April 30, 2014. That is the deadline for implementing the new MiFID regulations for insurers, brokers, bancassurers and all distributors of retail insurance product. This will have an impact on different domains such as commissioning and positioning of distribution channels, product development and pricing, and foremost the overall transparency towards the end client. Heidi Cortois explained in a webinar: *Briefly the changes in regulation and the timing *The impact on the insurance sector *Our personal advice for the implementation *The potential change in the insurance landscape

1. MiFID Webinar
Markets in financial instruments Directive
By Heidi Cortois, Director
Financial Institutions

2. MiFID Webinar - AGENDA
• Legislation:
 Scope
 Involved actors
 Important aspects
• Potential sanctions
• Potential impact on the sector & our advice
• Questions and answers
29 april 2014 Webinar MiFID
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3. A new European legislation MiFID II –
Scope
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Purpose:
“Establishing a safer, sounder, more
transparent and more responsible financial
system that works for the economy and
society as a whole.”

4. A new European legislation MiFID II –
Scope
29 april 2014 Webinar MiFID
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Royal Decrees were officially published on 21st February 2014:
• RD 1: MiFID rules of conduct applicable to the insurance sector
• RD 2: MiFID rules concerning conflict of interest, inducements and
client information
• RD 3: Changes to the ‘Wet Cauwenbergh’
Belgian context: MiFID as part of Twin Peaks II
 into force on 30/04/2014

5. A new European legislation MiFID II –
Scope
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In a nutshell...
• Insurance mediation (retail)
Excluding:
 Self insurance
 Accessory life insurance
 Re-insurance mediation
 Big risks
• Principle of proportionality
• Transactions as of 30/04/2014

6. A new European legislation MiFID II –
Involved actors
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Tied agent
Under the
complete
responsibility of
the insurer that
offers the policy
Insurers
Insurers ‘sensu lato’
Works on behalf of :
1 unique insurer
OR
Various insurers for
which the offered
products don’t compete
mutually
Other intermediary than
tied agent
Works on behalf of:
Various insurers
Non-tied agentBrokers
AND

7. A new European legislation MiFID II –
Responsibilities
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• Partly tied, partly non-tied
• Insurance mediation for insurance + mediation
bank allowed
Accepted
• Tied agent + broker
Not-accepted
• Tied agent + insurer
Reporting

8. A new European legislation MiFID II –
Important aspects
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Fundamental rule : MiFID Constitution “ Duty of Care”
• Principle :
Loyal, fair and professional commitment to the client’s interests
 In practice:
Client Risk Profile Products
Test
Questions
Profile algoritm Product algoritm

9. Duty of Care - Tests
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Product type Test type Purpose?
Life insurance with a savings
or investment component
(with personal advice)
Suitability test - Knowledge and
experience
- Financial situation
- Target/ investment goal
Life insurance with a savings
or investment component
(without personal advice)
Appropriateness test - Knowledge and
experience
Other insurance products
(e.g. RPI, GII, decease
insurance,…)
Needs analysis Ensure that all proposed
insurance products are in line
with requirements and needs
of the client

10. A new European legislation MiFID II –
Important aspects
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Duty of loyalty
 Conflict of interests:
Requirement for an effectively defined and written policy (identification, control &
management, information, …)
... and the update of all occured incidents into a register.
 Inducements:
Prohibition of compensations or advances (Risk conflict of interests)
Remark: 3 exceptions

11. A new European legislation MiFID II –
Important aspects
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•Information to clients
•Product knowledge
•Data storage
•Reporting to clients
•Client file

12. A new European legislation MiFID II –
Potential sanctions
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• Penalties:
 Stop of sales specific products
 Penalty payments per day of delay after warnings by FSMA: EUR 5.000 – 75.000
 Administrative injunctions and fines up until EUR 2.500.000
 Publications on FSMA – website
 Different civil sanctions:
(1) Indemnity in the case of rebuttable presumption
(2) Abrogation of policies when sold by non-licensed intermediaries/insurers
• New jurisprudential principles:
 Mistery shopping;
 Rebuttable presumption against intermediary;
 Legal claim for collective recovery > increase reputational risk;

13. Potential impact on the insurance sector
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The insurance landscape will be impacted in several ways:
Professionalization of
brokers1
Evolution from push
model to client focused
supply model
2
Internal market
competition between
insurers and brokers
3
Bank and insurance holdings’
pressure to have tied agents
for the insurance part
4
Growing importance of direct
online distribution channel for
commodity products5
Diversity of questionnaires and
profiles6

14. Growing need to
define algoritmes
 Client profile
algoritmes
 Product algoritmes
Define value
proposition per
distribution
channel
Potential impact on the insurance sector
& our advice
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Contract review:
Tied or non-tied
agents?
Framework
agreement?
Review of
positioning /
strategy
Marketing
differentiation
per distribution
channel
Standardize
operational
processes across all
distribution channels

15. What do
you think
now? We like
to help!
Want
to
know
more? Your
Challenges?
www.trifinance.com
Here we go!
Heidi Cortois
Director TriFinance Financial Institutions
+32 477 999 750
Heidi.cortois@trifinance.be
Q&A