Question ID: 2164
Regulation Reference: (EU) No 2016/97 - Insurance Distribution Directive
Topic: Other
Article: 8(Ancillary insurance intermediaries)
Status: Final
Date of submission: 09 Jul 2020
Question
A freight forwarder is organising shipments of goods, from one place to another, on behalf of its customers. Therefore, the company arranges for packaging, stuffing/destuffing the goods in/from a container, road/air/marine transportation, customs procedures, et cetera and strives to successfully complete its mission, to safely deliver the cargo. Cargo insurance is a much needed complementary service that would certainly benefit all parties involved in our story. Furthermore, it covers damage, loss and theft of the shipment during transit and these risks are all linked to the services provided by the forwarder. The Directive has a broad applicability and I consider a freight forwarder is a perfect match for an ancillary insurance intermediary, just as a travel agency is for a travel insurance. Please share with me your opinion on this matter and if we all agree a freight forwarder should be considered an ancillary insurance intermediary, I kindly ask you to let me know what are the steps I should complete to work in full harmony with our local financial authority.
EIOPA answer
In order to guarantee that the same level of protection applies regardless of the channel through which customers buy an insurance product, either directly from an insurance undertaking or indirectly from an intermediary, the scope of the IDD needs to cover not only insurance undertakings or intermediaries, but also other market participants who sell insurance products on an ancillary basis, such as travel agents and car rental companies, unless they meet the conditions for exemption (recital 8 of the IDD).
The IDD does not provide an exhaustive list of ancillary insurance intermediaries, rather gives an exemplificative selection of natural or legal persons who can provide insurance distribution on an ancillary basis. IDD excludes specifically only credit institutions and investment firms from the possibility of conducting distribution activities on an ancillary basis. Recital 15 of the IDD gives examples of a good or service in relation to which insurance can be complementary, such as train journey, gym subscription or a seasonal theatre pass, other risks linked to travel such as travel cancellation or loss of baggage.
Consequently, a freight forwarder can be considered an ancillary insurance intermediary provided that all the conditions mentioned in Article 2(1) point 4 of the IDD are met. It should be noted that the IDD does not apply to ancillary insurance intermediaries carrying out insurance distribution activities where all the conditions under Article 1(3) of the IDD are met.