Commission clarifies rules in the insurance sector

A new Commission’s Communication clarifies the concepts of freedom to provide services and general good in the insurance industry. The Communication concerns in particular certain provisions of the Third Life Assurance Directive (92/96/EEC) and the Third Non-life Insurance Directive (92/49/EEC).

The Communication also analyses cross-border insurance activities carried on via electronic commerce, which are subject to the rules on the freedom to provide services. The Member State of establishment of the insurance undertaking in this case is the Member State of establishment of the insurer that effectively carries on the insurance activity and not the place where the Internet server is installed. The Commission intends to issue a Green Paper analysing the existing Directives in the light of e-commerce in financial services.

The Communication clarifies the procedure for notifying the opening of a branch or the intention to carry on business under the freedom to provide services. Since the purpose of the procedure is to ensure the exchange of information between supervisory authorities, if an insurance policy is concluded without the procedure having previously been followed, its validity should not be affected. All forms of advertising of insurance services by whatever means (mail, fax, the Internet) should not be subject to the notification procedure.

In Part Two, the Communication defines the legal framework within which a Member State may invoke the general good to justify national rules which regulate insurance business in its territory by way of branching or by way of freedom to provide services by an insurance undertaking duly authorised and established in another Member State. Companies which are required to comply with rules that they consider not to be consistent with EC law may lodge a complaint with the Commission (IP/00/122, 8 February 2000).