The inclusion of experts who deal with insured losses in the draft Insurance Mediation Directive 2 (IMD2) is intended to protect consumers, but could have a considerable effect on commercial insurance buyers.
Mark Vos
The Federation of European Loss Adjusting Experts (FUEDI) strongly supports the principle of mutual recognition among member states. As the wording of IMD2 now stands, however, there is a risk of creating a more inflexible system, one similar to the US where loss adjusting experts can only act in the state where they are licenced.
Currently, there is no European-wide regulation of loss adjusting experts. Control of our professional standards is primarily a matter of self-regulation, professional requirements from the insurers who appoint us, national regulation or a combination of these factors.
As a result, the German insurer of an Italian FERMA member can instruct an international loss adjuster or assessor with expertise in chemical plants, for instance, to examine a loss in a third EU member state. Any national regulation of loss adjusting experts must have a single passport system, or the insurer could be restricted to a local firm which might not have the required level of knowledge or did not meet the client’s expectations.
The latest version of IMD2, published in July 2012, included insurance after-sales services “such as loss adjusters” for the first time. For all those now mentioned, the directive now proposes:
- Mutual recognition of professional knowledge and ability, as evidenced by registration and proof of professional qualifications acquired in another member state.
- Effective, proportionate and dissuasive administrative sanctions and measures by competent authorities in respect of breaches provided by guidelines to member states.
- Exemption for loss adjusters and assessors from specified registration procedures for insurance intermediaries and authority to carry on activities by way of simple declaration.
The profession of loss expertise is conducted in different ways throughout Europe. Moreover, there is not a large pipeline of people coming into the profession who can offer the right skills. Especially for large and complex claims which businesses suffer, an international resource is essential.
We understand that it is not easy to insure consistent standards among thousands of European businesses describing themselves as loss adjusting experts, when many of them are tiny operations, sometimes only one person. I will add, however, that some of these small loss practices are very specialised and expert. In addition, there are loss adjusting experts who are already indirectly regulated via the service contracts with insurers, linked to national solvency requirements.
We believe it is in the interest of FERMA members to maintain the ability of their insurers to involve qualified industrial loss adjusters to service their insurance programmes promptly throughout Europe. FUEDI argues, therefore, that to avoid restrictions on cross-border service provisions any recognition of a loss adjuster should immediately cover all EU-members states.
IMD2 will come into force in 2015 at the earliest, but there are already signals that questions are raised whether loss adjusters should be managed as insurance intermediaries under the IMD2 directive. The text is likely to be formally adopted at EU level this year, and there will then be further work on detailed implementation by the transposition of the directive into national regulations.
FUEDI will, therefore, monitor both the EU consumer objectives for post-catastrophe insurance services, etc, and the potential impact on members’ ability to provide prompt, flexible cross-border services throughout Europe on the basis of ‘the right man (or woman) at the right place’.
Mark Vos is the incoming Vice-President of FUEDI.