Order on Good Conduct for Insurance Distributors

Order on Good Conduct for Insurance Distributors 1)

Pursuant to Section 67, paragraph 2, and Section 316, paragraph 1, of Act No. 718 of 13 June 2023 on insurance business, and Section 12, paragraph 2, and Section 42, paragraph 7, of the Act on Insurance Mediation, as consolidated in Act No. 806 of 21 June 2024, the following is enacted:

Chapter 1 Scope of Application and Definitions

Section 1. This Order applies to the following businesses:

1. Danish insurance companies and foreign insurance companies conducting business in this country, including through branch establishment or cross-border provision of services.
2. Danish insurance mediators, pursuant to Section 2, No. 3, and foreign companies conducting insurance mediation business in this country, including through branch establishment and cross-border business.
3. Danish accessory insurance mediators, pursuant to Section 2, No. 4, and foreign accessory insurance mediators conducting accessory insurance mediation business in this country, including through branch establishment and cross-border business, provided that the accessory insurance mediator is covered by the Act on Insurance Mediation, pursuant to Section 1, paragraph 2, of the Act on Insurance Mediation.

Paragraph 2. This Order does not apply to the following activities:

1. Occasional provision of information in connection with other business activities, provided that a) the business does not take further measures to assist in concluding or fulfilling an insurance contract, or b) the purpose of the business activity is not to assist in concluding or fulfilling a reinsurance contract.
2. Commercial administration of damage reports and damage settlement and valuation of an insurance or reinsurance company.
3. Provision of data and information about potential policyholders to insurance or reinsurance mediators or insurance or reinsurance companies, provided that only data is provided and the supplier does not take further measures to assist in the conclusion of an insurance or reinsurance contract.
4. Provision of information about insurance or reinsurance products, an insurance or reinsurance mediator, or an insurance or reinsurance company to potential policyholders, provided that only such information is provided and the supplier does not take further measures to assist in the conclusion of an insurance or reinsurance contract.

Paragraph 3. The information obligations in Sections 14-17, 20, and 21 do not apply to insurance distribution business in connection with the insurance of large risks.

Paragraph 4. The information in Sections 34 and 36-40 need not be provided to a professional customer as defined in Annex 1 to the Order on Investor Protection in Securities Trading.

Paragraph 5. This Order does not apply to insurance and reinsurance distribution in connection with risks and liabilities outside the Union, unless the Union has concluded an agreement with the relevant country in the financial area.

Section 2. In accordance with the corresponding definitions in the Act on Insurance Mediation and the Act on Marketing, the following terms are understood in this Order:

1. Insurance distribution: a) The business consisting of advising on, proposing, or carrying out preliminary work in connection with the conclusion of insurance contracts, concluding such contracts, or participating in the administration and fulfillment of such contracts. b) The business consisting of providing information about one or more insurance contracts in accordance with the customer's chosen criteria via a website or other media and preparing a prioritized list of insurance products, including price and product comparisons, or discounts on the price of an insurance contract, provided that the customer is able to directly or indirectly conclude an insurance contract via the relevant medium.
2. Insurance distributor: An insurance mediator, an accessory insurance mediator, or an insurance company.
3. Insurance mediator: A natural or legal person who is not an insurance or reinsurance company or their employees, and who is not an accessory insurance mediator, who for remuneration initiates or carries out insurance distribution business.
4. Accessory insurance mediator: A natural or legal person who for remuneration initiates or carries out insurance distribution business as an accessory activity, provided that the following conditions are met: a) The person is not a credit institution or an investment firm as defined in Article 4, paragraph 1, Nos. 1 and 2, of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms. b) The person does not carry out insurance distribution as a main profession. c) The person only distributes insurance products that constitute a supplement to a good or service. d) The insurance product does not include life or liability insurance, unless this is a supplement to the good or service that the mediator offers as their main profession.
5. Narrow links: a) Direct or indirect links within a group. b) Capital interests, meaning a company's direct or indirect holding of 20 percent or more of the voting rights or capital in a company. c) The common link of several companies or persons, pursuant to letter a, with a company.
6. Advice: A personal recommendation to a customer, either at the customer's request or on the initiative of the insurance distributor, regarding one or more insurance contracts.
7. Large risks: a) Risks under insurance classes 4-7, 11, and 12 in Annex 1 to the Act on Insurance Business. b) Risks under insurance classes 14 and 15 in Annex 1 to the Act on Insurance Business, when the policyholder carries out industrial, commercial, or liberal professional activities, and the risks relate to this business. c) Risks under insurance classes 3, 8-10, 13, and 16 in Annex 1 to the Act on Insurance Business, when the policyholder meets at least two of the following conditions: i) The policyholder has a balance sheet total of at least 6.2 million euros. ii) The policyholder has an annual net turnover of at least 12.8 million euros. iii) The policyholder had 250 or more full-time employees in the most recent financial year.
8. Durable medium: Any instrument enabling the customer to store information addressed personally to that customer in a way accessible for future reference for a period of time adequate for the purposes of the information, and which allows for the unchanged reproduction of the stored information.
9. Insurance-based investment product: An insurance product that has a maturity value or a surrender value, and where this maturity value or surrender value is directly or indirectly wholly or partly exposed to market fluctuations, and which does not include: a) Non-life insurance products listed in Annex I to Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II). b) Life insurance contracts where the benefits stipulated in the contract are payable only on death or on account of incapacity resulting from accident, illness, or invalidity. c) Pension products considered to have the main purpose of securing a pension income for investors and entitling the investor to certain benefits. d) Officially recognized occupational pension schemes falling within the scope of Directive 2003/41/EC of the European Parliament and of the Council of 3 June 2003 on the activities and supervision of institutions for occupational retirement provision or Directive 2009/138/EC of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II). e) Individual pension products requiring an economic contribution from the employer, where the employer or employee has no choice regarding the pension product or pension provider.
10. Consumer: A natural person who primarily acts for purposes outside their trade, business, craft, or profession. A legal person primarily acting for purposes outside their trade, business, craft, or profession is equated with a consumer in this Order.
11. Commercial practice: An act, omission, conduct, representation, or commercial communication, including advertising and marketing, carried out by a trader directly connected to the promotion, sale, or supply of a product to consumers.
12. Good commercial practice: The standard of special skill and care which a trader may reasonably be expected to exercise towards consumers, which is commensurate with honest market practice and/or the general principle of good faith in the trader's field of activity. The concept covers the same as the concept of 'professional diligence' used in Directive 2005/29/EC on unfair commercial practices.
13. Call to purchase: A commercial communication in which the product's characteristics and price are presented in a way appropriate to the commercial communication medium used, enabling the consumer to make a purchase.
14. Independent insurance mediator: An insurance mediator meeting the conditions in Section 16 of the Act on Insurance Mediation.

Chapter 2 Form Requirements

Section 3. Information provided pursuant to Section 14, paragraph 1, Nos. 1-10, Section 14, paragraphs 2-5, Sections 15-17, 20, 21, 34, and 36, shall be provided to the customer on paper, subject to paragraphs 2-4. The information shall be given in a clear manner understandable to the customer. The information shall be provided to the customer in an official language of the Member State where the risk is situated, or in the Member State where the obligation is entered into, or in another language agreed between the parties. The information shall be provided free of charge.

Paragraph 2. The information mentioned in paragraph 1 may be provided on another durable medium than paper if the following conditions are met:

1. The provision of the information is appropriate in relation to the manner in which the business between the insurance distributor and the customer is conducted.
2. The customer has been given the choice between receiving the information on paper or on another durable medium and has chosen the other durable medium.

Paragraph 3. The information mentioned in paragraph 1 may be provided via a website that does not constitute a durable medium if the following conditions are met:

1. The provision of the information is appropriate in relation to the manner in which the business between the insurance distributor and the customer is conducted.
2. The customer agrees to the information being provided via a website.
3. The customer is informed electronically about the website's address and where on the website the information can be found.
4. The information is available on the website for as long as the customer can reasonably be expected to need it.

Paragraph 4. The customer may at any time request the information mentioned in paragraph 1 on paper, regardless of paragraphs 2 and 3.

Paragraph 5. In assessing whether the provision of information is appropriate, pursuant to paragraph 2, No. 1, and paragraph 3, No. 1, emphasis is placed on whether the customer regularly has access to the internet. If the customer provides an email address, the customer is considered to regularly have access to the internet.

Paragraph 6. In telephone sales, information provided by the insurance distributor to the customer prior to the conclusion of the contract, including the document with information about the insurance product, pursuant to Section 17, must be given in accordance with the rules in Sections 34e-g of the Insurance Contracts Act. In these cases, the customer must receive the information mentioned in paragraphs 1-3 immediately after the conclusion of the insurance contract.

Chapter 3 General Provisions on Good Conduct in the Exercise of Insurance Distribution

Section 4. An insurance distributor must act honestly and fairly towards its customers, subject to paragraph 2.

Paragraph 2. If the relevant commercial practice affects the consumer's economic interests, Chapter 4 applies instead of paragraph 1. If the relevant commercial practice simultaneously contravenes considerations not intended to protect the consumers' economic interests, including considerations of taste and decency, safety and health, or other considerations, or if the relevant commercial practice is regulated by contract law, paragraph 1 applies alongside Chapter 4.

Paragraph 3. Insurance companies and insurance mediators exercising insurance distribution through an accessory insurance mediator exempt from the Act on Insurance Mediation must ensure that the relevant accessory insurance mediator has appropriate and proportionate arrangements to enable it to comply with paragraph 1.

Chapter 4 Commercial Practices Towards Consumers Good Commercial Practice

Section 5. An insurance distributor must exercise good commercial practice in its commercial practices towards consumers.

Misleading Actions

Section 6. An insurance distributor's commercial practice must not contain false information or, by its presentation or in any other way, mislead or be likely to mislead the average consumer, even if the information is factually correct.

Paragraph 2. Misleading information pursuant to paragraph 1 may relate to one or more of the following elements:

1. The existence or nature of the product.
2. The main characteristics of the product.
3. The extent of the insurance distributor's obligations, the justification for the relevant commercial practice, and the nature of the sales process used.
4. Declarations or symbols with direct or indirect support or approval of the insurance distributor or its products.
5. The price, the manner in which the price is calculated, or a special price advantage.
6. Need for maintenance, spare parts, replacement, or repair.
7. The insurance distributor's or its mediator's characteristics and rights.
8. The consumer's rights.
9. The insurance distributor's compliance with a code of conduct of which it states it is bound.
10. Confusion with a competitor's product, trademark, or business identifier.

Misleading Omissions, Including Calls to Purchase and Hidden Advertising

Section 7. An insurance distributor's commercial practice must not mislead by omitting or hiding material information or presenting material information in a unclear, unintelligible, ambiguous, or inappropriate manner.

Paragraph 2. In calls to purchase, the following information is considered material:

1. The product's main characteristics, to an extent corresponding to the medium and the product.
2. The insurance distributor's physical address and name, and, if another trader acts on its behalf, the physical address and name of that trader.
3. Conditions regarding payment, delivery, and performance of the contract, to the extent these conditions differ from what is usual in the industry.
4. The insurance distributor's procedure in handling complaints, to the extent it differs from what is usual in the industry.
5. Right of withdrawal, right of cancellation, or right of return, if the consumer has such a right.
6. The price including VAT and duties.
7. Additional costs regarding freight, delivery, or postage, to the extent such costs are charged.

Paragraph 3. When the nature of the product means that the price cannot reasonably be calculated in advance, the insurance distributor must inform how the price is calculated. When costs regarding freight, delivery, or postage cannot reasonably be calculated in advance, it must be stated that such costs may apply.

Paragraph 4. The insurance distributor must clearly inform of the commercial intent of any form of commercial practice, including advertising. Section 9 applies correspondingly.

Paragraph 5. In assessing whether information has been omitted pursuant to paragraphs 1 and 4, consideration shall be given to whether the insurance distributor uses a medium that only allows limited space or time to convey the information, and what measures the insurance distributor has taken to make the information available to consumers in other ways.

Aggressive Commercial Practices

Section 8. The insurance distributor must not use harassment, coercion, including the use of physical force, or undue influence in its commercial practice that is likely to significantly impair the consumer's freedom of choice in relation to a product.

Paragraph 2. In assessing whether a trader has used harassment, coercion, including the use of physical force, or undue influence in its commercial practice, consideration shall be given to:

1. The timing of the commercial practice, the place where it took place, and its character and persistence.
2. The use of threatening or inappropriate language or behavior.
3. The trader's exploitation of a specific unfortunate circumstance or event of such a serious nature that it impairs the consumer's ability to make an informed decision, which the trader is aware of and exploits to influence the consumer's decision in relation to the product.
4. The trader's setting of burdensome or disproportionately extensive non-contractual hurdles when a consumer wishes to exercise their rights under the contract, including the right to terminate the contract or to choose another product or another trader.
5. Any threat of illegal actions.

Significant Distortion of Economic Behavior

Section 9. A condition for acting in breach of Sections 5-8 is that the relevant commercial practice significantly distorts or is likely to significantly distort the economic behavior of the average consumer or, if the relevant commercial practice is directed at a specific group of consumers, of an average member of that group.

Paragraph 2. A commercial practice which the insurance distributor can reasonably be expected to distort the economic behavior significantly only among a clearly identifiable group of consumers who are particularly vulnerable to the practice or the product in question, including due to mental or physical infirmity, age, or credulity, is assessed with reference to an average member of that group.

Forms of Commercial Practice Always Considered Misleading or Aggressive

Section 10. Regardless of whether there is a breach of Sections 6-8, an insurance distributor must not use the forms of commercial practice listed in Annex 1.

Chapter 5 Relationships Between Traders

Misleading and Unfair Commercial Practices Between Traders

Section 11. An insurance distributor's commercial practice must not be likely to mislead such that it can be assumed to affect the economic behavior of other traders or harm a competitor.

Paragraph 2. In assessing whether an insurance distributor's commercial practice is misleading pursuant to paragraph 1, consideration shall be given to the relevant commercial practice as a whole, including information about

1. the characteristics of the product,
2. the price or the manner in which the price is calculated, and the conditions for the delivery of the products, and
3. the advertiser's status, characteristics, and rights.

Paragraph 3. An insurance distributor's commercial practice must not be aggressive or unfair towards other traders.

Chapter 6 Information Obligations

Section 12. An insurance company must, in connection with marketing to consumers of an insurance contract covering risks outside Denmark, and which is taken out in a non-life insurance company, inform about

1. the company's home country, and
2. whether the company is covered by a guarantee scheme covering the customer's claims in the event of the company's insolvency, and the name of this guarantee scheme.

Paragraph 2. If an insurance company distributes insurance contracts covering risks outside Denmark, and which are taken out in a non-life insurance company, the insurance company must on its website in Danish inform about

1. whether a non-life insurance contract for consumers taken out in a non-life insurance company is covered by a guarantee scheme and the content of this guarantee scheme, pursuant to paragraph 1, No. 2, and
2. the insurance company's name and address.

Paragraph 3. If an insurance company does not have a website, the information mentioned in paragraph 2 must be provided in connection with the marketing of a non-life insurance contract, pursuant to paragraph 1.

Section 13. Insurance mediators and accessory insurance mediators must, in connection with marketing to consumers of a non-life insurance contract covering risks outside Denmark, and which is taken out in a non-life insurance company, inform about

1. in which insurance company the insurance is taken out,
2. the insurance company's home country, and
3. whether the insurance company is covered by a guarantee scheme covering the customer's claims in the event of the insurance company's insolvency, and the name of this guarantee scheme.

Paragraph 2. If insurance mediators and accessory insurance mediators distribute insurance contracts covering risks outside Denmark, and which are taken out in a non-life insurance company, the mediators must on their website in Danish inform about

1. whether a non-life insurance contract for consumers taken out in a non-life insurance company is covered by a guarantee scheme, and the content of this guarantee scheme, pursuant to paragraph 1, No. 3, and
2. the insurance company's name and address.

Paragraph 3. If an insurance mediator or an accessory insurance mediator does not have a website, the information mentioned in paragraph 2 must be provided in connection with the marketing of a non-life insurance contract, pursuant to paragraph 1.

Paragraph 4. Paragraphs 1 and 2 do not apply to independent insurance mediators.

Section 14. An insurance mediator must, in good time before the conclusion of an insurance contract, provide the customer with the following information:

1. The insurance mediator's name and address, and information that the person is an insurance mediator.
2. Whether the insurance mediator provides advice on the sold insurance products.
3. How the customer can complain about the insurance mediator.
4. Which register the insurance mediator is entered in and an indication of how it can be checked.
5. Whether the insurance mediator represents the customer or acts on behalf of an insurance company.
6. Whether the insurance mediator has a direct or indirect share of 10 percent or more of the voting rights or capital in a specific insurance company.
7. Whether a specific insurance company or the parent company of a specific insurance company has a direct or indirect share of 10 percent or more of the voting rights or capital in an insurance mediator.
8. Whether the insurance mediator, in connection with the contract proposed or advised on, a) provides advice based on an objective and personal analysis, b) has a contractual obligation to exclusively use one or more insurance companies, and in that case inform the customer of the names of these insurance companies, or c) does not have a contractual obligation to exclusively use one or more insurance companies for its insurance distribution business and does not provide advice based on an objective and personal analysis; in that case, the insurance mediator must inform the customer of the names of the insurance companies that the insurance mediator can use