Response to consultation on Professional Indemnity Insurance (PII) for mortgage credit intermediaries
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Due to the connection between the level of coverage and the contribution payable, it is important to ensure that the minimum amounts are sufficient to cover a realistic level of risk. Any uniform minimum amount stipulated for professional indemnity insurance should therefore be set to the lowest amount of cover regarded as necessary from the Member State’s perspective.
Generally speaking, intermediation by Bausparkassen intermediaries can be regarded as posing a very low risk. Furthermore, the loans provided by the Bausparkassen can in general be classed as small-scale lending. Both these factors mean that an excessively high minimum amount of cover would not be appropriate for our professional group. The Member States should therefore be given the opportunity to adopt exemptions in order to take account of these circumstances.
The professional indemnity insurance for insurance intermediaries therefore can and should be much higher than the amount of professional indemnity insurance for mortgage credit intermediaries; indeed, such a solution is entirely justified.
Setting the minimum amount at the average of the amounts used in Member States is clearly not compatible with the minimum harmonisation approach stipulated in the Directive on credit agreements for consumers relating to residential immovable property. Nor is it compatible with the specific mandate to stipulate the minimum monetary amount of the professional indemnity insurance for credit intermediaries under Article 29(2)(a) of the Directive.
Do you agree that, of the four options presented, option 4 (i.e. setting the minimum amount at the average of the amounts used in Member States) is the option the EBA should pursue, resulting in a minimum amount of EUR 584 000 per claim, and EUR 886 000 per year?
In stipulating the minimum monetary amount of the professional indemnity insurance or comparable guarantee for mortgage credit intermediaries, the different levels of risk in the mortgage credit intermediation in each Member State must be considered. Of the options proposed by the EBA, option 3 takes greatest account of national differences and is thus the EFBS’s preferred option. This means that EUR 100 000 per claim and EUR 150 000 per year should be stipulated in the regulatory technical standards. Giving Member States the possibility of establishing different minimum monetary amounts of professional indemnity insurance for particularly low-risk sectors (such as Bausparkassen) should also be considered.Due to the connection between the level of coverage and the contribution payable, it is important to ensure that the minimum amounts are sufficient to cover a realistic level of risk. Any uniform minimum amount stipulated for professional indemnity insurance should therefore be set to the lowest amount of cover regarded as necessary from the Member State’s perspective.
Generally speaking, intermediation by Bausparkassen intermediaries can be regarded as posing a very low risk. Furthermore, the loans provided by the Bausparkassen can in general be classed as small-scale lending. Both these factors mean that an excessively high minimum amount of cover would not be appropriate for our professional group. The Member States should therefore be given the opportunity to adopt exemptions in order to take account of these circumstances.
Do you consider the number and the compensatable loss of compensation claims arising from the activity of mortgage intermediation to be lower than, the same as, or higher than those arising from insurance intermediation? Please explain your reasoning.
The average loan granted by our members in 2013 amounted to approximately 33,000 euros. Average life insurance cover amounts to around 150,000 euros. An insurance intermediary also handles many more higher-volume contracts, such as pensions, buildings insurance, incapacity insurance and life insurance, which together amount to a much higher volume of business than the intermediation of a single mortgage loan.The professional indemnity insurance for insurance intermediaries therefore can and should be much higher than the amount of professional indemnity insurance for mortgage credit intermediaries; indeed, such a solution is entirely justified.
Do you know of options other than those listed in this consultation paper that the EBA should consider when deciding on the minimum amount of coverage?
Article 29(2)(a) of the Directive on credit agreements for consumers relating to residential immovable property also requires the EBA merely to stipulate the minimum monetary amount of the professional indemnity insurance. In line with the basic principle of minimum harmonisation established in this Directive, the EBA should stipulate a very low minimum amount. This minimum amount should therefore be based on the Member State with the lowest average volume of net loan amounts.Setting the minimum amount at the average of the amounts used in Member States is clearly not compatible with the minimum harmonisation approach stipulated in the Directive on credit agreements for consumers relating to residential immovable property. Nor is it compatible with the specific mandate to stipulate the minimum monetary amount of the professional indemnity insurance for credit intermediaries under Article 29(2)(a) of the Directive.