Law No. 7/2019 published on January 16th approves the new framework on insurance and reinsurance distribution in Portugal.
This law transposes Directive (EU) 2016/97 on insurance distribution into national law, thus changing Law 147/2015, of 9 September, which contains the legal framework on the access to and the exercise of insurance activity and reinsurance in Portugal, as well as the procedural rules that apply to crimes related to the Insurance Sector and Pension Funds and to misdemeanors whose processing is managed by the Portuguese Insurance and Pension Funds Supervisory Authority (ASF). It also revokes Decree-Law No. 144/2006, of 31 July.
This new framework aims to improve consumer protection and to avoid situations of miss-selling, thus reinforcing professional eligibility and conduct of business requirements, and governing insurance distribution activities whether directly exercised by Insurance or Reinsurance undertakings or by intermediaries.
Chief amongst these changes is the reinforcement of information duties being that where advice is provided prior to the sale of an insurance product a personalized recommendation should be provided to the insured (the customer) according to his/her risk & investment profile, as well as on why a particular product best meets the customer’s insurance demands and needs. Moreover, it imposes mandatory training for exercising the activity and a duty of disclosure upon the person distributing the insurance to provide customers clear information about the type of remuneration which they receive. Steps should be also taken to prevent conflicts of interest.
This law will apply from October 1st, 2018 onwards, except for the provisions of the new law that are subject to the issuance of Regulations by the ASF, the relevant undertakings having a deadline until February 23rd, 2019 to meet the qualification requirements.
It is now up to insurance and reinsurance undertakings and intermediaries to implement the required measures in order to comply with this new legal framework on insurance and reinsurance distribution