New Guidelines for Insurers on Distribution in Poland

On 24 June 2014, the KNF (The Polish Financial Supervision Authority) published Guidelines for Insurance Undertakings on the Distribution of Insurance (“the Guidelines”), which will become effective on 31 March 2015.

The Guidelines apply to local insurers and EEA insurers, such as Lloyd's. They are intended to ensure that insurance undertakings have appropriate supervision of the intermediaries that act on their behalf, to harmonise conduct of business standards across all distribution channels and to protect consumers. The Guidelines are not legally binding and do not form part of the general good conditions but the KNF expects that all insurers will comply with them.

The main points covered in the Guidelines are as follows:

• Insurers are to have internal rules concerning the distribution of insurance. These should be approved by the board and be subject to periodic review.
• To avoid conflicts of interest, an intermediary is not permitted to act as a policyholder in respect of a contract that it has mediated. Consequently, an intermediary cannot be a policyholder on a master policy.
• An insurer cannot pay any remuneration to an entity involved in the distribution of insurance unless it is a registered insurance intermediary.
• Business acquisition costs, especially remuneration paid to insurance agents, should be evenly distributed over time.
• The remuneration paid to an insurance agent by an insurer should not undermine the insured's confidence in the financial market and should be at a reasonable level and in proportion to the amount of premium collected.
• In addition, the Guidelines contain provisions regarding the information provided to the insured before and after inception, and the manner in which the information is provided.
• Finally, insureds and beneficiaries under life insurance policies must have the right to claim directly against the insurer and there is an obligation on insurers to inform them of this right.

Some of the provisions in the Guidelines regarding the internal controls of an insurance undertaking are already accommodated in Lloyd’s Code of Practice on Delegated Underwriting, Minimum Standards on Underwriting (Section 3 on Delegated Authority) and Minimum Standards on Conduct Risk. However, managing agents should assess which additional measures they need to put in place. Where there is a coverholder in Poland in the placement chain, it may be appropriate for some of the provisions in the Guidelines to be fulfilled by the coverholder on behalf of the managing agent. In such cases, the managing agent will need to ensure that the coverholder is able to do so.  

Further details about the Guidelines can be found in the following sections of Crystal: Intermediary regulation; Master policies; Pre-contractual information; Insurance documents. An English translation of the Guidelines is provided in the Insurance law and regulation section of Crystal for information purposes only.

For any related enquiries please contact Lloyd’s International Trading Advice (LITA).

Lloyd's International Trading Advice

Primary point of contact for advice and information on Lloyd's trading status worldwide.