LONDON, Nov 24 (Reuters) - Insurance brokers will need insurance themselves to cover negligence claims from customers under new European Union rules approved on Tuesday to protect consumers.
The European Parliament voted in favour of a law to tighten 10-year old EU rules on the information and advice provided by insurance sales staff.
Brokers and agents will have to be registered with national regulators and must take out insurance contracts to provide cover of at least 1.25 million euros against professional negligence claims, the parliament said in a statement.
Brokers may also have to hold reserves of up to 4 percent of all annual premiums received to protect customers.
“Moreover, their remuneration arrangements should not provide incentives to recommend a particular insurance product when a different one would better meet the customer’s needs.
Before signing a non-life insurance contract, all buyers must be given standard information on the type of insurance, obligations under the contract, risks insured and excluded, and means of payment and premiums, in clear, plain language.
The new rules won’t apply to insurance where the premium does not exceed 600 euros a year.
After the rules are formally signed off by EU member states, they will come into effect within two years. (Reporting by Huw Jones; Editing by Greg Mahlich)