1973L0239 — EN — 27.07.1973 — 000.001 — 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)
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 abolition of 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-upand p ursuit 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-upand p ursuit 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 application of 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 suretyshipinsurance 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 within a 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 an authorization be refused or withdrawn;1973L0239 — EN — 27.07.1973 — 000.001 — 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.
▼B
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 attainment
of coordination in this matter, as well as questions relating to the deter-mination of categories of investments and the valuation of assets, forsubsequent Directives;
Whereas it is necessary that insurance undertakings should possess,
over and above technical reserves of sufficient amount to meet their
underwriting liabilities, a supplementary reserve, to be known as thesolvency margin, and represented by free assets, in order to provideagainst business fluctuations; whereas in order to ensure that therequirements imposed for such purposes are determined according toobjective criteria, whereby undertakings of the same size are placed
on an equal footing as regards competition, it is desirable to provide
that such margin shall be related to the overall volume of business ofthe undertaking and be determined by reference to two indices ofsecurity, 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 that
undertakings 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-upand p ursuit 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, desirableas regards the methods of supervision to make special provision withrespect to such agencies or branches in view of the fact that the assetsof the undertakings to which they belong are situated outside the
Community;
Whereas it is, however, desirable to permit the relaxation of such
special conditions, while observing the principle that such agenciesand 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 in pursuance of this Directive, subjectto the application of 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 collaborationbetween the Commission and the Member States in this field;
HAS ADOPTED THIS DIRECTIVE:
Title I— General provisions
Article 1
This Directive concerns the taking-up and pursuit of the self-employed
activity of direct insurance carried on by insurance undertakings whichare established in a Member State or which wish to become establishedthere in the classes of insurance defined in the Annex to this Directive.1973L0239 — EN — 27.07.1973 — 000.001 — 3
▼B
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, in particular, assurance on survival to a stipulated
age only, assurance on death only, assurance on survival to a
stipulated age or an earlier death, life assurance with return ofpremiums, 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 includingincapacity for employment, insurance against death resulting
from an accident, and insurance against disability resulting
from 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 to
cancellation’.
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, which shall be implemented
within four years of notification of this Directive, export creditinsurance operations for the account of or with the support ofthe State.
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 suretyshiprisks,
— 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.
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 the
ceding undertaking.
In such a case the concessionary undertaking shall be subject to the
rules of this Directive.1973L0239 — EN — 27.07.1973 — 000.001 — 4
▼B
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 effectof maintaining for the benefit of the new institution the territorialcapacity of the institutions which have merged, nor shall capacity
as to the classes of insurance be regarded as modified if one of
these institutions takes over in respect of the same territory one ormore 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,
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 Crown Agents.1973L0239 — EN — 27.07.1973 — 000.001 — 5
▼B
Article 5
For the purposes of this Directive:
(a) ‘Unit of account’ means that unit which is defined in Article 4 of
the Statute of the European Investment Bank;
(b) ‘Matching assets’ means the representation of underwriting liabil-
ities expressed in a particular currency by assets expressed or
realizable in the same currency;
(c) ‘Localization of assets’ means the existence of assets, whether
movable of immovable, within a Member State but shall not beconstrued as involving a requirement that movable property bedeposited or that immovable property be subjected to restrictivemeasures such as the registration of mortgages. Assets representedby 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-upof the business of
direct insurance in its territory subject to an official authorization.
2. Such authorization shall be sought from the competent authority
of the Member State in question by:
(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 in question;
(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 itsbusiness 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 applicantseeks permission to carry out his business only in a part of the nationalterritory.
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 theAnnex.
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, provided
that it attaches to such authorization the appropriate denomination
specified therein;
(b) An authorization given for one class or a groupof classes shall also
be valid for the purpose of covering ancillary risks included inanother class if the conditions specified in point C of the Annexare fulfilled;
(c) Pending further coordination, which must be implemented within
four years of notification of this Directive, the Federal Republic of1973L0239 — EN — 27.07.1973 — 000.001 — 6
▼B
Germany may maintain the provision prohibiting the simultaneous
undertaking in its territory of health insurance, credit and surety-shipinsurance or insurance in resp ect of recourse against third
parties and legal defence, either with one another or with other
classes.
Article 8
1. Each Member State shall require that any undertaking set upin its
territory for which an authorization is sought shall:
(a) Adopt one of the following forms:
— in the case of the Kingdom of Belgium:
‘société anonyme — naamloze vennootschap’, ‘société en
commandite par actions — vennootschap bij wijze van
geldschieting opaandelen’, ‘association d'assurance mutuelle —
onderlinge verzekeringsmaatschappij’, ‘société coopérative —cooperative vennootschap’,
— in the case of Denmark:
‘Aktieselskaber’, ‘gensidige selskaber’,
— in the case of the Federal Republic of Germany:
‘Aktiengesellschaft’, ‘Versicherungsverein auf Gegenseitigkeit’,
‘Öffentlich-rechtliches Wettbewerbs-Versicherungsunter-nehmen’,
— in the case of the French Republic:
‘société anonyme’, ‘société à forme mutuelle’, ‘mutuelle’,
‘union de mutuelles’,
— in the case of the Republic of Ireland:
‘incorporated companies limited by shares or by guarantee or
unlimited’,
— in the case of the Italian Republic:
‘società per azioni’, ‘società cooperativa’, ‘mutua di assicura-
zione’,
— in the case of the Grand Duchy of Luxembourg:
‘société anonyme’, ‘société en commandite par actions’, ‘asso-
ciation d'assurances mutuelles’, ‘société coopérative’,
— in the case of the Kingdom of the Netherlands:
‘naamloze vennootschap’, ‘onderlinge waarborgmaatschappij’,
‘coöperative vereniging’,
— 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 Friendly
Societies Act’ ►
C1the association of underwriters known as
Lloyd's◄.
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 conditionsequivalent 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 othercommercial 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, in the case referred to in Article 6 (2) (d), to anotherpart of the territory, shall be required to submit a scheme of operationsin accordance with the provisions of Article 9 as regards such otherclasses or other part of the territory.1973L0239 — EN — 27.07.1973 — 000.001 — 7
▼C1
▼B
▼B
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 higher
minimum 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 other
documents necessary for the normal exercise of supervision to be
approved.
4. The abovementioned provisions may not require that any applica-
tion for an authorization shall be dealt with in the light of the economicrequirements 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 financial
resources intended to cover them;
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) above
be required with regard to risks classified under Nos 14 and 15 of point
A 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 in Article 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 the1973L0239 — EN — 27.07.1973 — 000.001 — 8
▼B
agent has a legal personality, it must have its head office in the
host country and it must in its turn designate an individual to repre-sent it who complies with the above conditions. The designated
agent shall not be refused by the Member State except on grounds
relating to repute or technical qualifications such as apply to direc-tors of undertakings whose head offices are situated in the territoryof the State in question.
With regard to Lloyd's, in the event of any litigation in the host
country resulting from underwritten commitments, assured persons
must 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 thatcapacity 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 conditionscontained 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.
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 itproposes 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 financialresources intended to cover them;
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.
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 the risks classified under Nos 14 and 15 of
point A of the Annex. The particulars referred to in (a) and (b) need
not 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 businessfor three financial years it shall be required to furnish them only for thefinancial years completed.1973L0239 — EN — 27.07.1973 — 000.001 — 9
▼B
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, and
accompanied by an affidavit certifying that auditors' certificates have
been supplied in respect of each insurer and showing that the responsi-bilities incurred as a result of these operations are wholly covered bythe assets. These documents must allow authorities to form a view ofthe 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 the
competent authorities of the head office country. The latter authorities
shall communicate their Opinion to the former within three monthsfrom the receipt of the documents; if their Opinion has not beencommunicated upon the expiry of this time, it shall be deemed to befavourable.
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 provision for a right to apply to the
courts should there be any refusal.
Such provision shall also be made with regard to cases where to
competent authorities have not dealt with an application for an author-ization upon the expiry of a period of six months 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.
Article 14
The supervisory authority of the Member State in whose territory the
head office of the undertaking is situated must verify the state ofsolvency of the undertaking with respect to its entire business. The
supervisory authorities of the other Member States shall provide the
former with all the information necessary to enable such verificationto be effected.
Article 15
1. Each Member State in whose territory business is carried on shall
require the undertaking to establish sufficient technical reserves.
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 the
established practices in such State.
2. Technical reserves shall be required to be covered by equivalent
and matching assets localized in each country where business is carried
on. 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 technical
reserves 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 such1973L0239 — EN — 27.07.1973 — 000.001 — 10
▼B
case, 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 in whose territory
the head office of an undertaking is situated shall verify that its balancesheet shows in respect of the technical reserves assets equivalent to the
underwriting liabilities assumed in all the countries where it undertakes
business.
Article 16
1. Each Member State shall require every undertaking whose head
office is situated in its territory to establish an adequate solvencymargin 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,
— in the case of a mutual or mutual-type association with variable
contributions, any claim which it has against its members by wayof a call for supplementary contribution, within the financial year,upto one-half of the difference between the maximum contribu-
tions and the contributions actually called in, and subject to an
over-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 other
Member State where it carries on its business, any hidden reserves
resulting from under-estimation of assets or over-estimation ofliabilities in the balance sheet, in so far as such hidden reservesare 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 nationalregulations; however, pending further coordination of technicalreserves, an amount equivalent to 75 % of the difference between the
amount of the reserve for outstanding risks calculated at a flat rate by
the 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 anoption between the two methods, can be taken into account in thesolvency margin upto 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. In the case,
however, of undertakings which essentially underwrite only one or
more of the risks of storm, hail, frost, the last seven years shall betaken as the period of reference for the average burden of 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 then be deducted the total amount of
premiums or contributions cancelled in the last financial year, as1973L0239 — EN — 27.07.1973 — 000.001 — 11
▼B
well as the total amount of taxes and levies pertaining to the
premiums 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 second
comprising the excess; 18 % and 16 % of these portions respectivelyshall 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 theamount of claims remaining to be borne by the undertaking after
deduction of transfers for reinsurance and the gross amount of claims;
this ratio may in no case be less than 50 %.
Second result (claims basis):
— the amounts of claims paid in respect of direct business (without
any deduction of claims borne by reinsurers and retrocessionaires)
in the 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,
— 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 the
commencement of the second financial year preceding the lastfinancial year for which there are accounts, both for direct businessand 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 two
portions, the first extending up to seven million units of account and
the 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 transfers
for reinsurance and the gross amount of claims; this ratio may in nocase be less than 50 %.
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 ona similar technical basis to that of life assurance, if
— the premiums paid are calculated on the basis of sickness tables
according to the mathematical method applied in insurance,
— a reserve is set upfor increasing age,— an additional premium is collected in order to set up a safety
margin of an appropriate amount,
— 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. In the case of Lloyd's, the calculation of the first result in respect
of premiums, referred to in paragraph 3, shall be made on the basis of
net premiums, which shall be multiplied by a flat-rate percentage fixed
annually by ►
C1the supervisory authority of the head office. ◄This
flat-rate percentage must be calculated on the basis of the most recentstatistical data on commissions paid.
The details, together with the relevant calculations shall be sent to the
authorities of the countries where Lloyd's is established.1973L0239 — EN — 27.07.1973 — 000.001 — 12
▼B
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:
— 400 000 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 10, 11, 12, 13, 14 and 15 are covered,
— 300 000 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 1, 2, 3, 4, 5, 6, 7, 8, and 16 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 the
Annex 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 associations
and mutual-type associations.
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 in Article 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 restrainthe 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 upand p ursuit of the businessof life assurance maintain, with respect to health insurance within themeaning of Article 16 (4), the restrictions imposed on the free disposal
of assets in so 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 coverpensions 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 and solvency.
2. Member States shall require undertakings operating in their terri-
tory to render periodically the returns, together with statisticaldocuments, which are necessary for the purposes of supervision. Thecompetent supervisory authorities shall furnish each other with the
documents and 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 afterhaving informed the supervisory authorities of the country where thehead office is situated of its intention.1973L0239 — EN — 27.07.1973 — 000.001 — 13
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2. For the purposes of restoring the financial situation of an under-
taking whose solvency margin has fallen below the minimum requiredunder Article 16 (3), the supervisory authority of the head-office
country shall require a plan for the restoration of a sound financial
position to be submitted for its approval.
3. If the solvency margin falls below the guarantee fund as defined
in Article 17, the supervisory authority of the head-office country 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 and
the 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 cases
provided for in (1) and (3).
5. The supervisory authorities of other Member States in whose
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
assign all or part of its portfolio of policies if the assignees possessthe 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.
SectionC: Withdrawalofauthorization
Article 22
1. The authorization granted by the competent authority of the
Member State in whose territory the head office is situated may bewithdrawn by such authority if the undertaking:
(a) No longer fulfils the conditions of admission;
(b) Has been unable, within the time allowed, to take the measures
contained in the restoration plan or finance scheme referred to inArticle 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 to
the supervisory authorities of other Member States which have issued
an authorization to the undertaking; they shall, thereupon, also with-draw their authorizations. The supervisory authority of the head-officecountry shall, in conjunction with such other authorities, take all neces-sary measures to safeguard the interests of the insured and, in
particular, 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 15.1973L0239 — EN — 27.07.1973 — 000.001 — 14
▼B
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 they
deem it necessary to suspend the business of such agency or branch
before consultation is concluded, they shall immediately advise thesupervisory 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 undertaking
in question.
Each Member State shall make provision for 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 the
Community 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 undertakesthere, and to keepthere all the records relating to the business
transacted;
(d) It designates an authorized agent, to be approved by the competent
authorities;
(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 amount
prescribed in Article 17 (2), in respect of the guarantee fund, and
deposits one-fourth of the minimum amount as security;
(f) It undertakes to keepa 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 theirterritories. Member States shall see that the agency or branch covers
such technical reserves by means of assets which are equivalent to
such 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 calculation of
technical reserves, the determination of categories of investments, and
the valuation of 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 allforeseeable 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 be1973L0239 — EN — 27.07.1973 — 000.001 — 15
▼B
taken only of the premiums or contributions and claims pertaining to
the 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 in
accordance 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 upto the amount of theguarantee fund and the excess, within the Community.
Article 26
1. Any undertaking which, having obtained an authorization from
one Member State, obtains an authorization from one or more other
Member States to establish other agencies or branches therein mayapply for one or more of the following advantages:
(a) That the solvency margin referred to in Article 25 be calculated in
relation to the entire business which it undertakes within theCommunity; in such case, account shall be taken of the premiumsor contributions and claims pertaining to the business effected by
all the agencies or branches established within the Community;
(b) That it be dispensed from lodging the deposit required under
Article 23 (2) (e), in such States also;
(c) That the assets representing the guarantee fund be kept in any one
of the Member States in which it carries out business.
2. Should at least two of the Member States in question approve the
application in whole or in part, the competent authority of the MemberState in whose territory the oldest establishment of the applicant is situ-
ated shall verify the state of solvency of the undertaking with respect to
the entire business carried on by it within the Member States whichapprove the application. However, at the request of the undertakingand with the unanimous approval of the Member States concerned,such verification may be carried out by the competent authority of
another Member State. The authority carrying out the verification shall
obtain from the other Member States the necessary informationregarding the agencies or branches established in their territories.
3. The advantages conferred by this Article may be withdrawn upon
the initiative of one or more of the 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, the supervisory authority of
the oldest establishment or the one that carries out in its place the veri-
fication of the overall solvency of branches or agencies shall beassimilated to the authority of the State in which the head office of aCommunity undertaking is situated.
Article 28
In the case of a withdrawal of authorization by the authority referred to
in Article 26 (2), this authority shall notify the authorities of the otherMember States where the undertaking operates and the latter supervi-sory authorities shall take the appropriate measures. If the reason forthe withdrawal of the authorization is the inadequacy of the overallstate of solvency as fixed by the Member States which agreed to the
request referred to in Article 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 application1973L0239 — EN — 27.07.1973 — 000.001 — 16
▼B
of 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 this
Directive provide insurance in their territories in one or more of the
classes referred to in Article 1 a period of five years, commencingwith the date of notification of this Directive, in order to comply withthe 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 of
solvency, a further period not exceeding two years in which to do
so provided that such undertakings have, in accordance with Article20, 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 fundrequired under Article 17 (2) from the requirement to establishsuch 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 ten years 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 the
notification 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 upin 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 periodof three years from the date of notification of this Directive.
The Member States in question shall draw upa list of such undertak-
ings and communicate it to the other Member States and the
Commission.
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 andsecurities 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 this1973L0239 — EN — 27.07.1973 — 000.001 — 17
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Directive, are undertaking one or more classes referred to in Article 1
and 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 andat the latest upon the expiry of a period of four years after the notifica-tion of the Directive, each Member State may retain in favour 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 in its territory are not 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 in the application of this Directive.
Article 34
1. The Commission shall submit to the Council, within six 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 in Article 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 — 27.07.1973 — 000.001 — 18
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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 than railway rolling 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 in transit or baggage, irrespective of the
form of transport
8.Fire and natural forces
All damage to or loss of property (other than property included 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 than property included 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 — 27.07.1973 — 000.001 — 19
▼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 litigationThe risks included in a class may not be included in any other class
except in the cases referred to in point C.
B.Description of authorizations granted for more than one class of insur-
ance
Where the authorization simultaneously 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 SuretyshipInsur-
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.
C.Ancillaryrisks
An undertaking obtaining an authorization for a principal risk belonging to
one class or a groupof 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, and1973L0239 — EN — 27.07.1973 — 000.001 — 20
▼B
— are covered by the contract insuring the principal risk.
However, the risks included in classes 14 and 15 in point A of this Annex
may not be regarded as risks ancillary to other classes.1973L0239 — EN — 27.07.1973 — 000.001 — 21