1973L0239 — EN — 25.06.1987 — 005.001 — 1
This document is meant purely as a documentation tool and the institutions do not assume any liability for its contents
►B FIRSTCOUNCILDIRECTIVE
of24July1973
on the coordination of laws, Regulations and administrative provisions relating to the taking-up
andpursuitofthebusinessofdirectinsuranceotherthanlifeassurance
(73/239/EEC)
(OJ L 228, 16.8.1973, p. 3)
Amended by:
Official Journal
No page date
►M1Council Directive 76/580/EEC of 29 June 1976 L 189 13 13.7.1976
►M2Council Directive 84/641/EEC of 10 December 1984 L 339 21 27.12.1984
►M3Council Directive 87/343/EEC of 22 June 1987 L 185 72 4.7.1987
►M4Council Directive 87/344/EEC of 22 June 1987 L 185 77 4.7.1987
Amended by:
►A1Act of Accessionof Greece L 291 17 19.11.1979
►A2Act of Accessionof Spainan d Portugal L 302 23 15.11.1985
Corrected by:
►C1Corrigendum, OJ L 5, 7.1.1978, p. 27 (73/239/EEC)
▼B
FIRSTCOUNCILDIRECTIVE
of24July1973
on the coordination of laws, Regulations and administrative provi-
sionsrelatingtothetaking-upandpursuitofthebusinessofdirect
insuranceotherthanlife assurance
(73/239/EEC)
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the European Economic
Community, and in particular Article 57 (2) thereof;
Having regard to the General Programme(1) for the abolitionof restric-
tions on freedom of establishment, and in particular Title IV C thereof;
Having regard to the proposal from the Commission;
Having regard to the Opinion of the European Parliament(2);
Having regard to the Opinion of the Economic and Social
Committee(3);
Whereas by virtue of the General Programme the removal of restric-
tions on the establishment of agencies and branches is, in the case ofthe direct insurance business, dependent on the coordination of theconditions for the taking-up and pursuit of this business; whereas such
coodination should be effected in the first place in respect of direct
insurance other than life assurance;
Whereas in order to facilitate the taking-up and pursuit of the business
of insurance, it is essential to eliminate certain divergencies which existbetween national supervisory legislation; whereas in order to achieve
this objective, and at the same time ensure adequate protection for
insured and third parties in all the Member States, it is desirable tocoordinate, in particular, the provisions relating to the financial guaran-tees required of insurance undertakings;
Whereas a classification of risks in the different classes of insurance is
necessary in order to determine, in particular, the activities subject to a
compulsory authorization and the amount of the minimum guaranteefund fixed for the class of insurance concerned;
Whereas it is desirable to exclude from the applicationof this Directive
mutual associations which, by virtue of their legal status, fulfil appro-
priate conditions as to security and financial guarantees; whereas it isfurther desirable to exclude certain institutions in several MemberStates whose business covers a very limited sector only and isrestricted by law to a specified territory or to specified persons;
Whereas the various laws contain different rules as to the simultaneous
undertaking of health insurance, credit and suretyship insurance andinsurance in respect of recourse against third parties and legal defence,whether with one another or with other classes of insurance; whereascontinuance of this divergence after the abolition of restrictions on theright of establishment in classes other than life assurance would mean
that obstacles to establishment would continue to exist; whereas a solu-
tion to this problem must be provided in subsequent coordination to beeffected withina relatively short period of time;
Whereas it is necessary to extend supervision in each Member State to
all the classes of insurance to which this Directive applies; whereas
such supervision is not possible unless the undertaking of such classesof insurance is subject to an official authorization; whereas it is there-fore necessary to define the conditions for the granting or withdrawalof such authorization; whereas provision must be made for a right toapply to the courts should anauthorizationbe refused or withdrawn ;1973L0239 — EN — 25.06.1987 — 005.001 — 2
(1) OJ No 2, 15. 1. 1962, p. 36/62.
(2) OJ No C 27, 28. 3. 1968, p. 15.
(3) OJ No 158, 18. 7. 1967, p. 1.
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Whereas it is desirable to bring the classes of insurance known as
transport classes bearing Nos 4, 5, 6, 7 and 12 in Paragraph A of theAnnex, and the credit insurance classes bearing Nos 14 and 15 in para-
graph A of the Annex, under more flexible rules in view of the
continual fluctuations in conditions affecting goods and credit;
Whereas the search for a common method of calculating technical
reserves is at present the subject of studies at Community level;whereas it therefore appears to be desirable to reserve the attainmentof coordination in this matter, as well as questions relating to the deter-
mination of categories of investments and the valuation of assets, for
subsequent Directives;
Whereas it is necessary that insurance undertakings should possess,
over and above technical reserves of sufficient amount to meet theirunderwriting liabilities, a supplementary reserve, to be known as thesolvency margin, and represented by free assets, in order to provide
against business fluctuations; whereas in order to ensure that the
requirements imposed for such purposes are determined according toobjective criteria, whereby undertakings of the same size are placedon an equal footing as regards competition, it is desirable to providethat such marginshall be related to the overall volume of busin ess ofthe undertaking and be determined by reference to two indices of
security, one based on premiums and the other on claims;
Whereas it is desirable to require a minimum guarantee fund related to
the size of the risk in the classes undertaken, in order to ensure thatundertakings possess adequate resources when they are set up and thatin the subsequent course of business the solvency margin shall in noevent fall below a minimum of security;
Whereas it is necessary to make provision for the case where the finan-
cial condition of the undertaking becomes such that it is difficult for it
to meet its underwriting liabilities;
Whereas the coordinated rules concerning the taking-up and pursuit of
the business or direct insurance within the Community should, in prin-ciple, apply to all undertakings entering the market and, consequently,also to agencies and branches where the head office of the undertaking
is situated outside the Community; whereas it is, nevertheless, desirable
as regards the methods of supervisionto make special provisionwithrespect to such agencies or branches in view of the fact that the assetsof the undertakings to which they belong are situated outside theCommunity;
Whereas it is, however, desirable to permit the relaxationof such
special conditions, while observing the principle that such agencies
and branches should not obtain more favourable treatment than under-takings within the Community;
Whereas certain transitional provisions are required in order, in parti-
cular, to permit small and medium-sized undertakings already inexistence to adapt themselves to the requirements which must beimposed by the Member States inpursuan ce of this Directive, subject
to the applicationof Article 53 of the Treaty;
Whereas it is important to guarantee the uniform application of coordi-
nated rules and to provide, in this respect, for close collaborationbetweenthe Commissionan d the Member States inthis field;
HAS ADOPTED THIS DIRECTIVE:
Title I— General provisions
Article 1
1. This Directive concerns the taking-up and pursuit of the self-
employed activity of direct insurance, including the provision of assis-tance referred to in paragraph 2, carried on by undertakings which are1973L0239 — EN — 25.06.1987 — 005.001 — 3
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established inthe territory of a Member State or which wish to become
established there.
2. The assistance activity shall be the assistance provided for
persons who get into difficulties while travelling, while away fromhome or while away from their permanent residence. It shall consistin undertaking, against the prior payment of a premium, to make aid
immediately available to the beneficiary under an assistance contract
where that person is in difficulties following the occurrence of achance event, in the cases and under the conditions set out in thecontract.
The aid may con sist inthe provisionof ben efits incash or inkin d. The
provision of benefits in kind may also be effected by means of the staffand equipment of the person providing them.
The assistance activity does not cover servicing, maintenance, after-
sales service or the mere indication or provision of aid as an inter-
mediary.
3. The classificationby classes of the activity referred to inthis
Article appears in the Annex.
Article 2
This Directive does not apply to:
1. The following kinds of insurance:
(a) Life assurance, that is to say, the branch of insurance which
comprises, inparticular, assuran ce onsurvival to a stipulatedage only, assurance on death only, assurance on survival to astipulated age or anearlier death, life assuran ce with returnof
premiums, tontines, marriage assurance, and birth assurance;
(b) Annuities;
(c) Supplementary insurance carried on by life-assurance undertak-
ings, that is to say, insurance against personal injury including
incapacity for employment, insurance against death resultingfrom an accident, and insurance against disability resultingfrom an accident or sickness, where these various kinds of insur-ance are underwritten in addition to life assurance;
(d) Insurance forming part of a statutory system of social security;
(e) The type of insurance existing in Ireland and the United
Kingdom known as ‘permanent health insurance not subject tocancellation’.
2. The following operations:
(a) Capital redemption operations, as defined by the law in each
Member State;
(b) Operations of provident and mutual benefit institutions whose
benefits vary according to the resources available and in whichthe contributions of the members are determined on a flat-ratebasis;
(c) Operations carried out by organizations not having a legal
personality with the purpose of providing mutual cover for their
members without there being any payment of premiums or
constitution of technical reserves;
(d) Pending further coordination, export credit insurance operations
for the account of or guaranteed by the State, or where the State
is the insurer.
3. The assistance activity in which liability is limited to the following
operations provided in the event of an accident or breakdown invol-1973L0239 — EN — 25.06.1987 — 005.001 — 4
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ving a road vehicle which normally occurs in the territory of the
Member State of the undertaking providing cover:
— an on-the-spot breakdown service for which the undertaking
providing cover uses, in most circumstances, its own staff andequipment,
— the conveyance of the vehicle to the nearest or the most appro-
priate locationat which repairs may be carried out an d thepossible accompaniment, normally by the same means of assis-tance, of the driver and passengers to the nearest location fromwhere they may continue their journey by other means,
— if provided for by the Member State of the undertaking
providing cover, the conveyance of the vehicle, possibly accom-panied by the driver and passengers, to their home, point ofdeparture or original destination within the same State,
unless such operations are carried out by an undertaking subject to
this Directive.
In the cases referred to in the first two indents, the condition that the
accident or breakdown must have happened in the territory of theMember State of the undertaking providing cover
(a) shall not apply where the latter is a body of which the benefi-
ciary is a member and the breakdown service or conveyance of
the vehicle is provided simply onpresen tationof a membershipcard, without any additional premium being paid, by a similarbody in the country concerned on the basis of a reciprocalagreement;
(b) shall not preclude the provision of such assistance in Ireland and
the United Kingdom by a single body operating in both States.
In the circumstances referred to in the third indent, where the acci-
dent or the breakdown has occurred in the territory of Ireland or, inthe case of the United Kingdom, in the territory of Northern Ireland,
the vehicle, possibly accompanied by the driver and passengers, may
be conveyed to their home, point of departure or original destinationwithineither territory.
Moreover, the Directive does not concern assistance operations
carried out onthe occasionof anacciden t to or the breakdownof aroad vehicle and consisting in conveying the vehicle which has beeninvolved in an accident or has broken down outside the territory of
the Grand Duchy of Luxembourg, possibly accompanied by the
driver and passengers, to their home, where such operations arecarried out by the Automobile Club of the Grand Duchy of Luxem-bourg.
Undertakings subject to this Directive may engage in the activity
referred to under this point only if they have received authorizationfor class 18 in point A of the Annex without prejudice to point C ofthe said Annex. In that event this Directive shall apply to the opera-
tions in question.
Article 3
1. This Directive does not apply to mutual associations in so far as
they fulfil all the following conditions:
— the articles of association must contain provisions for calling up
additional contributions or reducing their benefits,
— their business does not cover liability risks — unless the latter
constitute ancillary cover within the meaning of subparagraph (c)of the Annex — or credit and suretyship risks,
— the annual contribution income for the activities covered by this
Directive must not exceed one million units of account,
and
— at least half of the contribution income from the activities covered
by this Directive must come from persons who are members of themutual association.1973L0239 — EN — 25.06.1987 — 005.001 — 5
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This Directive shall not apply to undertakings which fulfil the
following conditions:
— the undertaking does not pursue any activity falling within the
scope of this Directive other thanthe on e described inclass 18 inpoint A of the Annex,
— this activity is carried out exclusively on a local basis and consists
only of benefits in kind, and
— the total annual income collected in respect of the activity of assis-
tance to persons who get into difficulties does not exceed
200000 ECU.
2. This Directive shall not, moreover, apply to mutual associations
which have concluded with other associations of this nature an agree-
ment which provides for the full reinsurance of the insurance policiesissued by them or under which the concessionary undertaking is tomeet the liabilities arising under such policies in the place of theceding undertaking.
In such a case the concessionary undertaking shall be subject to the
rules of this Directive.
Article 4
This Directive shall not apply to the following institutions unless their
statutes or the law are amended as regards capacity:
(a)In Germany
The following institutions under public law enjoying a monopoly
(Monopolanstalten):
1. Badische Gebäudeversicherungsanstalt, Karlsruhe,
2. Bayerische Landesbrandversicherungsanstalt, Munich,3. Bayerische Landestierversicherungsanstalt, Schlachtviehversi-
cherung, Munich,
4. Braunschweigische Landesbrandversicherungsanstalt, Bruns-
wick,
5. Hamburger Feuerkasse, Hamburg,
6. Hessische Brandversicherungsanstalt (Hessische Brandversi-
cherungskammer), Darmstadt,
7. Hessische Brandversicherungsanstalt, Kassel,
8. Hohenzollernsche Feuerversicherungsanstalt, Sigmaringen,
9. Lippische Landesbrandversicherungsanstalt, Detmold,
10. Nassauische Brandversicherungsanstalt, Wiesbaden,
11. Oldenburgische Landesbrandkasse, Oldenburg,12. Ostfriesische Landschaftliche Brandkasse, Aurich,
13. Feuersozietät Berlin, Berlin,
14. Württembergische Gebäudebrandversicherungsanstalt, Stuttgart.
However, territorial capacity shall not be regarded as modified in
the case of a merger between such institutions which has the effect
of maintaining for the benefit of the new institution the territorialcapacity of the institutions which have merged, nor shall capacityas to the classes of insurance be regarded as modified if one ofthese institutions takes over in respect of the same territory one or
more of the classes of another such institution.
The following semi-public institutions:
1. Postbeamtenkrankenkasse,
2. Krankenversorgung der Bundesbahnbeamten;
(b)In France
The following institutions:
1. Caisse départementale des incendiés des Ardennes,1973L0239 — EN — 25.06.1987 — 005.001 — 6
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2. Caisse départementale des incendiés de la Côte-d'Or,
3. Caisse départementale des incendiés de la Marne,4. Caisse départementale des incendiés de la Meuse,5. Caisse départementale des incendiés de la Somme,6. Caisse départementale grêle du Gers,7. Caisse départementale grêle de l'Hérault;
(c)In Ireland
Voluntary Health Insurance Board;
(d)In Italy
The Cassa di Previdenza per l'assicurazione degli sportivi (Spor-
tass);
(e)In the United Kingdom
The CrownAgen ts;
(f)In Denmark
Falcks Redningskorps A/S, København;
(g)In Spain
The following institutions:
1. Comisaría de Seguro Obligatorio de Viajeros,
2. Consorcio de Compensación de Seguros,3. Fondo Nacional de Garantía de Riesgos de la Circulación.
Article 5
For the purposes of this Directive:
(a) ‘Unit of account’ means the European unit of account (EUA) as
defined by Commission Decision 3289/75/ECSC(
1). Wherever this
Directive refers to the unit of account, the conversion value innational currency to be adopted shall, as from 31 December ofeach year, be that of the last day of the preceding month ofOctober for which EUA conversion values are available in all the
Community currencies;
(b) ‘Matching assets’ means the representation of underwriting liabil-
ities expressed ina particular curren cy by assets expressed or
realizable inthe same curren cy;
(c) ‘Localization of assets’ means the existence of assets, whether
movable of immovable, withina Member State but shall n ot beconstrued as involving a requirement that movable property bedeposited or that immovable property be subjected to restrictivemeasures such as the registrationof mortgages. Assets represen ted
by claims against debtors shall be regarded as situated in the
Member State where they are to be liquidated.
TitleII— Rulesapplicabletoundertakingswhoseheadofficesare
situatedwithintheCommunity
SectionA: Conditionsofadmission
Article 6
1. Each Member State shall make the taking-up of the business of
direct insurance in its territory subject to an official authorization.1973L0239 — EN — 25.06.1987 — 005.001 — 7
(1) OJ No L 327, 19. 12. 1975, p. 4.▼M2
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2. Such authorizationshall be sought from the competen t authority
of the Member State inquestionby:
(a) Any undertaking which establishes its head office in the territory of
such state;
(b) Any undertaking whose head office is situated in another Member
State and which opens a branch or agency in the territory of the
Member State inquestion ;
(c) Any undertaking which, having received the authorization required
under (a) or (b) above, extends its business in the territory of such
State to other classes;
(d) Any undertaking which, having obtained in accordance with Article
7 (1) an authorization for a part of the national territory, extends its
business beyond such part.
3. Member States shall not make an authorization subject to the
lodging of a deposit or the provision of security.
Article 7
1. An authorization shall be valid for the entire national territory
unless, and in so far as the national legislation permits, the applicant
seeks permission to carry out his business only in a part of the national
territory.
2. An authorization shall be given for a particular class of insurance.
It shall cover the entire class, unless the applicant desires to cover onlypart of the risks pertaining to such class, as listed in point A of the
Annex.
However:
(a) It shall be open to any Member State to grant an authorization for
any group of classes indicated in point B of the Annex, providedthat it attaches to such authorization the appropriate denomination
specified therein;
(b) Anauthorizationgivenfor on e class or a group of classes shall also
be valid for the purpose of covering ancillary risks included inanother class if the conditions specified in point C of the Annex
are fulfilled;
(c) Pending further coordination, which must be implemented within
four years of notification of this Directive, the Federal Republic of
Germany may maintain the provision prohibiting the simultaneous
undertaking in its territory of health insurance►
M3 ◄or insurance in respect of recourse against
third parties and legal defence, either with one another or withother classes.
Article 8
1. Each Member State shall require that any undertaking set up in its
territory for which anauthorizationis sought shall:
(a) Adopt one of the following forms:
— inthe case of the Kin gdom of Belgium:
‘société anonyme — naamloze vennootschap’, ‘société en
commandite par actions — vennootschap bij wijze vangeldschieting op aandelen’, ‘association d'assurance mutuelle —onderlinge verzekeringsmaatschappij’, ‘société coopérative —cooperative vennootschap’,
— inthe case of Den mark:
‘Aktieselskaber’, ‘gensidige selskaber’,
— inthe case of the Federal Republic of German y:
‘Aktiengesellschaft’, ‘Versicherungsverein auf Gegenseitigkeit’,
‘Öffentlich-rechtliches Wettbewerbs-Versicherungsunter-nehmen’,1973L0239 — EN — 25.06.1987 — 005.001 — 8
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— inthe case of the Fren ch Republic:
‘société anonyme’, ‘société à forme mutuelle’, ‘mutuelle’,
‘union de mutuelles’,
— inthe case of the Republic of Irelan d:
‘incorporated companies limited by shares or by guarantee or
unlimited’,
— inthe case of the ItalianRepublic:
‘società per azioni’, ‘società cooperativa’, ‘mutua di assicura-
zione’,
— inthe case of the Gran d Duchy of Luxembourg:
‘société anonyme’, ‘société en commandite par actions’, ‘asso-
ciationd'assuran ces mutuelles’, ‘société coopérative’,
— in the case of the Kingdom of the Netherlands:
‘naamloze vennootschap’, ‘onderlinge waarborgmaatschap-
pij’►M2 ◄,
— in the case of the United Kingdom:
‘incorporated companies limited by shares or by guarantee or
unlimited’, ‘societies registered under the Industrial and Provi-dent Societies Acts’, ‘societies registered under the FriendlySocieties Act’ ►
C1the association of underwriters known as
Lloyd's◄,
— inthe case of the Hellen ic Republic:
‘ανώνυµη εταιρία ’, ‘αλληλασφαλιστικός συνεταιρισµός ’,
— in the case of the Kingdom of Spain:
‘sociedad anónima’, ‘sociedad mutua’, ‘sociedad cooperativa’,
— inthe case of the Portuguese Republic:
‘sociedade anónima de responsibilidade limitada’, ‘mútua de
seguros’.
Furthermore, Member States may set up, where appropriate, under-
takings under any form of known public law provided that such
institutions have as their object insurance operations in conditions
equivalent to those undertakings under private law;
(b) Limit its business activities to the business of insurance and opera-
tions directly arising therefrom to the exclusion of all other
commercial business;
(c) Submit a scheme of operations in accordance with the provisions of
Article 9;
(d) Possess the minimum guarantee fund provided for in Article 17 (2).
2. An undertaking seeking an authorization to extend its business to
other classes or, inthe case referred to inArticle 6 (2) (d), to an otherpart of the territory, shall be required to submit a scheme of operations
in accordance with the provisions of Article 9 as regards such other
classes or other part of the territory.
It shall, furthermore, be required to show proof that it possesses the
solvency margin provided for in Article 16 and, if, with regard tosuch other classes, the provisions of Article 17 (2) require a higherminimum guarantee fund than previously, that it possesses such
minimum.
3. These coordinating measures do not prevent Member States from
applying provisions requiring directors and managers to have technicalqualifications or from requiring the memorandum or articles of associa-tion, general and special policy conditions, tariffs and any otherdocuments necessary for the normal exercise of supervision to be
approved.
Nor do they prevent Member States from subjecting undertakings
requesting or having obtained authorization for class 18 in point A ofthe Annex to checks on their direct or indirect resources in staff and1973L0239 — EN — 25.06.1987 — 005.001 — 9
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equipment, including the qualification of their medical teams and the
quality of the equipment, available to the undertakings to meet theircommitments arising from this class of insurance.
4. The abovementioned provisions may not require that any applica-
tionfor anauthorizationshall be dealt with inthe light of the econ omic
requirements of the market.
Article 9
The scheme of operations referred to in Article 8 (1) (c) shall contain
the following particulars or proof concerning:
(a) The nature of the risks which the undertaking proposes to cover;
the general and special policy conditions which it proposes to use;
(b) The tariffs which it is proposed to apply for each category of busi-
ness;
(c) The guiding principles as to reinsurance;
(d) The items constituting the minimum guarantee fund;
(e) Estimates relating to the expenses of installing the administrative
services and the organization for securing business; the financialresources intended to cover them, and, where the risks to becovered are listed under No 18 in point A of the Annex, the
resources available to the undertaking for providing the promised
assistance;
and in addition, for the first three financial years:
(f) Estimates relating to expenses of management other than costs of
installation, and in particular current general expenses and commis-sions;
(g) Estimates relating to premiums or contributions and to claims;(h) A forecast balance sheet;
(i) Estimates relating to the financial resources intended to cover
underwriting liabilities and the solvency margin.
However, the particulars referred to in (a) and (b) above shall not be
required with regard to the risks classified under Nos 4, 5, 6, 7 and12 of point A of the Annex, nor shall those referred to in (b) abovebe required with regard to risks classified under Nos 14 and 15 of pointA of the Annex. The particulars referred to in (a) and (b) need not berequired in the case of risks classified under No 11 of the same point.
Article 10
1. Each Member State shall require that an undertaking having its
head office in the territory of another Member State and seeking anauthorization to open an agency or branch shall:
(a) Submit its statutes and a list of its directors and managers;
(b) Produce a certificate issued by the competent authorities of the
head office country, attesting the classes of insurance which the
undertaking is entitled to carry on and that it possesses the
minimum guarantee fund or, if higher, the minimum solvencymargin calculated in accordance with Article 16 (3), and statingthe risks which it actually covers and the financial resourcesreferred to inArticle 11 (1) (e);
(c) Submit a scheme of operations in accordance with Article 11;
(d) Designate an authorized agent having his permanent residence and
abode in the host country, and possessing sufficient powers to bindthe undertaking in relation to third parties and to represent it inrelations with the authorities and courts of the host country; if theagent has a legal personality, it must have its head office in thehost country and it must in its turn designate an individual to repre-1973L0239 — EN — 25.06.1987 — 005.001 — 10
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sent it who complies with the above conditions. The designated
agent shall not be refused by the Member State except on groundsrelating to repute or technical qualifications such as apply to direc-
tors of undertakings whose head offices are situated in the territory
of the State inquestion .
With regard to Lloyd's, in the event of any litigation in the host
country resulting from underwritten commitments, assured personsmust not be more unfavourably treated than if the litigation hadbeen brought against businesses of a more conventional type. Theauthorized agent must, therefore, possess sufficient powers toenable proceedings to be instituted against him and must in that
capacity be able to bind the Lloyd's underwriters concerned.
2. Each Member State shall require that for the purpose of extending
the business of the agency or branch, either to other classes or to otherparts of the national territory in the case provided for in Article 6 (2)(d), the applicant for the authorization shall submit a scheme of opera-
tions in accordance with Article 11 and comply with the conditions
contained in (1) (b) above.
3. These coordinating measures do not prevent Member States from
enforcing provisions requiring, for all insurance undertakings, approvalof the general and special policy conditions, tariffs and any other docu-
ment necessary for the normal exercise of supervision.
Nor do they prevent Member States from subjecting undertakings
requesting or having obtained authorization for class 18 in point A of
the Annex to checks on their direct or indirect resources in staff and
equipment, including the qualification of their medical teams and thequality of the equipment, available to the undertakings to meet theircommitments arising from this class of insurance.
4. The abovementioned provisions may not require that any applica-
tion for an authorization shall be examined in the light of the economicrequirements of the market.
Article 11
1. The scheme of operations of the agency or branch referred to in
Article 10 (1) (c) shall contain the following particulars or proofsconcerning:
(a) The nature of the risks which the undertaking proposes to cover in
the host country; the general and special policy conditions which it
proposes to use;
(b) The tariffs which the undertaking proposes to apply for each cate-
gory of business;
(c) The guiding principles as to reinsurance;
(d) The state of the solvency margin of the undertaking, referred to in
Articles 16 and 17;
(e) Estimates relating to the expenses of installing the administrative
services and the organization for securing business; the financial
resources intended to cover them, and, where the risks to becovered are listed under No 18 in point A of the Annex, theresources available to the undertaking for providing the promisedassistance;
and in addition, for the first three financial years:
(f) Estimates relating to expenses of management;
(g) Estimates relating to premiums or contributions and to claims in
respect of the new business;
(h) A forecast balance sheet for the agency or branch.1973L0239 — EN — 25.06.1987 — 005.001 — 11
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However, the particulars referred to in (a) and (b) above shall not be
required with regard to the risks classified under Nos 4, 5, 6, 7 and12 of point A of the Annex, nor shall those referred to in (b) above
be required with regard to the risks classified under Nos 14 and 15 of
point A of the Annex. The particulars referred to in (a) and (b) neednot be required in the case of risks classified under No 11 of thesame point.
2. The scheme of operations shall be accompanied by the balance
sheet and profit and loss account of the undertaking for each of thepast three financial years. If, however, it has not yet been in business
for three financial years it shall be required to furnish them only for the
financial years completed.
With regard to Lloyd's, the publication of the balance sheet and the
profit and loss account shall be replaced by the compulsory presenta-tion of annual trading accounts covering the insurance operations, andaccompanied by an affidavit certifying that auditors' certificates havebeen supplied in respect of each insurer and showing that the responsi-bilities incurred as a result of these operations are wholly covered by
the assets. These documents must allow authorities to form a view of
the state of solvency of the Association.
3. The scheme of operations, together with the observations of the
authorities competent to issue authorizations, shall be forwarded to thecompetent authorities of the head office country. The latter authoritiesshall communicate their Opinion to the former within three monthsfrom the receipt of the documents; if their Opinion has not been
communicated upon the expiry of this time, it shall be deemed to be
favourable.
Article 12
Any decision to refuse an authorization shall be accompanied by the
precise grounds for doing so and notified to the undertaking in ques-
tion.
Each Member State shall make provisionfor a right to apply to the
courts should there be any refusal.
Such provisionshall also be made with regard to cases where to
competent authorities have not dealt with an application for an author-
izationuponthe expiry of a period of six mon ths from the date of itsreceipt.
SectionB: Conditionsforexercise ofbusiness
Article 13
Member States shall collaborate closely with one another in super-
vising the financial position of authorized undertakings. Should the
undertakings in question be authorized to cover the risks listed underNo 18 in point A of the Annex, Member States shall also collaboratein supervising the resources available to those undertakings for carryingout the assistance operations they have undertaken to perform, wheretheir laws provide for supervisionof such resources.
Article 14
The supervisory authority of the Member State inwhose territory the
head office of the undertaking is situated must verify the state ofsolvency of the undertaking with respect to its entire business. Thesupervisory authorities of the other Member States shall provide the
former with all the information necessary to enable such verification
to be effected.
Article 15
1. Each Member State inwhose territory busin ess is carried onshall
require the undertaking to establish sufficient technical reserves.1973L0239 — EN — 25.06.1987 — 005.001 — 12
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The amount of such reserves shall be determined according to the rules
fixed by the State, or, in the absence of such rules, according to theestablished practices insuch State.
2. Technical reserves shall be required to be covered by equivalent
and matching assets localized in each country where business is carriedon. Member States may, however, permit relaxations in the rules as tomatching assets and the localization of assets.
Having regard to its special position, the Grand Duchy of Luxembourg
may, pending coordination of legislation on the winding-up of under-takings, retain the system of guarantees for technical reserves existingat the time of entry into force of this Directive.
The regulations of the country where the business is is carried on shall
determine the nature of such assets and, where appropriate, the extentto which they may be used for the purpose of covering the technicalreserves and shall also determine the rules for valuing such assets.
3. If a Member State allows any technical reserves to be covered by
claims against reinsurers, it shall fix the percentage so allowed. In suchcase, it may not require the assets representing such claims to be loca-lized in its territory, notwithstanding the provisions of paragraph 2.
4. The supervisory authority of the Member State inwhose territory
the head office of an undertaking is situated shall verify that its balancesheet shows in respect of the technical reserves assets equivalent to theunderwriting liabilities assumed in all the countries where it undertakes
business.
Article 15a
1. Each Member State shall require undertakings established on its
territory and underwriting risks included under class 14 in point A ofthe Annex (hereinafter referred to as ‘credit insurance’) to set up an
equalization reserve for the purpose of offsetting any technical deficit
or above-average claims ratio arising in that class for a financial year.
2. The equalizationreserve must be calculated, un der the rules laid
down by each Member State, in accordance with one of the four
methods set out in point D of the Annex which shall be regarded as
being equivalent.
3. Up to the amount calculated in accordance with the methods set
out in point D of the Annex, the equalization reserve shall be disre-
garded for purposes of calculating the solvency margin.
4. Member States may exempt establishments from the obligation to
set up an equalization reserve for credit insurance business where thepremiums or contributions receivable in respect of credit insurance are
less than 4 % of the total premiums or contributions receivable by them
and less than 2 500000 ECU.
Article 16
1. Each Member State shall require every undertaking whose head
office is situated inits territory to establish anadequate solven cy
margin in respect of its entire business.
The solvency margin shall correspond to the assets of the undertaking,
free of all foreseeable liabilities, less any intangible items. In particularthe following shall be considered:
— the paid up share capital or, in the case of a mutual concern, the
effective initial fund,
— one-half of the share capital or the initial fund which is not yet paid
up, once the paid-up part reaches 25 % of this capital or fund,
— reserves (statutory reserves and free reserves) not corresponding to
underwriting liabilities,
— any carry-forward of profits,1973L0239 — EN — 25.06.1987 — 005.001 — 13
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— inthe case of a mutual or mutual-type associationwith variable
contributions, any claim which it has against its members by wayof a call for supplementary contribution, within the financial year,
up to one-half of the difference between the maximum contribu-
tions and the contributions actually called in, and subject to anover-riding limit of 50 % of the margin,
— at the request of, and upon proof being shown by the undertaking,
and with the agreement of the supervisory authorities of each otherMember State where it carries on its business, any hidden reservesresulting from under-estimation of assets or over-estimation ofliabilities inthe balan ce sheet, inso far as such hiddenreserves
are not of an exceptional nature.
Over-estimation of technical reserves shall be determined in relation to
their amount calculated by the undertaking in conformity to national
regulations; however, pending further coordination of technical
reserves, an amount equivalent to 75 % of the difference between theamount of the reserve for outstanding risks calculated at a flat rate bythe undertaking by application of a minimum percentage in relation topremiums and the amount that would have been obtained by calcu-
lating the reserve contract by contract where the national law gives an
optionbetweenthe two methods, canbe takenin to accoun t inthesolvency margin up to 20 %.
2. The solvency margin shall be determined on the basis either of
the annual amount of premiums or contributions, or of the averageburden of claims for the past three financial years. ►
M3Inthe case,
however, of undertakings which essentially underwrite only one ormore of the risks of credit, storm, hail or frost, the last seven financial
years shall be takenas the referen ce period for the average burdenof
claims.◄
3. Subject to the provisions of Article 17, the amount of the
solvency margin shall be equal to the higher of the following tworesults:
first result (premium basis):
— the premiums or contributions (inclusive of charges ancillary to
premiums or contributions) due in respect of all direct business inthe last financial year for all financial years, shall be aggregated,
— to this aggregate there shall be added the amount of premiums
accepted for all reinsurance in the last financial year,
— from this sum there shall thenbe deducted the total amoun t of
premiums or contributions cancelled in the last financial year, aswell as the total amount of taxes and levies pertaining to thepremiums or contributions entering into the aggregate.
The amount so obtained shall be divided into two portions, the first
portion extending up to 10 million units of account, the secondcomprising the excess; 18 % and 16 % of these portions respectively
shall be calculated and added together.
The first result shall be obtained by multiplying the sum so calculated
by the ratio existing in respect of the last financial year between the
amount of claims remaining to be borne by the undertaking afterdeduction of transfers for reinsurance and the gross amount of claims;this ratio may inn o case be less than50 %.
Second result (claims basis):
— the amounts of claims paid in respect of direct business (without
any deduction of claims borne by reinsurers and retrocessionaires)inthe periods specified in(2) shall be aggregated,
— to this aggregate there shall be added the amount of claims paid in
respect of reinsurances or retrocessions accepted during the sameperiods,
— to this sum there shall be added the amount of provisions or
reserves for outstanding claims established at the end of the lastfinancial year both for direct business and for reinsurance accep-tances,1973L0239 — EN — 25.06.1987 — 005.001 — 14
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— from this sum there shall be deducted the amount of
►C1recoveries effected ◄during the periods specified in (2),
— from the sum then remaining, there shall be deducted the amount of
provisions or reserves for outstanding claims established at thecommencement of the second financial year preceding the last
financial year for which there are accounts, both for direct business
and for reinsurance acceptances.
One-third, or one-seventh, of the amount so obtained, according to the
period of reference established in (2), shall be divided into twoportions, the first extending up to seven million units of account andthe second comprising the excess; 26 % and 23 % of these portionsrespectively shall be calculated and added together.
The second result shall be obtained by multiplying the sum so obtained
by the ratio existing in respect of the last financial year between the
amount of claims remaining to be borne by the business after transfersfor reinsurance and the gross amount of claims; this ratio may in nocase be less than50 %.
In the case of the risks listed under No 18 in point A of the Annex, the
amount of claims paid used to calculate the second result (claims basis)
shall be the costs borne by the undertaking in respect of assistance
given. Such costs shall be calculated in accordance with the nationalprovisions of the Member State in whose territory the head office ofthe undertaking is situated.
4. The fractions applicable to the portions referred to in (3) shall
each be reduced to a third in the case of health insurance practised on
a similar technical basis to that of life assurance, if
— the premiums paid are calculated onthe basis of sickn ess tables
according to the mathematical method applied in insurance,
— a reserve is set up for increasing age,— anaddition al premium is collected inorder to set up a safety
marginof anappropriate amoun t,
— the insurer may only cancel the contract before the end of the third
year of insurance at the latest,
— the contract provides for the possibility of increasing premiums or
reducing payments even for current contracts.
5. Inthe case of Lloyd's, the calculationof the first result inrespect
of premiums, referred to inparagraph 3, shall be made onthe basis ofnet premiums, which shall be multiplied by a flat-rate percentage fixedannually by ►
C1the supervisory authority of the head office. ◄This
flat-rate percentage must be calculated on the basis of the most recent
statistical data oncommission s paid.
The details, together with the relevant calculations shall be sent to the
authorities of the countries where Lloyd's is established.
Article 17
1. One-third of the solvency margin shall constitute the guarantee
fund.
2. (a) The guarantee fund may not, however, be less than:
— 1 400 000 ECU inthe case where all or some of the risks
included in the class listed in point A of the Annex under
No 14 are covered. This provisionshall apply to every
undertaking for which the annual amount of premiums orcontributions due in this class for each of the last threefinancial years exceeded 2 500000 ECU or 4 % of the totalamount of premiums or contributions receivable by theundertaking concerned,
— 400 000 ECU inthe case where all or some of the risks
included in one of the classes listed in point A of the Annex1973L0239 — EN — 25.06.1987 — 005.001 — 15
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under Nos 10, 11, 12, 13 and 15 and, insofar as the first
indent does not apply, No 14,
— 300 000 ECU inthe case where call or some of the risks
included in one of the classes listed in point A of the Annex
under Nos 1, 2, 3, 4, 5, 6, 7, 8, 16 and 18 are covered,
— 200 000 units of account in the case where all or some of the
risks included in one of the classes listed in point A of theAnnex under Nos 9 and 17 are covered;
(b) If the business carried on by the undertaking covers several
classes or several risks, only that class or risk for which thehighest amount is required shall be taken into account;
(c) Any Member State may provide for a one-fourth reduction of
the minimum guarantee fund in the case of mutual associationsand mutual-type associations;
(d) Where an undertaking carrying on credit insurance is required to
increase the fund referred to in subparagraph (a), first indent, to1 400000 ECU, the Member State concerned shall allow such
undertaking:
— a period of three years in which to bring the fund up to
1 000 000 ECU,
— a period of five years to bring the fund up to 1 200000 ECU,— a period of seven years to bring the fund up to
1 400 000 ECU.
These periods shall run from the date from which the conditions
referred to in the first indent of subparagraph (a) are fulfilled.
Article 18
1. Member States shall not prescribe any rules as to the choice of
the assets in excess of those representing the technical reserves referredto inArticle 15.
2. Subject to the provisions of Article 15 (2), Article 20 (1) and (3)
and Article 22 (1) last subparagraph, Member States shall not restrain
the free disposal of the assets, whether movable or immovable prop-erty, forming part of the assets of authorized businesses.
The Federal Republic of Germany may, however, pending further coor-
dination of the conditions for the taking up and pursuit of the businessof life assurance maintain, with respect to health insurance within the
meaning of Article 16 (4), the restrictions imposed on the free disposal
of assets inso far as the free disposal of assets which cover mathema-tical reserves is subject to the agreement of a ‘Treuhänder’.
Until further measures of coordination have been taken, the Kingdom
of Denmark may however retain in force its legislation restricting thefree disposal of assets built up by insurance undertakings to cover
pensions payable under compulsory insurance against industrial acci-
dents.
3. These provisions shall not preclude any measures which Member
States, while observing the rules prevailing in the country where thebusiness is carried on, as required under Article 15 (2), and while safe-guarding the interests of the insured, are entitled to take as owners or
members or associates of the undertakings in question.
Article 19
1. Each Member State shall require every undertaking whose head
office is situated in its territory to produce an annual account, coveringall types of operation, of its financial situation, solvency and, asregards cover for risks listed under No 18 in point A of the Annex,1973L0239 — EN — 25.06.1987 — 005.001 — 16
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other resources available to them for meeting their liabilities, where its
laws provide for supervisionof such resources.
1a. In respect of credit insurance, the undertaking shall make avail-
able to the supervisory authority accounts showing both the technicalresults and the technical reserves relating to that business.
2. Member States shall require undertakings operating in their terri-
tory to render periodically the returns, together with statistical
documents, which are necessary for the purposes of supervision and,
as regards cover for risks listed under No 18 in point A of the Annex,to indicate the resources available to them for meeting their liabilities,where their laws provide for supervisionof such resources. The compe-tent supervisory authorities shall furnish each other with the documentsand information necessary for exercising supervision.
Article 20
1. If an undertaking does not comply with the provisions of Article
15, the supervisory authority of the country where it carries on its busi-ness may prohibit the free disposal of assets in that country after
having informed the supervisory authorities of the country where the
head office is situated of its intention.
2. For the purposes of restoring the financial situation of an under-
taking whose solvency margin has fallen below the minimum required
under Article 16 (3), the supervisory authority of the head-officecountry shall require a plan for the restoration of a sound financialpositionto be submitted for its approval.
3. If the solvency margin falls below the guarantee fund as defined
inArticle 17, the supervisory authority of the head-office coun try shallrequire the undertaking to submit a short-term finance scheme for itsapproval.
It may also restrict or prohibit the free disposal of the assets of the
undertaking. It shall inform the authorities of other Member States inwhose territories the undertaking is authorized of any measures andthe latter shall, at the request of the former, take the same measures.
4. The competent supervisory authorities may further take all
measures necessary to safeguard the interests of the insured in the casesprovided for in(1) an d (3).
5. The supervisory authorities of other Member States inwhose
territory the undertaking in question has also been authorized shallcollaborate for the purpose of implementing the provisions referred toin(1) to (4).
Article 21
1. Each Member State shall make it possible for an undertaking to
assignall or part of its portfolio of policies if the assign ees possess
the necessary solvency margin, due account being taken of the assign-
ment.
The supervisory authorities concerned shall consult each other before
approving such assignment.
2. Once approved by the competent supervisory authority, such
assignment shall affect directly the policy-holders or insuredconcerned.1973L0239 — EN — 25.06.1987 — 005.001 — 17
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SectionC: Withdrawalofauthorization
Article 22
1. The authorization granted by the competent authority of the
Member State inwhose territory the head office is situated may bewithdrawn by such authority if the undertaking:
(a) No longer fulfils the conditions of admission;
(b) Has beenun able, withinthe time allowed, to take the measures
contained in the restoration plan or finance scheme referred to in
Article 20;
(c) Fails seriously in its obligations under the national regulations.
In the event of the withdrawal of the authorization, the supervisory
authority of the head-office country shall notify such withdrawal tothe supervisory authorities of other Member States which have issuedan authorization to the undertaking; they shall, thereupon, also with-draw their authorizations. The supervisory authority of the head-office
country shall, in conjunction with such other authorities, take all neces-
sary measures to safeguard the interests of the insured and, inparticular, shall restrict the free disposal of the assets of the under-taking if such restriction has not been already imposed in accordancewith the provisions of Article 20 (1) and (3), subparagraph 2.
2. An authorization granted to an agency or branch of an under-
taking whose head office is situated in another Member State may bewithdrawn if the agency or branch:
(a) No longer fulfils the conditions for admission;
(b) Fails seriously in its obligations under the regulations of the
country where it carries on its business, with respect in particularto the establishment of technical reserves as defined in Article 15.
Before withdrawing the authorization the supervisory authorities of the
country where business is carried on shall consult the supervisoryauthority of the country where the head office is situated. If theydeem it necessary to suspend the business of such agency or branch
before consultation is concluded, they shall immediately advise the
supervisory authority of the country where the head office is situated.
3. Any decision to withdraw an authorization or suspend business
shall be supported by precise reasons and notified to the undertakinginquestion .
Each Member State shall make provisionfor a right to apply to the
courts against such a decision.
Title III — Rules applicable to agencies or branches established
within the Community and belonging to undertakings whose head
officesareoutsidetheCommunity
Article 23
1. Each Member State shall make access to the business referred to
in Article 1 by any undertaking whose head office is outside theCommunity subject to an official authorization.
2. A Member State may grant an authorization if the undertaking
fulfils at least the following conditions:
(a) It is entitled to undertake insurance business under its national law;
(b) It establishes an agency or branch in the territory of such Member
State;
(c) It undertakes to establish at the place of management of the agency
or branch accounts specific to the business which it undertakes
there, and to keep there all the records relating to the businesstransacted;
(d) It designates an authorized agent, to be approved by the competent
authorities;1973L0239 — EN — 25.06.1987 — 005.001 — 18
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(e) It possesses in the country where it carries on its business assets of
an amount equal to at least one-half of the minimum amountprescribed in Article 17 (2), in respect of the guarantee fund, and
deposits one-fourth of the minimum amount as security;
(f) It undertakes to keep a margin of solvency in accordance with the
requirements referred to in Article 25;
(g) It submits a scheme of operations in accordance with the provisions
of Article 11 (1) and (2).
Article 24
Member States shall require undertakings to establish adequate tech-
nical reserves to cover the underwriting liabilities assumed in their
territories. Member States shall see that the agency or branch covers
such technical reserves by means of assets which are equivalent tosuch reserves and are, to the extent fixed by the State in question,matching assets.
The law of the Member States shall be applicable to the calculationof
technical reserves, the determination of categories of investments, andthe valuationof assets.
The Member State in question shall require that the assets representing
the technical reserves shall be localized in its territory. Article 15 (3)
shall, however, be applicable.
Article 25
1. Each Member State shall require for agencies or branches estab-
lished in its territory a solvency margin consisting of assets free of all
foreseeable liabilities, less any intangible items. The solvency marginshall be calculated in accordance with the provisions of Article 16 (3).However, for the purpose of calculating this margin, account shall betaken only of the premiums or contributions and claims pertaining tothe business effected by the agency or branch concerned.
2. One-third of the solvency margin shall constitute the guarantee
fund. The guarantee fund may not be less than one-half of theminimum required under Article 17 (2). The initial deposit lodged inaccordance with Article 23 (2) (e) shall be counted towards such guar-
antee fund.
3. The assets representing the solvency margin must be kept within
the country where the business is carried on up to the amount of theguarantee fund and the excess, within the Community.
Article 26
1. Any undertaking which has requested or obtained authorization
from more than one Member State may apply for the following advan-tages which may be granted only jointly:
(a) the solvency margin referred to in Article 25 shall be calculated in
relation to the entire business which it carries on within the
Community; in such case, account shall be taken only of the opera-
tions effected by all the agencies or branches established within theCommunity for the purposes of this calculation;
(b) the deposit required under Article 23 (2) (e) shall be lodged in only
one of those Member States;
(c) the assets representing the guarantee fund shall be localized in any
one of the Member States in which it carries on its activities.
2. Application to benefit from the advantages provided for in para-
graph 1 shall be made to the competent authorities of the Member
States concerned. The application must state the authority of theMember State which in future is to supervise the solvency of the entirebusiness of the agencies or branches established within the Community.Reasons must be given for the choice of authority made by the under-taking. The deposit shall be lodged with that Member State.1973L0239 — EN — 25.06.1987 — 005.001 — 19
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3. The advantages provided for in paragraph 1 may only be granted
if the competent authorities of all Member States in which an applica-tionhas beenmade agree to them. They shall take effect from the time
whenthe selected supervisory authority in forms the other supervisory
authorities that it will supervise the state of solvency of the entire busi-ness of the agencies or branches within the Community.
The supervisory authority selected shall obtainfrom the other Member
States the information necessary for the supervision of the overallsolvency of the agencies and branches established in their territory.
4. At the request of one or more of the Member States concerned,
the advantages granted under this Article shall be withdrawn simulta-neously by all Member States concerned.
Article 27
The provisions of Articles 19 and 20 shall also apply in relation to
agencies and branches of undertakings to which this Title applies.
As regards the application of Article 20, where an undertaking qualifies
for the advantages provided for in Article 26 (1), the authority respon-
sible for verifying the solvency of agencies or branches established
within the Community with respect to their entire business shall betreated inthe same way as the authority of the State inthe territory ofwhich the head office of a Community undertaking is situated.
Article 28
Inthe case of a withdrawal of authorizationby the authority referred to
inArticle 26 (2), this authority shall n otify the authorities of the other
Member States where the undertaking operates and the latter supervi-sory authorities shall take the appropriate measures. If the reasonforthe withdrawal of the authorizationis the in adequacy of the overallstate of solvency as fixed by the Member States which agreed to the
request referred to inArticle 26, the Member States which gave their
approval shall also withdraw their authorizations.
Article 29
The Community may, by means of agreements concluded pursuant to
the Treaty with one or more third countries, agree to the applicationof provisions different to those provided for in this Title, for the
purpose of ensuring, under conditions of reciprocity, adequate protec-
tion for insured persons in the Member States.
TitleIV— Transitionalandotherprovisions
Article 30
1. Member States shall allow undertakings referred to in Title II
which at the entry into force of the implementing measures to thisDirective provide insurance in their territories in one or more of theclasses referred to in Article 1 a period of five years, commencingwith the date of notification of this Directive, in order to comply with
the requirements of Articles 16 and 17.
2. Furthermore, Member States may:
(a) allow any undertakings referred to in (1), which upon the expiry of
the five-year period have not fully established the margin ofsolvency, a further period not exceeding two years in which to do
so provided that such undertakings have, in accordance with Article
20, submitted for the approval of the supervisory authority themeasures which they propose to take for such purpose;
(b) exempt undertakings referred to in (1) whose annual premium or
contribution income upon the expiry of the period of five yearsfalls short of six times the amount of the minimum guarantee fund1973L0239 — EN — 25.06.1987 — 005.001 — 20
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required under Article 17 (2) from the requirement to establish
such minimum guarantee fund before the end of the financial yearin respect of which the premium or contribution income is as much
as six times such minimum guarantee fund. After considering the
results of the examination provided for under Article 33, theCouncil shall unanimously decide, on a proposal from the Commis-sion, when this exemption is to be abolished by Member States.
3. Undertakings desiring to extend their operations within the
meaning of Article 8 (2) or Article 10 may not do so unless they
comply immediately with the rules of this Directive. However, the
undertakings referred to in paragraph (2) (b) which within the nationalterritory extend their business to other classes of insurance or to otherparts of such territory may be exempted for a period of tenyears fromthe date of notification of the Directive from the requirement to consti-
tute the minimum guarantee fund referred to in Article 17 (2).
4. An undertaking having a structure different from any of those
listed in Article 8 may continue, for a period of three years from thenotification of the Directive, to carry on their present business in thelegal form in which they are constituted at the time of such notifica-tion. Undertakings set up in the United Kingdom ‘by Royal Charter’or ‘by private Act’ or ‘by special public Act’ may continue to carry
on their business in their present form for an unlimited period.
Undertakings in Belgium which, in accordance with their objects, carry
on the business of intervention mortgage loans or savings operations inaccordance with No 4 of Article 15 of the provisions relating to thesupervision of private savings banks, coordinated by the ‘arrête royal’of 23 June 1967, may continue to undertake such business for a period
of three years from the date of notification of this Directive.
The Member States inquestionshall draw up a list of such un dertak-
ings and communicate it to the other Member States and theCommission.
5. At the request of undertakings which comply with the require-
ments of Articles 15, 16 and 17, Member States shall cease to applyrestrictive measures such as those relating to mortgages, deposits and
securities established under present regulations.
Article 31
Member States shall allow agencies or branches referred to in Title III
which, at the entry into force of the implementing measures to thisDirective, are undertaking one or more classes referred to in Article 1and do not extend their business within the meaning of Article 10 (2) amaximum period of five years, from the date of notification of this
Directive, in order to comply with the conditions of Article 25.
Article 32
During a period which terminates at the time of the entry into force of
an agreement concluded with a third country pursuant to Article 29 and
at the latest uponthe expiry of a period of four years after the n otifica-tionof the Directive, each Member State may retaininfavour ofundertakings of that country established in its territory the rules appliedto them on 1 January 1973 in respect of matching assets and the loca-
lization of technical reserves, provided that notification is given to the
other Member States and the Commission and that the limits of relaxa-tions granted pursuant to Article 15 (2) in favour of the undertakings ofMember States established inits territory are n ot exceeded.
Title V— Finalprovisions
Article 33
The Commission and the competent authorities of the Member States
shall collaborate closely for the purpose of facilitating the supervisionof direct insurance within the Community and of examining any diffi-culties which may arise inthe applicationof this Directive.1973L0239 — EN — 25.06.1987 — 005.001 — 21
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Article 34
1. The Commissionshall submit to the Coun cil, withinsix years
from the date of notification of this Directive, a report on the effects
of the financial requirements imposed by this Directive on the situation
on the insurance markets of the Member States.
2. The Commission shall, as and when necessary, submit interim
reports to the Council before the end of the transitional period providedfor inArticle 30 (1).
Article 35
Member States shall amend their national provisions to comply with
this Directive within 18 months of its notification and shall forthwithinform the Commission thereof.
The provisions thus amended shall, subject to Articles 30, 31 and 32,
be applied within 30 months from the date of notification.
Article 36
Upon notification of this Directive, Member States shall ensure that the
texts of the main provisions of a legislative, regulatory or administra-
tive nature which they adopt in the field covered by this Directive arecommunicated to the Commission.
Article 37
The Annex shall form an integral part of this Directive.
Article 38
This Directive is addressed to the Member States.1973L0239 — EN — 25.06.1987 — 005.001 — 22
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ANNEX
A.Classificationofrisksaccordingtoclassesofinsurance
1.Accident (including industrial injury and occupational diseases)
— fixed pecuniary benefits
— benefits in the nature of indemnity— combinations of the two
— injury to passengers
2.Sickness
— fixed pecuniary benefits
— benefits in the nature of indemnity— combinations of the two
3.Land vehicles (other thanrailway rollin g stock)
All damage to or loss of
— land motor vehicles
— land vehicles other than motor vehicles
4.Railway rolling stock
All damage to or loss of railway rolling stock
5.Aircraft
All damage to or loss of aircraft
6.Ships (sea, lake and river and canal vessels)
All damage to or loss of
— river and canal vessels
— lake vessels
— sea vessels
7.Goods in transit (including merchandise, baggage, and all other goods)
All damage to or loss of goods intran sit or baggage, irrespective of the
form of transport
8.Fire and natural forces
All damage to or loss of property (other thanproperty in cluded in
classes 3, 4, 5, 6 and 7) due to
— fire
— explosion
— storm— natural forces other than storm— nuclear energy
— land subsidence
9.Other damage to property
All damage to or loss of property (other thanproperty in cluded in
classes 3, 4, 5, 6 and 7) due to hail or frost, and any event such as theft,
other than those mentioned under 8
10.Motor vehicle liability
All liability arising out of the use of motor vehicles operating on the
land (including carrier's liability)
11.Aircraft liability
All liability arising out of the use of aircraft (including carrier's liability)1973L0239 — EN — 25.06.1987 — 005.001 — 23
▼B
12.Liability for ships (sea, lake and river and canal vessels)
All liability arising out of the use of ships, vessels or boats on the sea,
lakes, rivers or canals (including carrier's liability)
13.General liability
All liability other than those forms mentioned under Nos 10, 11 and 12
14.Credit
— insolvency (general)
— export credit
— instalment credit— mortgages— agricultural credit
15.Suretyship
— suretyship (direct)
— suretyship (indirect)
16.Miscellaneous financial loss
— employment risks
— insufficiency of income (general)— bad weather— loss of benefits— continuing general expenses
— unforeseen trading expenses
— loss of market value— loss of rent or revenue— indirect trading losses other than those mentioned above— other financial loss (non-trading)
— other forms of financial loss
17.Legal expenses
Legal expenses and costs of litigation
18.Assistance
Assistance for persons who get into difficulties while travelling, while
away from home or while away from their permanent residence
The risks included in a class may not be included in any other class
except inthe cases referred to inpoin t C.
B.Description of authorizations granted for more than one class of insur-
ance
Where the authorizationsimultan eously covers:
(a) Classes Nos 1 and 2, it shall be named ‘Accident and Health Insurance’;
(b) Classes Nos 1 (fourth indent), 3, 7 and 10, it shall be named ‘Motor
Insurance’;
(c) Classes Nos 1 (fourth indent), 4, 6, 7 and 12, it shall be named ‘Marine
and Transport Insurance’;
(d) Classes Nos 1 (fourth indent), 5, 7 and 11, it shall be named ‘Aviation
Insurance’;
(e) Classes Nos 8 and 9, it shall be named ‘Insurance against Fire and other
Damage to Property’;
(f) Classes Nos 10, 11, 12 and 13, it shall be named ‘Liability Insurance’;
(g) Classes Nos 14 and 15, it shall be named ‘Credit and Suretyship Insur-
ance’;
(h) All classes, it shall be named at the choice of the Member State in ques-
tion, which shall notifiy the other Member States and the Commission of
its choice.1973L0239 — EN — 25.06.1987 — 005.001 — 24
▼M2
▼B
▼B
C.Ancillaryrisks
An undertaking obtaining an authorization for a principal risk belonging to
one class or a group of classes may also insure risks included in another
class without an authorization being necessary for them if they:
— are connected with the principal risk,
— concern the object which is covered against the principal risk, and— are covered by the contract insuring the principal risk.
However, the risks included in classes 14, 15 and 17 in point A may not be
regarded as risks ancillary to other classes.
Nonetheless, the risk included in class 17 (legal expenses insurance) may be
regarded as an ancillary risk of class 18 where the conditions laid down in
the first subparagraph are fulfilled, where the mainrisk relates solely to the
assistance provided for persons who fall into difficulties while travelling,
while away from home or while away from their permanent residence.
Legal expenses insurance may also be regarded as an ancillary risk under the
conditions set out in the first subparagraph where it concerns disputes or
risks arising out of, or in connection with, the use of seagoing vessels.
D.Methods of calculating the equalization reserve for the credit insurance
class
Method No 11. In respect of the risks included in the class of insurance in point A No 14
(hereinafter referred to as ‘credit insurance’), the undertaking shall set up
an equalization reserve to which shall be charged any technical deficit
arising in that class for a financial year.
2. Such reserve shall in each financial year receive 75 % of any technical
surplus arising on credit insurance business, subject to a limit of 12 %
of the net premiums or contributions until the reserve has reached 150 %
of the highest annual amount of net premiums or contributions received
during the previous five financial years.
Method No 2
1. In respect of the risks included in the class of insurance listed in point A
No 14 (hereinafter referred to as ‘credit insurance’) the undertaking shall
set up an equalization reserve to which shall be charged any technical
deficit arising in that class for a financial year.
2. The minimum amount of the equilization reserve shall be 134 % of the
average of the premiums or contributions received annually during the
previous five financial years after subtraction of the cessions and addition
of the reinsurance acceptances.
3. Such reserve shall in each of the successive financial years receive 75 %
of any technical surplus arising in that class until the reserve is at least
equal to the minimum calculated in accordance with paragraph 2.
4. Member States may lay downspecial rules for the calculationof the
amount of the reserve and/or the amount of the annual levy in excess of
the minimum amounts laid down in this Directive.
Method No 31. An equalization reserve shall be formed for class 14 in point A (herein-
after referred to as ‘credit insurance’) for the purpose of offsetting any
above-average claims ratio for a financial year in that class of insurance.
2. The equalizationreserve shall be calculated onthe basis of the method
set out below.
All calculations shall relate to income and expenditure for the insurer's
ownaccoun t.
An amount in respect of any claims shortfall for each financial year shall
be placed to the equalizationreserve un til it has reached, or is restored to,
the required amount.
There shall be deemed to be a claims shortfall if the claims ratio for a
financial year is lower than the average claims ratio for the reference
period. The amount in respect of the claims shortfall shall be arrived at
by multiplying the difference between the two ratios by the earned
premiums for the financial year.1973L0239 — EN — 25.06.1987 — 005.001 — 25
▼M4
▼M3
▼M3
The required amount shall be equal to six times the standard devition of
the claims ratios inthe referen ce period from the average claims ratio,
multiplied by the earned premiums for the financial year.
Where claims for any financial year are in excess, an amount in respect
thereof shall be takenfrom the equalizationreserve. Claims shall be
deemed to be in excess if the claims ratio for the financial year is higher
thanthe average claims ratio. The amoun t inrespect of the excess claims
shall be arrived at by multiplying the difference between the two ratios
by the earned premiums for the financial year.
Irrespective of claims experience, 3,5 % of the required amount of the
equalization reserve shall be first placed to that reserve each financial
year until its required amount has been reached or restored.
The lenght of the reference period shall be not less than 15 years and not
more than 30 years. No equalization reserve need be formed if no under-
writing loss has been noted during the reference period.
The required amount of the equalization reserve and the amount to be
takenfrom it may be reduced if the average claims ratio for the referen ce
period in conjunction with the expenses ratio show that the premiums
include a safety margin.
Method No 41. An equalization reserve shall be formed for class 14 in point A (herein-
after referred to as ‘credit insurance’) for the purpose of offsetting any
above-average claims ratio for a financial year in that class of insurance.
2. The equalizationreserve shall be calculated onthe basis of the method
set out below.
All calculations shall relate to income and expenditure for the insurer's
ownaccoun t.
An amount in respect of any claims shortfall for each financial year shall
be placed to the equalizationreserve un til it has reached the maximum
required amount.
There shall be deemed to be a claims shortfall if the claims ratio for a
financial year is lower than the average claims ratio for the reference
period. The amount in respect of the claims shortfall shall be arrived at
by multiplying the difference betwen the two ratios by the earned
premiums for the financial year.
The maximum required amount shall be equal to six times the standard
deviationof the claims ratio inthe referen ce period from the average
claims ratio, multiplied by the earned premiums for the financial year.
Where claims for any financial year are in excess, an amount in respect
thereof shall be takenfrom the equalizationreserve un til it has reached
the minimum required amount. Claims shall be deemed to be in excess
if the claims ratio for the financial year is higher than the average claims
ratio. The amount in respect of the excess claims shall be arrived at by
multiplying the difference between the two ratios by the earned premiums
for the financial year.
The minimum required amount shall be equal to three times the standard
deviationof the claims ratio inthe referen ce from the average claims
ratio multiplied by the earned premiums for the financial year.
The length of the reference period shall be not less than 15 years and not
more than 30 years. No equalization reserve need be formed if no under-
writing loss has been noted during the reference period.
Both required amounts of the equalization reserve and the amount to be
placed to it or the amount to be taken from it may be reduced if the
average claims ratio for the reference period in conjunction with the
expenses ratio show that the premiums include a safety margin and that
safety margin is more than one-and-a-half times the standard deviation of
the claims ratio in the reference period. In such a case the amounts in
question shall be multiplied by the quotient or one-and-a-half times the
standard deviation and the safety margin.1973L0239 — EN — 25.06.1987 — 005.001 — 26