The European Union is set to roll out new rules in 2005 that would curb malpractice techniques practiced by insurance brokers, such as financial ties with a particular firm.
The rules set strict requirements for insurance brokers, including the obligation to declare whether they have a special relationship with a particular insurer and the terms of this, according to a Reuters report. The directive was adopted in September 2002, long before New York Attorney General Eliot Spitzer last month launched his inquiry into controversial “contingent commissions” paid to brokers by insurers for placing business with them, the report said citing a EU spokesperson.
However, the 25 EU member states have yet to translate the new rules on insurance brokers – known as the Insurance Mediation Directive – into national legislation despite a looming deadline of January 15, 2005, the spokesperson said.