Brokers and intermediaries could face two rival regulators within 18 months if, as expected, the European Commission proceeds with a “policy proposal for a new directive”, which it has adopted this week.
The Commission's decision to table the draft directive is the equivalent, in UK terms, of a new bill being introduced into the Houses of Parliament.
The European law-making body is expected to take 18 months to fine-tune the directive before it is published for consultation and ratification by the European Union's 15 member states.
But it is understood that central to the directive is the proposal to compulsorily regulate insurance sellers in all 15 countries.
The legislative package is expected to provide a huge fillip for the Insitute of Insurance Brokers' campaign to set up its own self-regulatory body for brokers in competition with the General Insurance Standards Council.
The IIB's leader, Andrew Paddick, has always maintained that the European proposals would support the existence of more than one regulator in each member EU state.
A senior figure within the Commission's administration, who asked not to be named, supported this suggestion: “The current idea within the Commission is to permit more than one authority to register and monitor the activities of insurance intermediaries in each country.”
Harald Krauss of the International Federation of Insurance Intermediaries (IFII) said the draft directive was certain to go through almost entirely unchanged.
He said: “These proposals are the view of the European Commission – 20 commissioners have approved the text of the proposals and normally they do not seek to vary them very much.”
Under the proposed rules, brokers will have to pay a minimum level of professional indemnity insurance of e1m (£603,000).
European financial services commissioner Frits Bolkestein said: “Insurance intermediaries are a vital link in the process of selling insurance products in the European Union. They play a pivotal role in protecting the interests of insurance customers.”
Another key thrust of the proposal is to enable brokers to trade throughout the European Union. While the detail of the rules appears weak compared to UK terms, individual governments will be allowed to introduce more stringent rules if they wish.
“The aim of the proposal is to make it easier for insurance intermediaries to avail themselves of the freedom of movement and freedom to provide services,” said Bolkestein.