Group Insurance policies – ECJ Decision Revises the Definitions of ‘Insurance Intermediary’ and ‘Insurance Mediation’
In Case C-633/20 of the European Court of Justice (the ‘Court’) delivered on the 29th September 2022, the First Chamber of the Court produced a judgment (the ‘Judgment’) in response to a reference for a preliminary ruling concerning the definition of ‘insurance intermediary’ in the context of Directive 2016/97 (the ‘Insurance Distribution Directive’ or the ‘IDD’) and Directive 2002/92 (the ‘Insurance Mediation Directive’ or the ‘IMD’) and in the circumstances of the referring court’s main proceedings. The request was made in the proceedings between the Bundesverband der Verbraucherzentralen und Verbraucherverbände – Verbraucherzentrale Bundesverband eV (Federal Union of Consumer Organisations and Associations, Germany) and TC Medical Air Ambulance Agency GmbH concerning the alleged unauthorised insurance mediation activity being carried out by TC Medical Air Ambulance Agency GmbH.
The dispute within the main proceedings before the Federal Court of Justice in Germany (the ‘referring court’) concerned the provision of insurance coverage in the event of sickness or accident pursuant to an existing insurance policy issued in the name of the defendant, which was established to have been a policyholder paying premiums to an insurance company. The defendant tasked advertising companies with the offering of collective insurance schemes to consumers. Neither the defendant nor the advertising companies possessed the necessary licenses to carry out insurance mediation activities.
The Opinion of the Advocate General provided a review of group insurance in light of the IDD and IMD, noting in particular that: “the recognition of an entity as an ‘insurance intermediary’ may entail not only the obligation to obtain a specific licence (as required by national law, since the directives themselves only stipulate that such entities shall be registered […]), but also the imposition of certain requirements on that entity”1.
In line with the IDD and IMD, the Court reaffirmed that “in order to ensure that the activity of an insurance intermediary guarantees an adequate level of consumer protection, that intermediary is required, in accordance with those directives, to comply with, inter alia, a set of professional, financial and organisational requirements, rules of conduct such as those aimed at preventing the risk of a conflict of interest arising from any links between that intermediary and a given insurer, and with obligations to inform and advise those consumers”2.
The Court ruled, in line with the Conclusion of the Advocate General’s Opinion, that the definition of an insurance intermediary and, therefore, that of an insurance distributor, also encompasses “a legal person whose activity consists in offering its customers membership on a voluntary basis, in return for payment which it receives from them, of a group insurance policy to which it has subscribed previously with an insurance company, where that membership entitles those customers to insurance benefits in the event, in particular, of sickness or accident abroad”3.
The extension of the definition of an insurance intermediary through this Judgment is propounded to have tangible implications on the licensing and regulatory requirements which are placed on entities carrying out such activities under group insurance policies. The Court’s decision extended the licensing requirements to such legal persons which, like the defendant in this case, would be policyholders of an insurance undertaking and would offer their consumers memberships in such a group insurance policy, which entitles them to insurance benefits. Intrinsically, the Judgement broadened the definition of insurance intermediary within the scope of the IDD.
1Point 83 of the Advocate General’s Opinion.
2Point 57 of the Judgment.
3Decision of the Court.
Disclaimer: This document does not purport to give legal, financial or tax advice. Should you require further information or legal assistance, please do not hesitate to contact Dr. Edmond Zammit Laferla
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