Denmark MAZANTI-ANDERSEN KORSØ JENSEN Bjarke Sanbeck

[email protected]

1.

Insurance intermediation activities

1.1

Is the distribution of insurance products (hereinafter referred to as ‘insurance intermediation activities’ or ‘insurance intermediation’) limited to insurance intermediaries in your country? The distribution of insurance products is generally limited to intermediaries and insurance companies.

1.2

What does the term ‘insurance intermediation’ include? Is there any definition set forth by statutory or case law? In any case, please indicate which activities/services are included in the above definition, for example, presentation or proposal of insurance products, assistance or consultancy aimed at drafting the agreement. Are collaboration activities that relate to the administration or execution of the contracts drafted, even in the case of accidents, included in the definition? Does the drafting of contracts or insurance agreements in a collective form on behalf of insured individuals also form part of insurance intermediation activities? 1

Insurance intermediation is in Denmark governed by the Insurance Intermediation Act and is an implementation of EU directive 2002/92/EC of of 9 December 2002 on insurance mediation. The Insurance Mediation Act includes definitions of brokering, reinsurance brokering, agents, sub-agents and insurance distribution business. The Insurance Mediation Act includes the following definition of insurance intermediation: Professional intermediation is the activity of introducing, proposing or carrying out other work preparatory to the conclusion of contracts of insurance, or of concluding such contracts, or of assisting in the administration and performance of such contracts, in particular in the event of a claim, for a fee. The drafting of contracts or insurance agreements in a collective form on behalf of individuals can be part of insurance intermediation activities. 1.3

1

Are insurance intermediation activities allowed as ancillary activities to other professional activities (eg, travel or rent-a-car services, etc) and to what extent? Furthermore, are there exceptions that allow actors, other than insurance intermediaries, to carry out insurance intermediation activities? Is it a matter related, for example, to the risk covered, the duration or the cost of the policy premium, etc?

Lovbekendtgørelse 2013-08-22 nr. 1065 om forsikringsformidling.

Insurance intermediation as an ancillary activity to others is allowed in Denmark under conditions as specified in the Insurance Mediation Act. For example, a tied insurance intermediary must, under section 34 of the Insurance Mediation Act, provide individuals with information pertaining to the specific insurance distributed and any commission agreed.

2.

Insurance intermediaries’ requirements

2.1

In order to act as an insurance intermediary, is there need for an authorisation and/or to be enrolled in a register? If yes, what are the requirements to be authorised/enrolled in the register as an insurance intermediary (individual or legal entities, integrity and/or professional requirements, etc)? Briefly explain how it works. 2

Insurance intermediation in Denmark requires an authorisation from the Danish FSA . In order to acquire an authorisation the applicant must meet the requirements set out in the Insurance Mediation Act. Legal entities must meet the requirements of integrity and insurance, and employ individuals authorised to practice as an insurance intermediary. Individuals must meet the requirements of integrity and insurance, and possess the appropriate knowledge and ability. Authorisation is granted after application to the Danish FSA. 2.2

In what form can anyone access and verify the registration/authorisation or verify the fact that the insurance intermediary is a professional (eg, via the web)? Anyone can access and verify the registration of an insurance intermediary on the FSA’s website where a list of insurance intermediaries is published. The register can be accessed at:

www.finanstilsynet.dk/en/Tal-og-fakta/Virksomheder-under-

tilsyn/Forsikringsregistre/Register-for-forsikrings-og-genforsikringsmaeglere.aspx. 2.3

Are insurance intermediaries with a registered office in another country allowed to operate in your country and how (eg, under the right of establishment or freedom to provide services in your country, as in the EU)? If yes, under what conditions? In such a case, are they bound by the same obligations of the insurance intermediaries with a registered office in your country? Please describe. Insurance Intermediaries legally entitled to operate in another EU Member State can operate in Denmark. The local competent authority must give notification of the operation to the FSA with a prior notice of one month before operation.

2

Finanstilsynet (www.finanstilsynet.dk/en.aspx).

Insurance intermediaries based outside of the EU may currently not operate in Denmark. The Danish FSA can issue an executive order permitting insurance intermediaries to operate in Demark. Registration will be a requirement.

3.

Different types of Insurance intermediaries

3.1

Please list the different types of insurance intermediaries acting in your country such as agents, brokers, banks, financial intermediaries or financial advisers. The types of insurance intermediaries acting in Denmark are:

3.2



insurance brokers;



reinsurance brokers;



insurance agents;



insurance sub-agents;



tied insurance intermediaries.

Do insurance intermediaries need to enter into a written contract with the insurers (or receive a mandate from the insurers)? An insurance intermediary may operate without a written contract with an insurance company. A written contract is customary but not required.

3.3

Can an insurance intermediary enter into a contract with the insurers (or receive a mandate from the insurer) and in turn enter into one or more agreements with other insurance intermediaries (the so-called horizontal distribution)? Horizontal distribution is permitted in Denmark. Sub-agencies must be registered with the FSA. To be registered, the sub-agent must be insured by the agent for professional indemnity, possess an appropriate general amount of knowledge of the insurance distributed and be solvent.

3.4

The insurance intermediaries more in detail:

3.4.1

The agent

3.4.1.1

Does the role of insurance agent exist in your country? If yes, describe the agent’s functions. Insurance agents operate in Denmark in respect of the distribution of insurance products on behalf of one or more insurers by mandate and/or contract for a fee.

3.4.1.2

In particular, does an agent act on behalf of the insurer or the insured? Who pays the agent’s remuneration? To what kind of remuneration is the agent entitled?

The insurance agent acts on behalf of the insurer. The insurance agent is usually a legal entity with one or more employees. The insurance agent’s remuneration is usually paid by the insurer as agreed between the insurer and the insurance agent. 3.4.1.3

If an agent acts on behalf of the insurer, describe the type of work relationship with the insurer (eg, subordinate, para-subordinate or freelance, self-employed etc). Does the ‘principal-agent model’ exist, that is, is one is appointed by the insurer to manage a particular branch or subsidiary? The insurance agent and the insurer usually define their work relationship in a service level agreement. The insurance agent can practice in any form, for example, as self-employed or a limited company with one or many employees, etc. The principal agent model exists.

3.4.1.4

What type of organisation does the agent have? Can he have staff working for him (eg, sub-agents)? The organisation of insurance agents in Denmark ranges from a single person organisation to organisations with many employees working in multiple markets. Agencies can also enter into contracts with sub-agents.

3.4.1.5

Is the relationship between the insurer and the agent regulated by a collective bargaining agreement? If yes, what does it mainly cover? Can the relationship be exclusive to a particular area? Is the remuneration established by the collective bargaining agreement? Can the provisions be waived by the parties’ mutual agreement? The relationship between the insurer and the agent is regulated by individual agreement as stated above.

3.4.1.6

Does the termination of the work relationship between the agent and insurer provide for the agent’s obligation to return the portfolio of contracts? In such a case, would the agent be entitled to an indemnity? The obligation of the agent to return the portfolio of contracts to the insurer and any kind of indemnity depends on the agreement between the parties.

3.4.2

The broker

3.4.2.1

Please describe the broker’s services? In general terms, do the services consist of intermediation or are they similar to consultancy/advisory activities? Is the broker an independent actor? Broker services in Denmark are in general terms defined as the activity of advising insurance customers on the basis of the analysis of a large quantum of insurance products or the presentation of insurance products from a single insurer without an explicit agreement with that insurer.

3.4.2.2

Who pays for the broker’s remuneration (please specify case by case for the different services, if any)? Is the broker allowed to retrocede a portion of his remuneration to the insurer or to the insured?

The customer usually pays the broker’s remuneration directly or indirectly through a cut of the premium payments. 3.4.3

Banks, financial intermediaries, financial advisers and others allowed to act as insurance intermediaries

3.4.3.1

Can banks, financial intermediaries and/or financial advisers act as insurance intermediaries? Banks, financial intermediaries and financial advisers can act as insurance intermediaries. Registration is required.

3.4.3.2

Please define a financial intermediary. Are there particular requisites for the profession of financial intermediary? Does the financial intermediary have to be enrolled in another register (eg, a register of financial intermediaries)? Financial intermediaries’ functions and their manner of registration are the same as other insurance intermediaries.

3.4.3.3

Please define a financial adviser. Are there particular requisites for the profession of financial adviser? Does the financial adviser have to be enrolled in another register (eg, a register of financial advisers)? Financial advisers’ functions and their manner of registration are the same as other insurance intermediaries (eg, insurance agents).

3.4.3.4

Can financial intermediaries and/or financial advisers distribute any insurance and/or financial products? If yes, under what conditions or with what limitations? Financial intermediaries and financial advisers functions as insurance agents and can, in principle, distribute any insurance/or financial products under the limitations in the Insurance Mediation Act and the rules for Danish Financial Business.

3.4.3.5

With reference to insurance intermediaries other than agents, brokers, banks, financial intermediaries and financial advisers, as indicated under question 2.1 above (if any), please describe what kind of products they can distribute and under what conditions. Other insurance intermediaries (eg those relating to travel, rent-a-car services, etc) beyond the scope of the Insurance Mediation Act can mediate insurance products if all the following conditions are met: a) the insurance contract only requires knowledge of the insurance cover that is provided; b) the insurance contract is not a life assurance contract; c) the insurance contract does not cover any liability risks;

d) the principal professional activity of the person is other than insurance mediation; e) the insurance is complementary to the product or service supplied by any provider, where such insurance covers: (i)

the risk of breakdown, loss of or damage to goods supplied by that provider; or

(ii)

damage to or loss of baggage and other risks linked to the travel booked with that provider, even if the insurance covers life assurance or liability risks, provided that the cover is ancillary to the main cover for the risks linked to that travel;

(iii)

the amount of the annual premium does not exceed €500 and the total duration of the insurance contract, including any renewals, does not exceed five years.

4.

Rules of conduct and responsibility

4.1

Are there rules of conduct that insurance intermediaries should comply with (eg, duties in relation to the obligation of utmost care, correctness, utmost good faith, information, adequacy, transparency, conflict of interests, filing of documentation, separate accounting or other accounting obligations? Please describe the above duties, specifying if they apply to all the different insurance intermediaries (eg, agents, brokers, banks, financial intermediaries, financial advisers, etc) and whether the content differs – with particular reference to responsibility – according to the type of actor/activity and person (insurer or insured) receiving the activity. Insurance brokers and reinsurance brokers must conduct their business in accordance with honest and good practice (eg, with regard to the obligation of utmost care, correctness, timeliness, utmost good faith, information, adequacy, transparency, conflict of interests etc) as laid out in the executive order 2007-10-24 no. 1253 on good practice for insurance intermediaries.

4.2.

Does the insurance intermediary represent the insurer? By way of example, is the agent also the insurer’s representative vis-à-vis the customer, and if so, does this also apply during trial before a court? Is there a matter of imputation of knowledge? What happens when a broker has information on matters relevant to the insurer’s decision to insure which the broker fails to disclose to the insurer? Is the insured deemed to have breached its duty of disclosure in such circumstances? In which cases? Can the insurance intermediary be accountable for the contracts he executed on behalf of the insurer? Insurance agents represent the insurer whereas insurance brokers represent the insured. Information contributed by the customer to the agent will usually constitute imputation of knowledge in the relationship between the customer and the insurer.

The insurance intermediary can be accountable for the contracts he executed on behalf of the insurer but usually the insured will be advised to file his claim directly against the insurer (‘deep pockets’). The question of imputation of knowledge between the broker and the insured is not an issue but cannot be ruled out entirely. 4.3

Is the insurer jointly liable for damages caused by the insurance intermediary, appointed by the same, when executing intermediary activities? Who is liable vis-à-vis the insured person? Is it always the intermediary or the insurer? The insurer is bound by contracts the insurer has committed to. The insurer, however, is not by default jointly liable for damages caused by the insurance intermediary, but may be jointly liable in case of negligence or purpose on the insurers behalf.

4.4

Are there particular regulations or specific forms of compensation for damages caused to the insured person? There are no regulations or specific forms of compensation for damages caused to the insured person by the insurance intermediary. The general rules of Danish tort law apply.

5.

Supervision and sanctions

5.1

Regardless of the requirement of an authorisation and/or enrolment, are insurance intermediaries subject to the control of supervisory bodies? Does the supervisory body have powers/duties of prudential supervision on the insurance intermediary’s activities, and if so, in what way does it act? The FSA is the competent authority and supervises that insurance intermediaries comply with

the

Insurance

Mediation

Act.

The FSA supervises insurance intermediaries by inspections and obtains information through enquiries. 5.2

Are there fines for violations of the insurance intermediaries’ obligations? If yes, please describe. Violation of the Insurance Mediation Act is sanctioned by fine and/or disqualification. If the insurance intermediary is a member of an association, additional penalties might apply. For example, violation of the ethical code of Danish Insurance Brokers is sanctioned by fines of up to DKK 75,000 or revocation of membership.

5.3

Do sanctions also apply to foreign intermediaries who operate in your country? Yes. Sanctions apply to all intermediaries covered by the Insurance Mediation Act.

5.4

Is there a consultation procedure with the insurance intermediary before the fine is applied?

Depending on the nature and severity of the violation there is usually a consultation between the insurance intermediary and the FSA before a fine is applied. 5.5

Could the application of more fines, or the breach of particular regulations, result in the revocation of the authorisation, or in the intermediary being struck off the register (if any), or in the prohibition to act as an insurance intermediary? If so, which are the most relevant circumstances? Repeated or a gross violation of the Insurance Mediation Act can result in revocation of an insurance broker’s authorisation by the FSA. Relevant but not exhaustive circumstances that could result in revocation include: 

the broker fails to provide required information to customers;



the broker receives commission from the insurer.