Tag Archives: Freedom to provide services

Audiovisual Media Services Directive

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Audiovisual Media Services Directive

Outline of the Community (European Union) legislation about Audiovisual Media Services Directive

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These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Audiovisual and media

Audiovisual Media Services (AMS) Directive

Document or Iniciative

Directive 2010/13/EU of the European Parliament and of the Council of 10 March 2010 on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the provision of audiovisual media services (Audiovisual Media Services Directive) (Text with EEA relevance).

Summary

This Directive establishes legal, regulatory and administrative provisions related to the provision and distribution of audiovisual media services.

Which media service providers * does the Directive apply to?

This Directive applies to media service providers when:

  • the head office of the provider and the editorial decisions taken about the audiovisual media services are located in the same Member State;
  • the head office and audiovisual media services are located in different Member States;
  • the service provider has its head office in a Member State, whereas decisions on the audiovisual media services are taken in a third country;
  • the service provider uses a satellite up-link situated in a Member State;
  • the service provider uses satellite capacity appertaining to a Member State.

To what extent does freedom of retransmission apply?

Member States shall not restrict retransmissions on their territory of audiovisual media services from other Member States, as long as the programmes broadcast are not of a violent or pornographic nature which could offend the sensibilities of minors.

They may also limit retransmissions if they believe public policy, health and security or consumer protection to be at risk.

What are the obligations of media service providers?

Media service providers shall make the following information available to consumers:

  • their name;
  • their geographical address;
  • their contact details;
  • the competent regulatory or supervisory bodies.

Protection of minors

In order to protect minors against the negative effects of pornographic or violent programmes, such programmes, when broadcast, must be preceded by an acoustic warning or identified by the presence of a visual symbol throughout the broadcast.

Incitement to hatred

Audiovisual media services may not contain any incitement to hatred based on race, sex, religion or nationality.

Accessibility of audiovisual media services

Providers are obliged to improve the accessibility of their services for people with a visual or hearing disability.

The right to information

Member States may take measures aimed at ensuring that certain events, which it considers are of major importance for society, cannot be broadcast exclusively in such a way as to deprive a substantial proportion of the public in that Member State. Each Member State may draw up a list of events and implementation procedures.

For the purpose of short news reports, any broadcaster established in a Member State has the right to access short extracts of events of high interest to the public which are broadcast on an exclusive basis.

Promotion of European and independent works

Broadcasters must devote at least 10% of their transmission time, or 10% of their programming budget, to European works created by producers who are independent of broadcasters, excluding time allocated to:

  • news;
  • sports events;
  • games;
  • advertising;
  • teletext services;
  • teleshopping.

With regard to on-demand audiovisual media services, Member States shall ensure that audiovisual media service providers promote the production of and access to European works. To this end, audiovisual service providers can contribute financially to the production of European works, or they can reserve a share and/or prominence for European works in their catalogue of programmes.

Audiovisual commercial communication

Media service providers provide audiovisual commercial communications *. These must comply with certain conditions:

  • they must be readily recognisable. Surreptitious audiovisual commercial communication shall be prohibited;
  • they shall not use subliminal techniques;
  • they shall not prejudice respect for human dignity;
  • they shall not be discriminatory;
  • they shall not encourage behaviour harmful to the environment;
  • they shall not contain messages relating to alcoholic beverages specifically aimed at minors;
  • they shall not promote tobacco products;
  • they shall restrict the promotion of medicinal products and medical treatments to those available on prescription only;
  • they shall not cause moral or physical detriment to minors.

Certain programmes or audiovisual media services may be sponsored *. In this case, they must meet other types of requirements:

  • they shall not affect the editorial independence of the media service provider;
  • they shall not directly encourage the purchase or rental of goods;
  • viewers shall be informed of the sponsorship agreement.

Product placement is authorised in certain circumstances and in certain types of programmes.

Television advertising and teleshopping

Television advertising and teleshopping shall be distinguishable from editorial content through optical, acoustic or spatial means.

The transmission of films made for television (excluding series, serials and documentaries), cinematographic works and news programmes may be interrupted by television advertising or teleshopping on the condition that the interruption only takes place once for each programme period of 30 minutes.

This Directive repeals Directive 89/552/EC.

Key terms of the Act
  • Media service provider: the natural or legal person who has editorial responsibility for the choice of the audiovisual content of the audiovisual media service and determines the manner in which it is organised;
  • Audiovisual commercial communication: images with or without sound which are designed to promote, directly or indirectly, the goods, services or image of a natural or legal entity pursuing an economic activity;
  • Sponsorship: any contribution made by public or private undertakings or natural persons not engaged in providing audiovisual media services or in the production of audiovisual works, to the financing of audiovisual media services or programmes with a view to promoting their name, trade mark, image, activities or products;
  • Product placement: the inclusion of a product, a service or a trade mark in a programme in return for payment or for similar consideration.

References

Act Entry into force Deadline for transposition in the Member States Official Journal
Directive 2010/13/EU

5.5.2010

–

OJ L 95 of 15.4.2010

Freedom to provide maritime transport services

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Freedom to provide maritime transport services

Outline of the Community (European Union) legislation about Freedom to provide maritime transport services

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Competition > Rules applicable to specific sectors > Competition in transport

Freedom to provide maritime transport services

Document or Iniciative

Council Regulation (EEC) No 4055/86 of 22 December 1986 applying the principle of freedom to provide services to maritime transport between Member States and between Member States and third countries.

Summary

The regulation entitles nationals of European Union (EU) countries to transport passengers or goods by sea from any port in an EU country to any port (or off-shore installation) either in another EU country or in a non-EU country. The regulation gives the same rights to non-EU shipping companies controlled by nationals of an EU country, if the ships fly the flag of that EU country.

The regulation defines “maritime transport service” as the carriage of goods and passengers by sea. .

When the regulation entered into force national restrictions reserving the transport of certain goods to vessels flying the national flag had to be removed.

Equally, cargo-sharing arrangements contained in bilateral agreements with non-EU countries had to be phased out or adjusted upon entering into force of the regulation. This kind of agreements has almost entirely disappeared.

If an EU country’s nationals or shipping companies experience or risk experiencing a situation where they do not have the opportunity to ply for trade to and from a particular non-EU country, the EU country concerned will inform the other EU countries and the Commission. The Council, acting on proposal from the Commission, will then have six months to decide on the necessary action.

The Council may extend this regulation’s provisions to non-EU nationals who provide maritime transport services and are established within the EU.

The regulation enables a person to temporarily provide maritime transport services in an EU country, under identical conditions to those that the particular EU country imposes on its own nationals.

References

Act Entry into force Deadline for transposition in the Member States Official Journal
Regulation (EEC) No 4055/86

1.1.1987

–

OJ L 378 of 31.12.1986
Amending act(s) Entry into force Deadline for transposition in the Member States Official Journal

Regulation (EEC) No 3573/90

17.12.1990

–

OJ L 353 of 17.12.1990

Related Acts

Council Regulation (EEC) No 4058/86 of 22 December 1986 concerning coordinated action to safeguard free access to cargoes in ocean trades [Official Journal L 378 of 31.12.1986]

This regulation applies when action by a non-EU country or by its agents restricts free access to the transport of liner cargoes, bulk cargoes or other cargoes by shipping companies of EU countries or by ships registered in an EU country. This regulation also provides for coordinated action by the EU following a request made by an EU country to the Commission. Such action might include diplomatic representation to non-EU countries and countermeasures directed at the shipping companies concerned. Similar coordinated action can be taken at the request of another country belonging to the Organisation for Economic Cooperation and Development (OECD) with which a reciprocal arrangement has been concluded.

Report from the Commission to the Council of 24 November 1992 on the implementation of Council Regulation (EEC) No 4055/86 of 22 December 1986 applying the principle of freedom to provide services to maritime transport between Member States and between Member States and third countries [SEC(1992)2183 Final – Not published in the Official Journal].

Council Decision 87/475/EEC of 17 September 1987 relating to maritime transport between Italy and Algeria [Official Journal L 272 of 25.9.1987].

System for the recognition of professional qualifications

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System for the recognition of professional qualifications

Outline of the Community (European Union) legislation about System for the recognition of professional qualifications

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Education training youth sport > Vocational training

System for the recognition of professional qualifications

Document or Iniciative

Directive 2005/36/EC of the European Parliament and of the Council of 7 September 2005 on the recognition of professional qualifications [See amending act(s)].

Summary

This directive applies to all European Union (EU) Member State nationals wishing to practise a regulated profession *, on either a self-employed or employed basis, in a Member State other than that in which they obtained their professional qualifications.

The directive makes a distinction between “freedom to provide services” and “freedom of establishment” on the basis of criteria identified by the Court of Justice: duration, frequency, regularity and continuity of the provision of services.

FREEDOM TO PROVIDE SERVICES

Any EU national who is legally established in a Member State may provide services on a temporary and occasional basis in another Member State under his/her original professional title without having to apply for recognition of his/her qualifications. However, if the profession in question is not regulated in that Member State, the service provider must provide evidence of two years’ professional experience.

The host Member State may require the service provider to make a declaration prior to providing any services on its territory (to be renewed annually), including details of insurance cover or other documents such as proof of nationality, legal establishment and professional qualifications.

If the host Member State requires pro forma registration with the competent professional association, this must be automatic. The competent authority must forward the applicant’s file to the professional organisation or body on receipt of the prior declaration. For professions that have public health or safety implications and do not benefit from automatic recognition, the host Member State may carry out a prior check of the service provider’s professional qualifications within the limits of the principle of proportionality.

In cases where the service is provided under the professional title of the Member State of establishment or under the formal qualifications * of the service provider, the competent authorities of the host Member State may require the latter to furnish recipients of the service with certain information, in particular concerning insurance cover against financial risks arising from professional liability.

With regard to both the temporary provision of services and permanent establishment in another Member State, the authorities concerned are to ensure a proactive exchange of information relating to any serious circumstances arising from an individual’s establishment on their territory that are liable to have consequences for the pursuit of the professional activities concerned. This exchange of information must be carried out in compliance with existing data protection legislation.

FREEDOM OF ESTABLISHEMENT

“Freedom of establishment” applies when a professional enjoys the effective freedom to become established in another Member State in order to conduct a professional activity there on a stable basis.

General system for the recognition of qualifications

The general system applies to professions not covered by specific rules of recognition and to certain situations where the professional does not meet the conditions set out in other recognition schemes. This system is based on the principle of mutual recognition, without prejudice to the application of compensatory measures if there are substantial differences between the training * acquired by the person concerned and the training required in the host Member State. The compensatory measure may take the form of an adaptation period * or an aptitude test *. The choice is left to the person concerned, unless specific derogations exist.

When access to or pursuit of a profession is regulated in the host Member State, i.e. it is subject to possession of specific professional qualifications, the competent authority in said Member State is to allow access to the profession in question and pursuit thereof under the same conditions as for its nationals. However, the applicant must hold a training qualification obtained in another Member State that attests to a level of training at least equivalent to the level immediately below that required in the host Member State.

On the other hand, when access to a profession is not subject to possession of specific professional qualifications in the applicant’s Member State, access to that profession in a host Member State where it is regulated requires proof of two years’ full-time professional experience over the preceding ten years in addition to the qualification.

The directive distinguishes five levels of professional qualifications:

  • attestation of competence issued by a competent authority in the home Member State, attesting either that the holder has acquired general knowledge corresponding to primary or secondary education, or has undergone training not forming part of a certificate or diploma, or has taken a specific examination without previous training or has three years’ professional experience;
  • certificate corresponding to training at secondary level of a technical or professional nature or general in character, supplemented by a professional course;
  • diploma certifying successful completion of training at post-secondary level of a duration of at least one year or professional training that is comparable in terms of responsibilities and functions;
  • diploma certifying successful completion of training at higher or university level of a duration of at least three years and not exceeding four years;
  • diploma certifying successful completion of training at higher or university level of a duration of at least four years.

The host Member State can make recognition of qualifications subject to the applicant completing a compensation measure (aptitude test or adaptation period of a maximum of three years) in the following three cases:

  • the training was at least one year shorter than that required by the host Member State;
  • the training covered substantially different matters from those covered by the evidence of formal training required in the host Member State;
  • the profession as defined in the host Member State comprises one or more regulated professional activities that do not exist in the corresponding profession in the applicant’s home Member State and requires specific training that covers substantially different matters from those covered by the applicant’s training.

The directive allows representative professional associations at both national and European level to propose common platforms to compensate for the substantial differences identified between Member States’ training requirements. The platform is a way of ensuring that additional measures are not imposed on those concerned, while guaranteeing an appropriate qualification level. The platform is a kind of predefined compensatory measure. The Commission will report to the European Parliament and the Council on the common platforms at the end of 2010.

System of automatic recognition of qualifications attested by professional experience in certain industrial, craft and commercial activities

The industrial, craft and commercial activities listed in the directive (Chapter II) are subject, under the conditions stated, to the automatic recognition of qualifications attested by professional experience.

The elements taken into consideration for the recognition of professional experience are its duration and form (in a self-employed or employed capacity). Previous training is also taken into consideration and may reduce the amount of professional experience required. However, evidence of all previous training must be provided by means of a certificate recognised by the Member State or judged as fully valid by a competent professional body.

The pursuit of all these professional activities is subject to the conditions shown in:

  • list I of Annex IV, referring to various sectors such as the textile, chemical and oil industries, printing, manufacturing, construction, etc.;
  • list II of Annex IV, referring to sectors such as the manufacture of transport equipment, activities related to transport, postal services, telecommunications, photographic studios, etc.;
  • list III of Annex IV, referring to sectors such as restaurants and hotels, personal, community and recreation services, etc.

System of automatic recognition of qualifications for the professions of doctor, nurse, dentist, veterinary surgeon, midwife, pharmacist and architect

The automatic recognition of training qualifications based on the coordination of minimum training conditions covers the following professions: doctors, nurses responsible for general care, dental practitioners, veterinary surgeons, midwives, pharmacists and architects (Chapter III of the directive).

For recognition purposes, the directive lays down minimum training conditions for each of these professions, including the minimum duration of studies. The formal qualifications conforming to the directive issued by Member States are listed in Annex V. These qualifications enable holders to practise their profession in any Member State.

The directive allows Member States to authorise part-time training for all of these professions, provided that the overall duration, level and quality of such training is not lower than that of continuous full-time training.

Without prejudice to the specific acquired rights of the professions concerned, and particularly of architects (Annex VI), even if the formal qualifications for these professional activities held by nationals of Member States do not satisfy all the training requirements described, each Member State has to recognise them as sufficient proof. However, these qualifications must attest to the successful completion of training that began before the reference dates laid down in Annex V and be accompanied by evidence of the holder having devoted at least three consecutive years to the activities in question over the preceding five-year period.

Procedure for the mutual recognition of professional qualifications

An individual application must be submitted to the competent authority in the host Member State, accompanied by certain documents and certificates. The competent authority has one month to acknowledge receipt of an application and to draw attention to any missing documents. In principle, a decision has to be taken within three months of the date on which the application was received in full. However, this deadline may be extended by one month in cases falling under the general system for the recognition of qualifications. Reasons have to be given for any rejection. A rejection or a failure to take a decision by the deadline can be contested in national courts.

Member State nationals must be able to use the title conferred on them, and possibly an abbreviated form thereof, as well as the corresponding professional title of the host Member State. If a profession is regulated in the host Member State by an association or organisation (see Annex I), Member State nationals have to become members of that organisation or association in order to be able to use the title.

Member States may require applicants to have the language knowledge necessary for practising the profession. This provision must be applied proportionately, which rules out the systematic imposition of language tests before a professional activity can be practised.

In order to facilitate the application of the above provisions, the directive calls for close collaboration between the competent authorities in the host and the home Member States. In addition, it calls for the introduction of the following provisions:

  • each Member State has to designate a coordinator to facilitate the uniform application of the directive;
  • Member States have to designate contact points tasked with providing citizens with any relevant information about the recognition of professional qualifications and helping them in asserting their rights, particularly through contact with the authorities ruling on requests for recognition;
  • Member States have to appoint representatives to the committee on the recognition of professional qualifications;
  • the Commission is required to consult experts from the professional groups concerned as appropriate.

Member States are required to report to the Commission on the application of the system every two years. If applying one of the provisions of the directive presents major difficulties in a particular area, the Commission has to examine those difficulties in collaboration with the Member State concerned.

As of 20 October 2007, the Commission will draw up a report on the implementation of the directive every five years.

Background

This directive is a response to the 2001 Stockholm European Council’s recommendations calling on the Commission to design a more uniform, transparent and flexible system with the aim of achieving the Lisbon strategy objectives.

The directive brings together in a single text the three directives on the general system for the recognition of professional qualifications (recognition of diplomas, certificates and other evidence of higher education of long duration; recognition of other diplomas, certificates and other evidence of other professional education and training; and the mechanism for the recognition of qualifications for crafts, trades and certain services).

It also consolidates twelve sectoral directives covering the professions of doctor, nurse (Directive 77/452/EEC), dental practitioner (Directive 78/686/EEC), veterinary surgeon (Directive 78/1026/EEC), midwife (Directive 80/154/EEC), architect and pharmacist (mutual recognition of diplomas in pharmacy and qualifications in pharmacy).

The specific directives on the provision of services by lawyers (Directive 77/249/EEC) and the establishment of lawyers are not covered by this exercise, since they concern the recognition not of professional qualifications but of the authorisation to practice.

Key terms used in the act
  • Regulated profession: a professional activity or group of professional activities, access to which, the pursuit of which, or one of the modes of pursuit of which is subject, directly or indirectly, by virtue of legislative, regulatory or administrative provisions, to the possession of specific professional qualifications; in particular, the use of a professional title limited by legislative, regulatory or administrative provisions to holders of a given professional qualification constitutes a mode of pursuit.
  • Formal qualification: diplomas, certificates and other evidence issued by an authority in a Member State designated pursuant to legislative, regulatory or administrative provisions of that Member State and certifying successful completion of professional training obtained mainly in the Community.
  • Regulated training: any training that is specifically geared to the pursuit of a given profession and that comprises a course or courses complemented, where appropriate, by professional training, or probationary or professional practice. The structure and level of the professional training, probationary or professional practice is laid down in the legislative, regulatory or administrative provisions of the Member State in question or subject to supervision or approval by the authority designated for that purpose.
  • Adaptation period: the pursuit of a regulated profession in the host Member State under the responsibility of a qualified member of that profession, such period of supervised practice possibly being accompanied by further training. This period of supervised practice is the subject of an assessment.
  • Aptitude test: a test limited to the professional knowledge of the applicant, carried out by the competent authorities of the host Member State with the aim of assessing the ability of the applicant to pursue a regulated profession in that Member State. For such tests to be allowed, the competent authorities have to draw up a list of subjects not covered by the evidence of formal qualifications possessed by the applicant.

References

Act Entry into force Deadline for transposition in the Member States Official Journal
Directive 2005/36/EC

20.10.2005

20.10.2007

OJ L 255 of 30.9.2005
Amending act(s) Entry into force Deadline for transposition in the Member States Official Journal
Directive 2006/100/EC

1.1.2007

1.1.2007

OJ L 363 of 20.12.2006
Regulation (EC) No 1137/2008

11.12.2008

–

OJ L 311 of 21.11.2008

Successive amendments and corrections to Directive 2005/36/EC have been incorporated in the basic text. This consolidated versionis for reference purposes only.

AMENDMENT OF ANNEXES

Annex II – List of courses having a special structure referred to in Article 11 point (c) subparagraph (ii):
Directive 2006/100/EC [Official Journal L 363 of 20.12.2006];
Regulation (EC) No 1430/2007 [Official Journal L 320 of 6.12.2007];
Regulation (EC) No 755/2008 [Official Journal L 205 of 1.8.2008];
Regulation (EC) No 279/2009 [Official Journal L 93 of 7.4.2009].

Annex III – List of regulated education and training referred to in the third subparagraph of Article 13(2):
Regulation (EC) No 1430/2007 [Official Journal L 320 of 6.12.2007].

Annex V – Recognition on the basis of coordination of the minimum training conditions:
Council Directive 2006/100/EC [Official Journal L 363 of 20.12.2006].

Annex VI – Acquired rights applicable to the professions subject to recognition on the basis of coordination of the minimum training conditions:
Council Directive 2006/100/EC [Official Journal L 363 of 20.12.2006].

Related Acts

Commission Decision 2007/172/EC of 19 March 2007 setting up the group of coordinators for the recognition of professional qualifications [Official Journal L 79 of 20.3.2007].
The role of this expert group is to facilitate the implementation of the directive and develop an internal market for regulated professions as regards qualifications. The Commission consults this group, which is made up of national coordinators, alternate members and of a Commission representative.

 

Tackling tax obstacles to the cross-border provision of occupational pensions

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Tackling tax obstacles to the cross-border provision of occupational pensions

Outline of the Community (European Union) legislation about Tackling tax obstacles to the cross-border provision of occupational pensions

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Internal market > Single market for capital

Tackling tax obstacles to the cross-border provision of occupational pensions

Document or Iniciative

Communication from the Commission to the Council, to the European Parliament and to the European Economic and Social Committee, of 19 April 2001, entitled, “The elimination of tax obstacles to the cross-border provision of occupational pensions” [COM(2001) 214 final – Not published in the Official Journal].

Summary

Through this communication the Commission:

  • seeks a coordinated approach adapted to the diversity of Member States’ rules rather than attempting to achieve harmonisation;
  • calls for the elimination of unduly restrictive or discriminatory tax rules;
  • presents measures to safeguard Member States’ tax revenues.

To do this, the Commission proposes to monitor Member States’ national rules in this field and take the necessary steps to ensure their compliance with the EC Treaty, in particular with the rules on non-discrimination. It reserves the right to initiate legal action against any Member State failing to comply with the rules.

The Commission also proposes adopting measures to maintain the tax revenues of Member States for the cross-border provision of pensions. It further proposes a coordinated approach to eliminating the tax obstacles, in particular double taxation, which result from the different taxation systems for occupational pensions in the Member States.

Application of the EC Treaty rules

The Commission notes that the EC Treaty rules on the free movement of capital, labour and services must be applied in the area of cross-border pension provision. Member States are consequently required to eliminate all discrimination against occupational schemes established in other Member States.

Discrimination means privileged treatment of domestic schemes, in particular more favourable rules on deductibility of contributions or taxation of benefits.

The Commission accordingly intends to examine the compliance of the relevant national rules with the fundamental freedoms of the EC Treaty and, where necessary, to bring cases before the Court of Justice so as to allow the emergence of a fully functioning single market for occupational pensions.

Exchange of information

A Community legislative framework for information exchange already exists, in particular under the Directive on mutual assistance between Member States in the field of direct taxation. In the interests of better coordination between Member States on the collection of taxes applicable to cross-border pensions, the Commission recommends that Member States agree on an automatic exchange of information on occupational pensions.

The Council has already decided upon the principle of automatic information exchange in the area of taxation of savings income. The extension of that principle to pensions will help prevent distortions by ensuring the same level of information exchange for comparable products.

Mismatch of tax systems

Different Member States have different rules in terms of whether they tax or exempt pension contributions, investment income and capital gains of the pension institution, and pension benefits. These differences can create problems where employees spend their working careers in one Member State but retire to another. Pensions are sometimes taxed, for example, even though the contributions are not tax deductible or the pension is not taxed even though the contributions are deductible.

Concerning problems of double taxation and non-taxation arising from the mismatch of tax systems, the Commission recommends wider application of the “EET system” (Exempt contributions, Exempt investment income and capital gains of the pension institution, Taxed benefits) already applied in eleven Member States, entailing the deductibility of pension contributions and investment income coupled with the taxation of benefits, together with better coordination of Member States’ taxation rules.

The Commission acknowledges that completely uniform rules for occupational pensions will not be easy to achieve while the reliance on social security and occupational pension schemes varies so significantly from one Member State to another.

The Commission therefore explores how double taxation and double non-taxation problems can be addressed by better coordination of Member States’ taxation rules.

Solutions could include unilateral tax relief, bilateral agreements or a multilateral convention or coordinating measures at European Union level.

Background

Pensions are an issue of universal concern: for individual citizens who want adequate provision for their retirement; for employers who seek cost-effective pension provision for their employees and for governments who, throughout the Union, are seeking to maintain adequate pension provision in the face of ageing populations.

The potential benefits of better cross-border pension provision are substantial. At present citizens who take up employment or residence outside their home State are often unable to remain in their existing occupational pension schemes. The number of European citizens aged 15 years and over residing in a Member State other than their Member State of origin is increasing, and enlargement of the Union will contribute further to this trend. Impediments to cross-border pension provision may also prevent European businesses from choosing the most efficient way of providing pensions for their employees by centralising their pension provision.

At the Stockholm European Council of 23 and 24 March 2001, as part of the new strategy to open up pan-European labour markets, the Commission promised an initiative in the tax field to complement the Directive on occupational retirement provision that would facilitate cross-border pension provision and investment.

 

Taking-up and pursuit of the business of insurance and reinsurance

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Taking-up and pursuit of the business of insurance and reinsurance

Outline of the Community (European Union) legislation about Taking-up and pursuit of the business of insurance and reinsurance

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These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Internal market > Single market for services > Financial services: insurance

Taking-up and pursuit of the business of insurance and reinsurance (Solvency II)

Proposal

Proposal for a Directive of the European Parliament and of the Council of 10 July 2007 on the taking-up and pursuit of the business of Insurance and Reinsurance – Solvency II.

Amended by:

Proposal for a Directive of the European Parliament and of the Council of 26 February 2008 on the taking-up and pursuit of the business of Insurance and Reinsurance – Solvency II (recast).

Summary

The solvency of insurers guarantees compensation of policyholders for losses. However, existing rules in this field are outdated. They do not take into account the risks and vary from one Member State to the next. This is why the new ‘Solvency II’ regime takes into account recent developments in prudential supervision, actuarial science and risk management. This proposal includes the recasting of fourteen Directives and the insertion of new provisions. It applies to life and non-life insurers as well as to reinsurers. However, some insurance companies, such as small insurance companies and pension funds, are not included. The Commission will look at the question of the solvency of pension funds during its review of Directive 2003/41/EC, due to take place in 2008. In addition, the proposal for a Directive will not change the arrangements that apply to financial conglomerates, for which the Commission will also review the existing legislation (Directive 2002/87/EC) in 2008.

Adjusting the proposal to take account of changes in Community law

Following the entry into force on 21 September 2007 of Directive 2007/44/EC amending Council Directive 92/49/EEC and Directives 2002/83/EC, 2004/39/EC, 2005/68/EC and 2006/48/EC as regards procedural rules and evaluation criteria for the prudential assessment of acquisitions and increase of holdings in the financial sector, differences became apparent between the texts of those Directives and the first proposal [COM(2007) 361]. In addition, in December 2007, the Council and the European Parliament reached a political agreement on the ‘Rome I’ Regulation. The provisions of that Regulation on the law applicable to contractual obligations will also affect this proposal. For these reasons, the initial proposal for the ‘Solvency II’ Directive has been amended [COM(2008) 119].

Objectives

The objectives of Solvency II are to:

  • eliminate the differences in the national rules that Member States apply to (re)insurance companies;
  • improve the operation of the single market by laying down coordinated rules on the supervision of insurance groups;
  • protect creditors by establishing procedures for the reorganisation and winding-up of insurance undertakings.

The new regime is broken down into three complementary pillars relating to:

  • quantitative requirements;
  • qualitative requirements and supervision rules;
  • supervisory reporting and public disclosure.

Pillar I: Quantitative requirements

Companies must meet the quantitative requirements dealt with in the following six sections:

  • valuation of assets and liabilities;
  • technical provisions;
  • own funds;
  • Solvency Capital Requirement;
  • Minimum Capital Requirement;
  • investment rules.

The first section relates to the valuation standards introduced for assets and liabilities. It indicates how the balance sheet must be calculated in Member States.

The second section establishes technical provisions in order for the companies to fulfil their obligations towards policyholders.

The following section relates to the availability of financial resources (own funds) serving as a buffer against risks and absorbing losses. To calculate own funds, it is sufficient to identify the amounts, classify them according to their nature and then examine the limits associated with the calculation of the amounts eligible for supervisory purposes.

The fourth section relates to the Solvency Capital Requirement, i.e. the capital needed by a company to limit the probability of ruin. This capital is monitored on a continuous basis and calculated at least once a year.

The Minimum Capital Requirement is the level of capital below which policyholders’ interests would be endangered. To continue to operate, companies must therefore hold eligible basic own funds calculated quarterly.

The last section relates to investment, management and monitoring of assets held by the companies. These activities must be in the best interest of policyholders.

Pillar II: Qualitative requirements and supervision

Solvency II requires supervision to ensure, above all, policyholder protection, taking account of financial stability and fair markets. Supervisory Authorities must assess the financial condition, the progress made and the methods used by the companies. They have the right of access to the data and the premises of insurance companies and reinsurers, including with regard to outsourced and sub-outsourced activities. For their part, the Supervisory Authorities must act in good time and respect the principle of proportionality.

A failure to comply with the qualitative and quantitative requirements may have severe consequences for the financial soundness of an insurance company and the supervisory review aims to identify institutions with financial, organisational or other features that expose them to high risk.

On the subject of governance, requirements across the banking, securities and (re)insurance sectors must be consistent. The requirements include, among other things, risk management, solvency, control and internal audit. It is the undertaking’s administrative or management body that takes final responsibility for complying with the quality and control requirements.

Pillar III: Supervisory reporting and public disclosure

The proposal maintains the acquis communautaire obliging companies to submit all information to the supervisory authorities. In line with the Lamfalussy approach, it introduces the principles with which supervisory reporting must comply.

Undertakings must publish an annual report, after approval by their management body, on their financial condition and solvency. They must update its information and may disclose additional information on a voluntary basis.

Promotion of supervisory convergence

The major challenge for the Financial Services Committee is fostering convergence of supervisory practices. Such convergence includes application of single market rules and Community legislation and enhancement of consistent supervision.

The Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) also plays a key role in fostering consistent application of this proposal and convergence of supervisory practices in Europe.

Group supervision

The way in which (re)insurance groups are supervised is a crucial factor for the success of the single market and the Solvency II regime. The proposal introduces the concept of ‘group supervisor’ and, for each group, a single authority will be appointed with concrete decision-making and coordination powers. These powers (group solvency, transactions, risk concentration, etc.) are exercised in cooperation with local supervisors.

References And Procedure

Amended proposal Official Journal Procedure
COM(2008) 119 – Codecision COD/2007/0143

Life assurance: freedom to provide services

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Life assurance: freedom to provide services

Outline of the Community (European Union) legislation about Life assurance: freedom to provide services

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Internal market > Single market for services > Financial services: insurance

Life assurance: freedom to provide services (until November 2012)

Document or Iniciative

Directive 2002/83/EC of the European Parliament and of the Council of 5 November 2002 concerning life assurance (recast) [See amending acts].

Summary

Scope

This Directive governs the taking-up and pursuit of the self-employed activity of direct insurance by undertakings established, or wish to become established, in a Member State. It particularly concerns life assurance based on a contract and certain savings operations based on a contract.

Conditions for obtaining authorisation

The taking-up and pursuit of direct insurance is subject to prior authorisation. Authorisation is sought from the authorities of the home Member State, is valid for the entire European Union (EU) and allows the insurance company to carry on business there, under either the right of establishment or the freedom to provide services.

In order to apply for and obtain authorisation, an insurance company must meet certain criteria: it must adopt the required legal form, possess the minimum guarantee fund, and provide the information required by the monitoring authorities. Any refusal of an authorisation must be explained and notified to the company concerned. If this is the case, the competent authority in the home Member State must inform the competent authorities in the other Member States, who must take appropriate action.

Agencies or branches established in the EU but belonging to companies whose head offices are outside the EU will be authorised subject to meeting certain conditions: they must be authorised under their national legislation, establish an agency or branch in the territory of the Member State, and designate a general representative who must be approved by the competent authority.

Financial supervision

Financial supervision is the responsibility of the home Member State’s authorities, which must monitor the insurance company’s entire business and its state of solvency. They must also ensure the existence of technical provisions, sound administrative and accounting procedures and adequate internal control mechanisms.

Prudential valuation

  • The Directive lays down precise criteria for the prudential valuation of shareholders and management in connection with a planned acquisition, together with clear rules for their application. This valuation procedure is undertaken by the competent authorities working together.

The Directive requires the competent authorities to appraise the suitability of the proposed acquirer and the financial soundness of the proposed acquisition against the following criteria:

  • the reputation and financial soundness of the proposed acquirer;
  • the reputation and experience of any person who will direct the business of the insurance company as a result of the proposed acquisition;
  • the ability of the insurance undertaking to comply, and continue to comply, with the prudential requirements;
  • the existence of reasonable grounds to suspect an operation or attempt to launder money or finance terrorism.

Professional secrecy

The Directive lays down strict conditions for the use of confidential information: the competent authorities may use such information only in the course of their duties, and persons working for them are bound by professional secrecy.

Technical provisions and investment diversification

Insurance companies must constitute technical provisions, the amount of which is calculated according to actuarial assumptions, and the interest rate for which is fixed by the competent authority in the home Member State. Insurance companies must make available to the public the bases and methods used to calculate technical provisions.

The Directive requires insurance companies to diversify their investments. In this connection it defines the thresholds which insurance companies must respect when investing the assets covering technical provisions.

Solvency margins and guarantee funds

Every insurance company must have an adequate solvency margin. This may consist of its assets — paid-up share capital, reserves and profit or loss brought forward — or other financial assets belonging to the insurance company.

One third of the solvency margin constitutes the guarantee fund, which must amount to a minimum of €3 million. The guarantee fund is reviewed each year.

Contract law and insurance conditions

The contracts referred to by this Directive are subject to the law of the ‘Member State of the commitment’. However, certain provisions offer the freedom to opt for a different contract law. An insured person who enters into an individual life assurance contract on his or her own initiative has a period of between 14 and 30 days to cancel the contract.

Right of establishment and freedom to provide services

Any insurance company that proposes to establish a branch within the territory of another Member State or which intends to carry out its business in one or more Member States under the freedom to provide services must notify the competent authority in its home Member State and provide it with the necessary information. It is the task of the Member State concerned to take the necessary measures to rectify any irregular situation in which an insurance company in its territory finds itself.

Cooperation between Member States and the Commission

The competent authorities in the Member States must work closely together with the Commission, assisted by the Insurance Committee, in order to facilitate the monitoring of insurance companies.

This Directive is repealed by Directive on the taking-up and pursuit of the business Insurance and Reinsurance from 1 November 2012.

References

Act Date of entry into force Deadline for transposition in the Member States Official Journal

Directive 2002/83/EC

19.12.2002

Depending on the Article:
19.6.2004
17.11.2002
20.9.2003

OJ L 345, 19.12.2002
Amending act(s) Date of entry into force Deadline for transposition in the Member States Official Journal

Directive 2004/66/EC

1.5.2004

1.5.2004

OJ L 168, 1.5.2004

Directive 2005/1/EC

13.4.2005

13.5.2005

OJ L 79, 24.3.2005

Directive 2005/68/EC

10.12.2005

10.12.2007

OJ L 323, 9.12.2005

Directive 2006/101/EC

1.1.2007

1.1.2007

OJ L 363, 20.12.2006

Directive 2007/44/EC

21.9.2007

20.3.2009

OJ L 247, 21.9.2007

Directive 2008/19/EC

20.3.2008

–

OJ L 76, 19.3.2008

The successive amendments and corrections to Directive 2002/83/EC have been incorporated in the original text. This consolidated version is for reference only.

Direct insurance other than life assurance: freedom to provide services

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Direct insurance other than life assurance: freedom to provide services

Outline of the Community (European Union) legislation about Direct insurance other than life assurance: freedom to provide services

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Internal market > Single market for services > Financial services: insurance

Direct insurance other than life assurance: freedom to provide services (until November 2012)

Document or Iniciative

Second Council Directive 88/357/EEC of 22 June 1988 on the coordination of laws, regulations and administrative provisions relating to direct insurance other than life assurance and laying down provisions to facilitate the effective exercise of freedom to provide services and amending Directive 73/239/EEC [See amending acts].

Summary

The Directive covers freedom to provide services, defined as the covering by an insurer established in one Member State of a risk situated in another (Member State of provision of services *), regardless of where the policy-holder is resident or established.

Some articles are of general application; others apply only to the provision of cross-frontier services. Some classes of business (e.g. accidents at work, nuclear liability, compulsory insurance of building works) are excluded from the freedom-of-services provisions and will be reviewed by the Council at a later date.

Directive 90/618/EEC brings compulsory motor-vehicle liability insurance within the scope of the second Directive.

The Directive lays down rules governing freedom to provide services. A firm wishing to do business by way of freedom to provide services in one or more Member States must notify the relevant authority in its home Member State. It must also inform that authority of changes in its activities.

In that event, the competent authority in the home Member State must inform within one month the competent authorities in the Member State or States where services are to be provided. The information must cover the firm itself, the business in which it intends to engage and the type of risks to be covered.

Risks

The concept of risk in Directive 73/239/EEC is also clarified. A distinction is made between large risk and mass risk business. Large risks are:

  • transport risks (including goods in transit), regardless of size;
  • credit and suretyship risks, if linked to a trade;
  • fire and other property damage, general liability, pecuniary loss, where the policy-holder, or group to which he belongs, meets two out of three conditions (relating to balance-sheet size, turnover and number of employees; the figures are found in accounts prepared in accordance with other Directives).

Mass risks are all other cases where there is considered to be greater need for consumer protection.

Large risks are subject to lighter controls than mass risks in both establishment * and services situations (in particular, no prior approval of policy conditions, premium rates or standard forms and letters which the insurer intends to use in relations with policy-holders).

Large risks benefit from home-country control in the case of services for businesses (all financial control is in the State of establishment). The insurer must, however, obtain a certificate of solvency from the State where his head office is located and send it to the Member State where services are to be provided, with notification of the intended activity.

Mass risks may be subject to heavy control in the State of provision of services, including:

  • authorization requirement (detailed information to be supplied which the host State has six months to consider);
  • technical reserves (needed to ensure that funds are available to meet claims) must be certified by the State where the head office is located;
  • that host State’s rules apply to policy conditions (thus determining the nature of the products that may be sold).

Insurance contracts

Articles of general application include rules on choice of contract law (governing insurer/policy-holder relations). These rules are intended to protect the policy-holder: the amount of choice depends on the circumstances of the policy-holder and never on those of the insurer.

Special rules apply to compulsory insurances: policies must comply with the rules of the State which makes such insurances compulsory.

A number of rules strengthen and amplify those in the first non-life insurance coordination Directive of 1973. These concern in particular:

  • the powers of the supervisory authorities;
  • the determination of currencies in which assets have to be held;
  • the transfer of portfolios.

Insurance policies taken out under the freedom-of-services provisions are exclusively liable to the indirect taxes and parafiscal charges levied on insurance premiums in the Member State where the risk is situated.

Freedom to provide services and specific risks

There are special rules for firms that cover risks in class 10 of point A in the Annex to Directive 73/239/EEC in another Member State from an establishment in another Member State.

They must not only become members of the national bureau and national guarantee fund of the Member State where the services are to be provided and join in their financing but also become subject to the legislation governing aggravated risks in that Member State.

In addition, they must designate in the Member State where the services are to be provided a representative, responsible not only for the payment of claims but also for representing the firm in relation to the authorities of that Member State.

This Directive is repealed by Directive on the taking-up and pursuit of the business Insurance and Reinsurance from 1 November 2012.

Key terms used in the act
  • Member State of provision of services: Member State in which the risk is situated when it is covered by an establishment situated in another Member State.
  • Establishment: the head office, agency or branch of an undertaking, account being taken of Article 3.

References

Act Entry into force Deadline for transposition in the Member States Official Journal

Directive 88/357/EEC

30.6.1988
(date of notification)

30.12.1989

OJ L 172 of 4.7.1988
Amending act(s) Entry into force Deadline for transposition in the Member States Official Journal

Directive 90/618/EEC

20.11.1990
(date of notification)

20.5.1992

OJ L 330 of 29.11.1990

Directive 92/49/EEC

2.7.1992
(date of notification)

31.12.1993

OJ L 228 of 11.8.1992

Directive 2000/26/EC

20.7.2000

19.7.2002
(except specific provisions)

OJ L 181 of 20.7.2000

Directive 2005/14/EC

11.6.2005

11.6.2007

OJ L 149 of 11.6.2005

Successive amendments and corrections to Directive 88/357/EEC have been incorporated in the original text. This consolidated version  is for reference purpose only.

Non-life insurance: third Directive

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Non-life insurance: third Directive

Outline of the Community (European Union) legislation about Non-life insurance: third Directive

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Internal market > Single market for services > Financial services: insurance

Non-life insurance: third Directive

Document or Iniciative

Directive 92/49/EEC of 18 June 1992 on the coordination of laws, regulations and administrative provisions relating to direct insurance other than life insurance and amending Directives 73/239/EEC and 88/357/EEC (Third non-life insurance Directive) [See amending acts].

Summary

This Directive applies to insurance and to the taking up of the independent business of direct non-life insurance by insurance undertakings established or proposing to become established in a Member State.

The taking up of the business of insurance

Undertakings wishing to take up the business of direct insurance must seek official authorisation from the authorities of the home Member State. Such authorisation permits an undertaking to carry on business under the right of establishment or the freedom to provide services.

Insurance undertakings taking up the business of direct insurance must adopt the form provided for.

Such undertakings must:

  • limit their objects to the business of insurance and operations arising therefrom;
  • submit a scheme of operations which must include information concerning the nature of the risks which the undertaking proposes to cover, the items constituting the minimum guarantee fund, and the guiding principles as to reinsurance;
  • possess the minimum guarantee fund required.

Undertakings must also communicate the identities of the shareholders and members to the competent authorities.

Harmonisation of the conditions governing the business of insurance

The financial supervision of insurance undertakings is the sole responsibility of the Member States. They are responsible for verifying the insurance undertaking’s entire business, its state of solvency and the establishment of technical provisions and of the assets covering them. For their part, insurance undertakings must provide Member States with the documents necessary for the purposes of supervision, together with statistical documents.

Every insurance undertaking must establish adequate technical provisions in order to carry out its operations. These technical provisions and equalisation reserves are established by investments and debts and claims, or even by other assets.

The competent authorities have the power to withdraw the authorisation granted to an undertaking if it:

  • does not make use of that authorisation within 12 months;
  • no longer fulfils the conditions for admission;
  • fails in its obligations.

Provisions relating to the right of establishment and the freedom to provide services

Insurance undertakings may open a branch within the territory of another Member State, provided they notify the competent authority of the home Member State and provide it with certain information, especially concerning business carried on under the right of establishment or the freedom to provide services.

The policy-holder must always be informed of the name of the Member State in which the undertaking has its head office, and of the branch with which the contract is to be concluded.

Key terms of the act
  • Reinsurance: the business of accepting risks transferred by an insurance undertaking or another reinsurance undertaking.

References

Act Entry into force Deadline for transposition in the Member States Official Journal
Directive 92/49/EEC

2.7.1992

31.12.1993

OJ L 228 of 11.8.1992
Amending act(s) Entry into force Deadline for transposition in the Member States Official Journal
Directive 95/26/EC

7.8.1995

18.7.1996

OJ L 168 of 18.7.1995

Directive 2000/64/EC

17.11.2000

17.11.2002

OJ L 290 of 17.11.2000

Directive 2002/87/EC

11.2.2003

10.8.2004

OJ L 35 of 11.2.2003

Directive 2005/1/EC

13.4.2005

13.5.2005

OJ L 79 of 24.3.2005

Directive 2005/68/EC

10.12.2005

10.12.2007

OJ L 323 of 9.12.2005

Directive 2007/44/EC

21.9.2007

20.3.2009

OJ L 247 of 21.9.2007

Directive 2008/36/EC

21.3.2008

–

OJ L 81 of 20.3.2008

Successive amendments and corrections to Directive 92/49/EEC have been incorporated into the basic text. This consolidated version is for information only.

RELATED ACTS

Directive 2000/26/EC of the European Parliament and of the Council of the 16 May on the approximation of the laws of the Member States relating to insurance against civil liability in respect of the use of motor vehicles and amending Council Directives 73/239/EEC and 88/357/EEC (Fourth motor insurance Directive).
This text aims to improve the protection of residents of any Member State who, while temporarily abroad (in a Member State other than that of residence or in a non-member country whose national insurers’ bureau has joined the Green Card system), are victims of a traffic accident. It provides for simplification of the compensation procedure and requires insurance companies to appoint a claims representative in each Member State responsible for handling and settling any claims arising from an accident, and to set up information structures for identifying the insurer to which they have to address their claims. The proposal further provides for the possibility of introducing a direct right of action throughout the European Union in favour of the victim, enabling the claim for compensation to be addressed directly to the insurer of the person responsible for the accident.

Freedom to provide services

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Freedom to provide services

Outline of the Community (European Union) legislation about Freedom to provide services

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Internal market > Single market for services > Financial services: insurance

Freedom to provide services

Document or Iniciative

Interpretative communication of the Commission concerning the freedom to provide services and the general good of the insurance sector [Official Journal C 43 of 16.02.2000]

Summary

The main objective of the Third Council Directives Nos 92/96/EEC (life assurance) and 92/49/EEC (non-life insurance) is to allow any insurer authorised in a Member State to carry on its insurance activities throughout the European Union, whether under the rules on branches or under the freedom to provide services. The Directives introduced a single system for the financial supervision of an insurer by its Member State of origin (home-country control). However, the Commission has identified differences in the interpretation of the Community rules that are hampering the smooth functioning of the insurance sector within the internal market.

Freedom to provide services and right of establishment in the insurance Directives

Where business is carried on under the freedom to provide services with the provider present on the territory of the Member State of provision, the concept of the provision of services is basically distinguished from that of establishment by its temporary character, while the right of establishment presupposes a lasting presence in the host country. According to the case law of the Court of Justice, the temporary nature of the provision of services is to be assessed in the light of its duration, regularity, frequency and continuity.

However, there is a grey area between the two concepts, in particular in the following cases:

  • Recourse to independent persons established in the host Member State: On the strength of the Court’s case law, the Commission considers that, in order for an insurer to be covered by the rules governing the right of establishment rather than those applicable to the freedom to provide services, the independent person must meet the following three cumulative conditions:

    – he must be subject to the direction and control of the insurer he represents;
    – he must be able to commit the insurer;
    – he must have received a permanent brief.

However, the Commission considers that, in order to conclude insurance policies under the freedom to provide services, an insurer can have recourse to an establishment opened in the Member State of the provision of services for support activities either upstream or downstream of the conclusion of the insurance policy (e.g. use of risk assessment services or of local medical services, receipt of notices of claims relating to policies entered into under the freedom to provide services);

  • Electronic machines performing insurance business: ATM-type electronic machines can be covered by the right of establishment if they fulfil the above-mentioned criteria laid down by the Court of Justice. For such machines to be treated as establishments, they would have to have human or electronic management.

The use of remote means of communication, in particular electronic commerce, to conclude insurance policies should be regarded as insurance business carried on under the freedom to provide services. In order to determine the place of establishment of the insurer with which a policy is concluded, it is necessary to take account of the Member State of establishment of the insurer doing the business in question rather than the location of the Internet server. The Commission has already stated in its Financial Services Action Plan that it intends to bring out a Green Paper to examine whether the existing provisions of the Directives provide a regulatory framework that is propitious to the development of electronic commerce in financial services while ensuring that the interests of consumers are protected.

The procedure for notifying the opening of a branch or the intention to carry on business under the freedom to provide services is designed to facilitate the exchange of information between supervisory authorities. It should not therefore be regarded as a consumer protection measure or as a measure affecting the validity of any insurance policy concluded without the procedure having previously been followed.

The Third Insurance Directives lay down that insurers with head offices in Member States may advertise their services in the Member State of the branch or of the provision of services, subject to any rules governing the form and content of such advertising. There are no forms of advertising (e.g. mail, fax, electronic mail, etc.) that are subject to the notification procedure

.The general good in the Third Insurance Directives; applicability of rules promoting the general good

A Member State may have recourse to the concept of the general good in order to enforce compliance with its own laws by an insurer wishing to carry on its business within its territory under either the right of establishment or the freedom to provide services. However, the concept of the general good is not provided for in the Insurance Directives, which are limited to a description of the requirements of the Court of Justice.

An insurer must comply with the rules of the host country, even if they entail a restriction. For such a measure to be justified as being in the general good, it:
must not have been harmonised at Community level;

  • must be non-discriminatory;
  • must be justified by imperative requirements in the general interest;
  • must be objectively necessary;
  • must not duplicate rules of the country of origin;
  • must be proportionate to the objective pursued.

Application of the “general good” principle

Prior notification of policy conditions is specifically prohibited except in cases where it is provided for by the Community Directives (e.g. compulsory or health insurance which is a substitute for a statutory social security system). As regards life assurance, a Member State may require notification of the technical bases used for calculating scales of premiums.

Capital redemption operations of insurers may be carried on anywhere in the Community, even in a Member State where they are not authorised for local life assurance companies on the grounds that such operations are regarded as banking operations and are therefore reserved for credit institutions. However, the insurer must comply with the rules in force in the host Member State which are justified by reasons of the general good (taxation, advertising, etc.).

As regards uniform no–claims bonus systems (coefficients for the reduction/increase of premiums taken into account in calculating the premiums for third-party motor insurance), the Commission considers that, to the extent that such systems constitute tariff measures, they are contrary to the Third Directive (92/49/EEC). In its view, a Member State cannot invoke the general good in order to preserve the mandatory nature of such systems as the systems have already been coordinated at Community level.

In order to protect consumers, some Member States require the language of the insurance policy to be the national language. However, the Commission considers that consumer protection is not a valid reason in the case of large commercial or industrial risks. With regard to mass risks and individual life assurance, account should be taken of policies with an international dimension.

Professional codes of conduct valid on the territory of a Member State are in principle also valid with regard to foreign insurers and failure to observe them incurs commercial penalties. The Commission also notes that agreements between firms must comply with the competition rules in Article 81 et seq. of the Treaty.

Maximum technical interest rates for life assurance are fixed by the insurer’s home Member State. Since the host Member State has no competence as regards financial supervision of an insurer duly authorised in its home Member State, it follows that it cannot impose compliance with its own prudential principles or check such compliance through substantive control of premium scales.

The imposition of standard clauses or minimum insurance conditions is aimed at protecting the weaker party in a contractual relationships whilst maintaining a contractual balance. The Commission considers that such a clause should be imposed only where it is objectively necessary.

With regard to clauses imposing mandatory levels of excess in insurance policies, insurers should be free to assess the advisability of including an excess in the policies which they market. Where an insurer is approved by its home Member State, it should be free to decide market insurance policies, with or without excesses, in the host Member State, clearly indicating to customers that it is doing so without being forced by binding national rules.

Compulsory stipulation of a surrender value in life assurance policies is justified by the concept of the general good, as it gives consumers flexibility and the ability to mobilise their savings. However, the Commission wonders whether there are other means, such as the obligation to give detailed information to the policyholder prior to the conclusion of a policy, which could protect the economic interests of policyholders.

In order for a host Member State to introduce practical arrangements for charging indirect taxes on insurance premiums for policies concluded under the freedom to provide services by appointing a tax representative of the insurer, the arrangements must comply with the requirements of proportionality and necessity laid down in the case law of the Court of Justice.

The Court of Justice has already recognised the right to prohibit the marketing practice of “cold calling” in order to protect consumers.

Legal remedy

Operators faced with a national rule that constitutes an unjustified restriction of the freedom of establishment or the freedom to provide services may resort to the courts or lodge a complaint with the Commission.

 

Insurance brokerage

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Insurance brokerage

Outline of the Community (European Union) legislation about Insurance brokerage

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Internal market > Single market for services > Financial services: insurance

Insurance brokerage

Document or Iniciative

Directive 2002/92/EC of the European Parliament and of the Council of 9 December 2002 on insurance mediation [OJ L 9 of 15.1.2003].

Summary

Insurance intermediaries * are considered as the vital links in the selling of insurance products in the European Union (EU).

This Directive aims to make it easier for insurance intermediaries to avail themselves of the right to freedom of establishment and freedom to provide services and to guarantee a high level of protection for their customers. It also aims to increase the supply of insurance products to consumers.

Registration conditions

Insurance or reinsurance intermediaries are registered by a competent authority in their Member State of origin (where the insurance firm’s registered office is located). They can carry out business in other Member States by way of freedom to provide services or by opening a branch.

Professional requirements

Registration is subject to strict requirements as regards professionalism and competence since intermediaries must have the necessary general, commercial and professional knowledge and ability.

Intermediaries must be covered by professional indemnity insurance for professional negligence. Insurance intermediaries who handle customers’ money are furthermore required to have sufficient financial capacity.

Exchange of information between Member States

The Directive provides rules on the information which intermediaries are required to send to potential customers. It requires that insurance intermediaries provide customers with clear explanations of the reasons underlying their advice when selling a specific insurance product. They must set out in writing in a manner comprehensible to customers why they recommend a particular product, bearing in mind the needs of the interested parties. For instance, the latter need to know whether they are negotiating with an intermediary appointed by one or more firms or whether they are dealing with an intermediary who is advising them on the whole range of products available on the market.

Settlement of disputes

The Directive encourages the Member States to put in place adequate and efficient procedures with a view to out-of-court settlements by using, in particular, the FIN-NET cross-border network.

Information provided by the insurance intermediary

Insurance intermediaries are required to provide certain information upon signature or renewal of the insurance contract:

  • his identity and address;
  • his registration number;
  • whether he has a holding, whether direct or indirect, representing more than 10 % of the voting rights or of the capital in a given insurance undertaking;
  • whether an insurance undertaking has a holding, whether direct or indirect, representing more than 10 % of the voting rights or of the capital of the insurance undertaking.
Key terms of the Act
  • Insurance intermediary: any natural or legal person who, for remuneration, takes up or pursues insurance mediation, which consists of introducing, proposing or carrying out other work preparatory to the conclusion of contracts of insurance, or of concluding such contracts, or of assisting in the administration and performance of such contracts, in particular in the event of a claim.

References

Act Entry into force Deadline for transposition in the Member States Official Journal

Directive 2002/92/EC

15.1.2003

15.1.2005

OJ L 9 of 15.1.2003