it is too early to assess whether it has achieved its goals. The IMD enjoys overwhelming support from intermediaries throughout the EU. The Commission should ensure that once the IMD has been absorbed by national legislation, the profession will be allowed an adequate period without having to further adapt to a fluctuating legislative environment. In the context of the IMD implementation, CEIOPS IMEG has also been working on how to determine the triggering element of the FOS activities of an intermediary. This issue is not defined in the IMD and had to be discussed mainly because of the matter of general good rules and stricter information requirements of the host Member State that must be complied with by the intermediaries when they are considered as carrying out FOS activities. After months of work and discussion with BIPAR, CEIOPS agreed on a definition of FOS that is based on the intention of the intermediary and the location of the policyholder/head office and risk. This definition meets BIPAR's requests. This proposal allows activities that are essentially local not to be defined as cross-border activities and allows avoiding unlevel playing field situations between large intermediaries who are actively carrying out FOS activities, and small local intermediaries who would be carrying out FOS activities without wanting it (ex: ski pass, holiday house etc...). CEIOPS submitted its proposal to the Commission on 5 November which will discuss it with the Member States end of November. Once the Commission agrees on a final definition, it may decide to publish it in an interpretative Communication or to include it in a possible revised IMD. VAT treatment in financial servicesThe Sixth VAT Council Directive 2006/112/EEC on the harmonisation of the laws of the Member States relating to turnover taxes stipulates in Article 135.1(a) that "insurance and reinsurance transactions, including related services performed by insurance brokers and insurance agents" are VAT exempt. In March 2006, the European Commission launched a consultation to modify the VAT treatment of financial services. BIPAR answered this consultation on 15 June 2006.BIPAR actions Since June 2006, the BIPAR VAT working party has met with European Commission officials (TAXUD) on various occasions. In December 2006, BIPAR submitted a working document outlining the boundaries of exempt and non-exempt activities. This working document was adapted to the new developments in the dossier and sent again to the European Commission in early June 2007. On 31 July 2007, members of the BIPAR VAT working party participated in a meeting organised by the European Commission. The meeting was considered as an opportunity for "a final roundtable discussion with representatives of the industry concerned". In answer to the invitation made at this meeting, BIPAR sent a memo to the European Commission on 31 August 2007 with some reflections on the issues discussed during the stakeholders meeting. BIPAR also sent a letter to Commissioner Kovacs to express that, in our opinion, the texts discussed during the stakeholders meeting didn't provide the necessary clarity and certainty to the industry or the Member States. For BIPAR, intermediation activities should continue to be exempt. In general terms, BIPAR promotes a pre-Andersen judgment situation in terms of tax treatment. There seems to be a general consensus within the European Commission that intermediation activities should remain exempt but it seems difficult for the European Commission to align political and legal/technical aspects in a new text. Next steps A formal proposal for a directive is expected to be released in November 2007 and this will be followed by detailed negotiations with the Member States. In the meantime, BIPAR and its working party continue its informal and formal work. National associations are kindly invited to contact the BIPAR Secretariat for more details on this dossier. Review of the Doorstep Selling Directive - Modification of the exemption for insurance contracts ?The Directive on the protection of consumers in respect of contracts negotiated away from business premises ("Doorstep Selling Directive") is one of 8 Directives covered by the ongoing review of the consumer regulatory framework. The review of the consumer acquis is part of the Commission's priority to simplify EU legislation and enhance its quality. The Doorstep Selling Directive excludes insurance contracts from its scope. However, in its consultation document issued mid November to take stock of the effectiveness of the Directive, the Commission states that in the context of the implementation of the EU text, Member States have made extensive use of the minimum clause to raise the level of consumer protection and the exemption concerning insurance contracts, for example, have not been implemented by all of them (although it has proved more popular than other exemptions). The Commission is therefore wondering whether the exemptions need to be modified in the light of the new market developments and is asking the views of stakeholders on the issue amongst others by 4TH December.BIPAR is in favour of maintaining the exemption re insurance contracts. Based on the comments of its member associations it will submit its position to the Commission as requested. AIFA / AMI council meeting in BrusselsTaking up BIPAR's suggestion to its member associations to hold one of their board meetings in Brussels, on 18/19 October 2007 the AIFA/AMI (Association of Independent Financial Advisors and Association of Mortgage Intermediaries) leadership met at BIPAR premises. This successful meeting allows AMI/AIFA to better understand the importance for our profession of the European institutions and of EU issues.AMI/AIFA visited the European Parliament and met with Roger Helmer MEP and Chris Heaton-Harris MEP, who explained the work of an MEP and the European Parliament's role in the policy-making process. Together with Isabelle Audigier, Director of BIPAR Legal department, David Harari, BIPAR past chairman, welcomed AMI/AIFA leadership at the BIPAR offices and presented BIPAR, together with the most current EU issues being monitored, including the sector inquiry into business insurance. They met with Arthur Kerrigan, Head of Unit at DG Taxation and discussed proposals for the new directive on VAT treatment in financial services. They also compared the UK and Dutch situations on MiFID and other industry matters with their Dutch counterparts; Rob Groenemeijer, Chairman of the Dutch Association of Insurance and Finance Brokers, and Niels Mourits, Director of the Dutch Association of Insurance and Financial Advisers. On the AIFA website, Chris Cummings, Director of AIFA, said that " 70 per cent of our regulation now comes from Europe and it's important to get involved in the legislative process at the earliest possible stage. This meeting was important because it enabled our Council to have a better understanding of the European process ". New lawyer at BIPAR SecretariatFurther to the departure of Alina Domaradzka, we have great pleasure in informing you that Ms Laura Gutierrez Sanchez, a 30-year-old Spanish lawyer specialised in International and European law, has joined our team as junior lawyer. She started on 15 October 2007. We are certain that you will join the entire Secretariat team in welcoming the newcomer and wishing her all the best.After graduating in Law with a specialisation in Economics from the University of Deusto in Spain, Laura gained her Master's degree in International and European law (LL.M) at the University of Humboldt in Berlin, Germany. She put into practise her legal academic background while undertaking training periods and working in several law firms in Germany and in Spain. Laura accomplished a traineeship within the European Commission's General Directorate of Competition, dealing with Regional State Aid cases, which provided her with valuable experience in competition insight procedures. Laura also worked for the Delegation of the Basque Country in Brussels; an experience which enabled her to become more familiar with relations between European institutions. Of Spanish mother tongue, she has an excellent command of German, French and English, as well as an intermediate level of Russian and a passive understanding of Italian and Portuguese. Laura will deal with European Affairs. Next BIPAR meetingsThe BIPAR mid-term meetings will take place in Madrid on 3, 4 and 5 March 2008The BIPAR AGM will take place on 12 and 13 June 2008 (venue to be confirmed shortly). Next EU Presidencies The Presidency of the Council of the European Union is held in turn by each Member State. The Council is presided over for a period of six months (from January to June, and from July to December) by each Member State in turn, in accordance with a pre-established rota. The Presidency of the Council plays an essential role in organising the work of the institution, particularly in promoting legislative and political decisions. It is responsible for organising and chairing all meetings, including the many working groups, and for brokering compromises. 2007: Germany-Portugal 2008: Slovenia-France 2009: Czech Republic- Sweden 2010: Spain-Belgium |