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    EBA Reviews Standards on Indemnity Insurance Under Mortgage Directive

    February 28, 2020

    EBA published a report on the review of the regulatory technical standards specifying the minimum monetary amount of the professional indemnity insurance or comparable guarantee for mortgage credit intermediaries, under the Mortgage Credit Directive, or MCD, in EU. The assessment found no evidence to suggest that the minimum monetary amounts for professional indemnity insurance need to be amended.

    In reaching this conclusion it is necessary to stress that the mandate given to EBA by Article 29(2) of the Mortgage Credit Directive refers only to the threshold amounts. The mandate does not extend to EBA assessing, for example, the extent to which the use of the minimum payout amounts prescribed in the regulatory technical standards are potentially impeded by specific clauses in professional indemnity insurance contracts; the nature of the comparable guarantees that may be used in the market; or what should be understood as a "comparable guarantee" at all. EBA, therefore, did not analyze those elements or conduct a thorough assessment of the content of insurance contracts.

    EBA assessed the responses to a survey sent by national competent authorities to the ten largest credit intermediaries in their respective jurisdiction, intelligence gathered from national authorities, and desk-based research. The regulatory technical standards on professional indemnity insurance, or PII, were published in the Official Journal of the European Union in October 2014 as Delegated Regulation 1125/2014, set the minimum monetary amount of the professional indemnity insurance or comparable guarantee for mortgage credit intermediaries by specifying an amount for each individual claim (EUR 460,000) and an aggregate amount per calendar year for all claims (EUR 750,000). As part of its mandate, EBA will review the regulatory standards on professional indemnity insurance every two years.


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    Keywords: Europe, EU, Banking, Professional Indemnity Insurance, Mortgage Credit Directive, Regulatory Technical Standards, Regulation 1125/2014, Credit Risk, MCD, EBA

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