Estonia moves to let car dealers, travel agents sell insurance
A new Finance Ministry bill would allow car dealerships and travel agencies to sell insurance directly to customers, a move insurers say could do buyers more harm than good.
The bill would amend insurance and contract law to allow non-insurance businesses, such as car dealerships or travel agencies, act as intermediaries through broker representatives, expanding sales channels for policies.
The Estonian Insurance Association (EKsL) opposes the plan, warning that adding another layer of intermediaries into the mix could lead to customers paying more for worse advice.
EKsL chair Tuuli Pärenson said that currently, clients are advised by professional brokers, who receive on average about 14 percent of premiums for their services.
"If that professional intermediary decides to delegate their work to someone else, two things will happen," Pärenson explained. "For one thing, brokerage work is fairly complex, and if it's delegated to a third party as a side task, there's no way the client will receive the same quality of advice."
Poorer guidance, she said, would lead to more disputes.
A second concern is that insurance premiums would also go up, as additional representatives also take a cut.
"We're adding another link in the chain that also needs a slice of the premium pie," Pärenson said.
Industry groups say the changes largely reflect EU rules.
Meelis Telliskivi, CEO of the Association of Estonian Car Dealers and Service Companies (AMTEL), said customers already sign up for insurance at car dealerships and that the planned reform would mainly transpose and clarify an EU directive.
"It would provide additional legal certainty and clarity," he said, adding that customers would also gain the right to see brokers' commission levels.
Liability in question
According to Telliskivi, the reform would also set requirements for dealerships, and include consumer protection provisions to ensure customers are sold insurance products that match their needs and preferences.
He said insurers would remain responsible for ensuring that dealers acting as agents are properly qualified.
Pärenson countered, however, that liability is often less clear in practice, even if brokers are formally responsible for the agents representing them.
She added that agency sales also involve more limited product knowledge as agents typically sell a single product, while insurance brokers must be able to compare a wider range options and match coverage to customer needs.
--
Editor: Karin Koppel, Aili Vahtla
