In response to the ruling of the European Court of Justice, the AFM published 'Interpretation of group insurance' in March 2024. This interpretation indicates in which cases group insurance involves intermediary and therefore activities requiring a license. In this interpretation, we also refer to examples in sectors such as freight forwarders and movers. This interpretation is now leading to questions from the sector. A law firm has asked us whether it is possible that freight forwarders, despite meeting the criteria arising from the judgment of the European Court, are not required to have a license as a financial service provider, because they meet the criteria under Article 1 (3) of the Insurance Distribution Directive. They also refer to the Q&A no. 2164 published by EIOPA in September 2020. In their opinion, it is clearly indicated here that freight forwarders do not carry out activities requiring a permit if this is not a main activity. Article 2 (4) of the IDD provides a definition of an ancillary insurance intermediary. In the opinion of the AFM, these are minor risks to be insured. Furthermore, the AFM interprets Article 1(3) of the IDD as follows. In our opinion, it is not about the goods that are transported and insured, but about the transport itself. After all, one of the conditions is: ‘This Directive shall not apply to ancillary insurance intermediaries carrying out insurance distribution activities where all the following conditions are met: (a) the insurance is complementary to the good or service supplied by a provider, where such insurance covers: (i) the risk of breakdown, loss of, or damage to, the good or the non-use of the service supplied by that provider;’ This provision could only be used in the event that the cancellation of the transport is ensured, which often is not the case in practice. Instead, freight forwarding will often involve covering a risk related to the goods being transported, and will not involve insuring against the transport's cancellation. In these cases, we are of the opinion that the conditions under Article 1(3) of the IDD are not met. For that reason, we have proposed suggestions to the answer of Q&A ' 2164 - Freight forwarder qualification as an ancillary insurance intermediary' to improve the legal certainty.

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. Recital 15 also notes that the IDD should not apply to persons practising insurance distribution as an ancillary activity where the

premium does not exceed a certain amount and the risks covered are limited. 

Freight forwarders, who arrange the movement of goods and may offer insurance covering either:

• damage, loss or theft of the goods during transport; or
• their own contractual liability,

may fall within the definition of an ancillary insurance intermediary insofar as all the requirements of Article 2(1), point (4)(a)–(c) are fulfilled.

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. This exemption is intended for low-risk, low-premium, limited-coverage insurance that is complementary to a good or short-term service, as illustrated in Recital 15.

With respect to freight forwarding:

• The insurance associated with freight forwarding typically covers high-value goods or significant liability exposures, which usually exceed the premium thresholds in Article 1(3)(b)–(c);
• The risks covered (loss or damage of commercial cargo, or liability for failure to perform the carriage contract) generally cannot be considered limited risks within the meaning of Recital 15;
• Article 1(3)(a)(i) relates to the risk of breakdown, loss of, or damage to, the good supplied by the same provider. Freight forwarders do not supply the transported goods, so this condition is typically not met;
• Article 1(3)(a)(ii), concerning travel-related risks such as baggage, is aimed at travel services provided to natural persons. Freight forwarding, which concerns commercial cargo and contractual logistics, does not fall within the intended scope of this provision.

Therefore, freight forwarders will usually not meet all the conditions of Article 1(3) and are therefore subject to the IDD when distributing insurance, even when acting as ancillary insurance intermediaries.