New Regulation of Insurance Intermediaries has come into force

A new Act on Insurance Intermediaries and Loss Adjusters came into force on 1 January 2005 in the Czech Republic.

The following new regulations apply to the diverse intermediaries in respect of starting or continuing the mediation business in the Czech Republic:

Foreign intermediaries

Intermediaries based in other EU Member States can take up mediation activities in the Czech Republic via a branch office or on freedom of services basis, provided that their home country has also already adopted the relevant EU legislation and a standard passporting out procedure has been carried out. When carrying out business in the Czech Republic, foreign intermediaries will continue to be subject to home country rules and supervision by their national regulator.

Czech operators

Czech insurance intermediaries who have operated mediation business under a previous regulation can continue to do so based on the original authorisation they obtained, yet they must fulfil additional duties in a transitional period:

• insurance agents who were not previously subject to the registration duty with the Ministry of Finance need to register within six months;
• insurance brokers (the only category of intermediaries subject to registration so far) need to conclude professional indemnity insurance and fulfil financial capacity requirements within six months; and
• insurance brokers need to fulfil professional competence requirements within two years.

Failure to comply with the above requirements in the periods set out means that they will cease to be authorised.

Czechs new to the market

Czech intermediaries who want to newly enter the mediation market must comply with all conditions for registration. These are set out in the Act, as well as further detailed (in particular as to professional qualification, training, exams, proof documentation, etc.) in a new implementing decree, which is also effective from 1 January 2005.