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New EU law for insurance agents

19/08/2004 11:49
So far, insurance agents used all their patience and persistence to convince us to “take out insurance”. From October, all would-be insurers must do so just to enter the sector.

The Insurance Superintendent Office has already prepared the administrative regulations for the enforcement of a new legislation, which was approved on May 1 and will be set before the Parliament on its opening after the summer holidays. The harmonized legislation demands by the insurance agents to get insured against professional responsibility and take “upgraded” professional exams. These regulations clarify the qualifications of the agents and the data that must be kept at the Superintendent’s Office, as well as the content of the contracts between the agents and the insurance company, the documents that must be submitted along with the registration application and the registration duties.

The obligation for an insurance against professional responsibility affects not only the new agents but the existing agents as well and increases the average cost for each insurer by £1000. For, the insurance companies examine the possibility of a joint venture for the insurance of their agents to share out the risk that this entails. All insurance agents must comply with the new law by January 15, 2005.

The issue of qualifications concerns new agents mostly and possibly those who joined the sector after September 2000. They must fulfill the requirements set by the Superintendent and take the relevant exams. “We expect a decrease in the number of new agents”, Chairman of the Insurance Companies Association, Filios Zachariadis told StockWatch.

The first round of exams will be held in October and will be taken by all those who wish to apply for registration in the Superintendent’s registry. Agents who have already been registered in the registry and all those who have recognized professional qualifications (actuaries, CII) will be exempted from the procedure.

The status of the agents’ assistants, however, is still uncertain. The legislation does not clarify whether they must insure themselves against professional responsibility or if they must sign the contracts with the companies they represent. The Insurance Companies Association has requested their exemption from the new regulations.

The ten new EU members adopted the European Commission directive in May 2004. “Older” members have been granted a deadline until January 15, 2005. The Commission still has second thoughts on the new regulation and the possibility to amend the relevant provision at a later stage is open.