Services of an insurance intermediary: EC regulation of insurance brokers and agents
The EC Insurance Intermediaries Directive (Council Directive 77/92) was introduced as a means of facilitating trade across EC borders and gives a general description of the activities of insurance agents and brokers for regulatory purposes.
On 30 September 2002 the EC Insurance Mediation Directive (Council Directive 2002/92) was implemented and has replaced the previous Intermediaries Directive. The latest Directive goes much further than the previous Directive and makes national regulation of certain intermediary activities compulsory within the EC. It requires that individuals or companies carrying out insurance or reinsurance mediation should be registered on the basis of the minimum requirements that they:
- possess appropriate knowledge and ability;
- have a good repute;
- possess professional indemnity insurance against liability arising out of professional negligence; and
- have sufficient financial capacity, in the case of intermediaries who handle customers’ money.
The definitions of the services of insurance brokers and agents contained in the previous Intermediaries Directive have often been used by the courts as a means of determining the scope of the VAT exemption for related services performed by insurance agents and brokers. The services listed in Legal Note 1 to item 4 are based largely upon the services found in the previous Directive - see VATINS1310.
The Andersen judgment distinguishes VAT law from regulatory law and suggests that regulatory law cannot be determinative of exemption for VAT under EU law, for further information refer to VATINS5210.