Decree Law 144/2006 of July 31 2006 sets forth the New Insurance Mediation Regime (NIMR), implementing Directive 2002/92/EC of the European Parliament and the Council, on insurance mediation in Portugal (December 9 2002). One of the main innovations of the NIMR is that any activity introducing or proposing insurance contracts, carrying out preliminary work on insurance contracts, concluding such contracts, or assisting in their administration and performance, in particular in the event of a claim, is now subject to the rules and professional requirements established in the NIMR, irrespective of distribution channel. To carry out insurance mediation activities, individuals and companies must belong to one of the insurance mediation categories that the NIMR outlines – tied insurance intermediary, insurance intermediary, or insurance broker, the intermediary's level of proximity or dependency towards the insurance companies being the main criterion distinguishing between these categories.
As a result of the new mediation rules under the NIMR, the activities included in the concept of bancassurance (promotion, distribution and sale of insurance contracts through banking channels) are now subject to the NIMR. Until now, banks carried out these activities in an independent and unregulated way. Like any other entity wishing to carry out insurance mediation, banks intending to develop their bancassurance activities are now obliged to register as insurance intermediaries with the Portuguese insurance supervisory authority, Instituto de Seguros de Portugal (ISP). They must comply with requirements that show their knowledge, ability, good reputation, qualification and fulfilment of conditions for the performance of the insurance mediation activity.
One of the changes that the NIMR has introduced relates to the supervisory power of the ISP. Banks must add this entity to the list of supervisors, which already features the Portuguese Securities Market Commission (CMVM) and the Bank of Portugal. The requirement is even more burdensome if we consider that it not only requires data referring to the corporate body that is filing the registration, but also information about the administrators and the other employees responsible for the development of the insurance mediation activity.
Registration with the ISP is now compulsory: the candidate must choose one of the above-mentioned categories and develop its activity within that scope. Its actions are limited, unless it communicates to the ISP a change in the category under which it performs the activities of mediator. The Portuguese legislator has seized the opportunity to broaden the Directive's regime, stating that it can also apply to pension fund products. This enlarges the range of activities developed by banks under the NIMR. It means that pension funds must also be registered with the ISP.
An internal reorganisation has taken place in the way that Banks deal with the offering of insurance products, to deal properly with the new supervisory role of the ISP, liability and information duties relating to it, and the insurance companies and clients. It changes an activity that was, until recently, practically unregulated.
In the context of banks' development of their insurance distribution activities, doubt remains regarding whether the NIMR should have special rules for bankassurance instead of not distinguishing between this activity and the work of traditional insurance intermediaries. Such a distinction, and a special ruling on banks' sale of insurance products, would make sense. Besides having their own way of distributing insurance – linking it strictly with their financial activity – the insurance distribution practice that banks have developed over the years needs a specific legal approach. The approach would have to be tailor made to their characteristics and better positioned than the NIMR to face the challenges of insurance mediation activity in the Portuguese market. The various market players operating in this segment have made the ISP aware of the need for more tailored regulation. But the ISP has not yet made its position public. This is certainly a matter to be followed with particular attention over the next few months.
Ana Rita Almeida Campos and Rita Rendeiro