Question ID:
2019_4542
Legal Act:
Directive 2015/2366/EU (PSD2)
Topic:
Monetary amount of the professional indemnity insurance
Article:
5
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations:
EBA/GL/2017/08 - Guidelines on the criteria on how to stipulate the minimum monetary amount of the professional indemnity insurance
Article/Paragraph:
1.4
Disclose name of institution / entity:
No
Type of submitter:
Other
Subject Matter:
Insurance policy on minimum monetary amount of the professional indemnity insurance of PSD2
Question:

If an e-money payment institution (for the purpose of new PSD2 services - Payment Initiation Service Provider (PISP) and Account Information Service Provider (AISP) in line with insurance industry standards signed an insurance policy with insurance company for several thousand/million euros with franchise deductible (e.g. in the amount of 25k EUR), fulfills adequate capital requirements and is being regularly monitored by the regulator (local central bank), does the above mentioned insurance policy violate guidelines rule that the insurance policy should not have any excess, deductible or any threshold that could prejudice repayments or do we understand it correctly that such insurance policy does not in any case prejudice that potential refunds requests will not be refunded and it as such fulfills guideline requirements? We understand that such insurance does not prejudice any repayments.

Background on the question:

E-money payment institution (EMI) has (for the purpose of new PSD2 services - PISP and AISP), signed an insurance policy with international leading insurance company for several thousand/million euros with franchise deductible (e.g. in the amount of 25k EUR). Respectively, EMI fulfills adequate capital requirements and is being regularly monitored by the regulator (local central bank).

As an e-money issuer, we need clarification on the Guideline 1.4 from the Guidelines on the criteria on how to stipulate the minimum monetary amount of the professional indemnity insurance or other comparable guarantee under Article 5(4) of Directive (EU) 2015/2366 (PSD2). We also acknowledge that guidelines do not explicitly determine that the deductible has to be 0 EUR, which is in line with international insurance market standards. Having an adequate insurance policy for several thousand/millions of euros with 25k EUR deductible, having in mind EMI with sufficient capital requirements, it does not in any case prejudice that potential repayments by EMI could not be performed.  Capital requirements for EMI in addition and legal requirements are set a level, where all potential repayments will be possible.

Being an EMI, having signed adequate insurance policy with internationally renowned insurance company, which is in line with insurance industry standards, having adequate capital requirements regularly monitored, we understand that such insurance policy does not in any case prejudice that potential refunds requests will not be refunded. We understand that such policy fulfills guideline requirements.

Date of submission:
12/02/2019
Published as Final Q&A:
31/07/2020
EBA Answer:

Guideline 1.4 of the EBA Guidelines on the criteria on how to stipulate the minimum monetary amount of the professional indemnity insurance (PII) or other comparable guarantee under Article 5(4) of Directive (EU) 2015/2366 (PSD2) prescribes that ‘the minimum monetary amount of the PII or comparable guarantee allows undertakings to effectively meet their liabilities in relation to their activities by verifying that the PII or comparable guarantee does not have any excess, deductible or any threshold that could prejudice repayments resulting from the requests for refunds of payment service users and account servicing payment service providers (ASPSPs) and is valid when the liability occurs’.

Guideline 1.3 further specifies that the minimum monetary amount of the PII or comparable guarantee, should cover costs and expenses incurred by payment service users and ASPSPs who request undertakings to refund losses resulting from one or more of the liabilities referred to in Article 5(2) and (3) of PSD2.

In relation to the above, the PII or the comparable guarantee should cover the potential costs and expenses that may be incurred by all payment service users of the third party provider (TPP) and ASPSPs resulting from one or more of the liabilities that are referred in Article 5(2) and (3) of PSD2. Where the amount of the cover, has any excess, deductible or any threshold whatsoever, these should not prejudice repayments to payment service users and/or ASPSPs and should be covered by any safeguards the TPP may have put in place, such as a deposit that can be withdrawn within certain conditions, an additional insurance or another comparable guarantee.

Status:
Final Q&A