The Commission Delegated Regulation (EU) 2024/896 revising regulatory technical standards (the Delegated Regulation) was published in the Official Journal of the European Union on 20 March 2024.
The Delegated Regulation will increase the set base euro amounts for professional indemnity insurance (PII) and the required financial capacity for intermediaries specified in the Insurance Distribution Directive (EU) 2016/97) (IDD).
The IDD provides that (re)insurance intermediaries must have either PII covering the whole territory of the European Union or a comparable guarantee against liability resulting from professional negligence. The IDD currently provides that the level of PII in respect of a single claim must be, at a minimum, €1,300,380, and in aggregate €1,924,560 per year for all claims.
Pursuant to the Delegated Regulation, the current base euro amounts for PII will increase to:
- €1,564,610 for each claim; and
- €2,315,610 in aggregate per year for all claims.
The second amendment to the IDD under the Delegated Regulation concerns Article 10(6). This amendment places an obligation on Member States to implement certain measures aimed to protect consumers in the event that a (re)insurance intermediary (including ancillary insurance intermediaries) is unable to a) transfer the insurance premium either to the insurance undertaking, b) to transfer the amount of a claim or c) return the premium to the insured. Certain measures are laid out under Article 10(6) of the IDD, including a requirement for an intermediary to have a permanent financial capacity amounting to 4% of the sum of the annual premiums it receives, subject to a minimum of €18,750. The Delegated Regulation seeks to increase this minimum prescribed amount to €23,480.
The Delegated Regulation enters into force on 9 April 2024 and applies from 9 October 2024. (Re)insurance intermediaries (including ancillary insurance intermediaries) should be mindful of the incoming changes to the regulatory technical standards and should consider how they will meet the increased minimum base amounts of PII and, where applicable, financial capacity.
For further information, please contact Ian Murray or any member of our Insurance team.
Contributed by Martha Ní Dhochartaigh.
