Amended rules on ancillary insurance intermediaries 23 January 2019

Insurance law

As of January 2019, the rules on ancillary insurance intermediary activity have been amended by the Hungarian Insurance Act in several aspects.

The category of the ancillary insurance intermediary was introduced in Hungarian law in 2018 while implementing the Directive (EU) 2016/97 of the European Parliament and of the Council of 20 January 2016 on insurance distribution. The ancillary insurance intermediaries are insurance distributors who take up or pursue insurance distribution on an ancillary basis. Despite the name this category does not qualify as an insurance intermediary, thus they are governed by less strict regulations in the Hungarian Insurance Act then the intermediaries.

To date, the ancillary insurance intermediary could have acted on behalf of several insurers, multiple agents or brokers, or it could have been a subcontractor of another insurance intermediary as well.

From 2019, due to the amendment of the Hungarian Insurance Act, the ancillary insurance intermediary can simultaneously be mandated only by one insurance distributor (an insurer, a broker or a multiple agent). In addition, the ancillary insurance intermediary may not assign any subcontractor to contribute in its ancillary insurance intermediary activity.

Another major change is that the insurer, broker or multiple agent mandating the ancillary insurance intermediary is responsible for the fulfillment of client-information requirements and, in case of several products, the preparation of the client’s needs assessment for the full range of products available. The ancillary insurance intermediary has to inform the client about the range of products available, and notify him that a wider range of products are available through other insurance distribution channels.

The amendment also makes it clear that the ancillary insurance intermediary can carry out the distribution with or without providing advice. The client has to be notified about this as well.


Intermediaries

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