After much debate and discussion, the European Parliament and the Council have issued thesmall business lawyer and tax lawyer nicholas hammond recast Directive on Insurance Distribution.

EU Directive 2016/97 (“Directive”) was issued on the 20th January 2016 and was published in the Official Journal of the European 2nd February 2016. The provisions of the Directive coming into effect 20 days after its publication. The Directive has to be brought into force by Member states by 23rd February 2018.

Whether National Governments will make the necessary time available to implement the provisions will be up to them. As Romanian is entering an election year it is relatively safe to assume that the current technocrat government will not introduce any legislation into Parliament to implement the Directive. Usually, in Romania, there is a change at the top in many organisations following an election and we would be surprised if the Romanian Authority for Financial Supervision has the time or the inclination to start to implement decisions rules or regulations before the elections. They will wait until Parliament passes the necessary enabling legislation adopting the Directive. As to how quickly that will happen will depend on the composition of the next Parliament and for that we will have to wait and see.

The Directive was brought about as it was felt that there was some clarity needed in respect of Directive 2002/92/EC and the way in which insurance, reinsurance and intermediaries carried out their business inside the EU and that therefore a number of amendments were needed. It was felt that further steps were needed to be taken to harmonise national provisions concerning insurance, reinsurance and insurance intermediaries. It also felt that there were some inconsistencies in relation to national laws which a recast directive could help iron out.

The new Directive sets out steps and a minimum level of harmonisation and will not prevent national governments and authorities imposing more stringent regulations provided that they have to be complied with by both local and non-local insurance and reinsurance companies.

It was also felt that there were certain areas where consumers could benefit from greater disclosure and clarity in respect of products being sold to them. Also, it was felt that there was a greater need for the training of staff and that all channels through which insurance and reinsurance are sold will be harmonised.

A number of articles in the Directive also deal with the possibility of insurance companies, reinsurance companies and intermediaries who wish to “passport” into another EU country. Any such company wishing to carry on business in another EU country should carefully consider the amended provisions to ensure that they wish to passport into another country.

How the provisions of the Directive will be implemented in Romania is currently unknown. It will be interesting to see whether the current provisions in relation to the insurance and reinsurance market are changed or continue to be restrictive or a more liberal market will open up. The consumer will, however, continue to be served by increasing clarity and disclosure in respect of such products marketed in Romania. Romanian Companies should study the recast Directive to see how it will affect their business and start now making the necessary changes.