1988L0357 — EN — 20.11.1990 — 001.001 — 1
This document is meant purely as a documentation tool and the institutions do not assume any liability for its contents
►B SECOND COUNCIL DIRECTIVE
of 22 June 1988
on the coordination of laws, regulations and administrative provisions relating to direct insurance
other than life assurance and laying down provisions to facilitate the effective exercise of freedom
to provide services and amending Directive 73/239/EEC
(88/357/EEC)
(OJ L 172, 4.7.1988, p. 1)
Amended by:
Official Journal
No page date
►M1Council Directive 90/618/EEC of 8 November 1990 L 330 44 29.11.1990
▼B
SECOND COUNCIL DIRECTIVE
of 22 June 1988
on the coordination of laws, regulations and administrative provi-
sions relating to direct insurance other than life assurance andlaying down provisions to facilitate the effective exercise of freedom
to provide services and amending Directive 73/239/EEC
(88/357/EEC)
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the European Economic
Community, and in particular Articles57 (2) and 66 thereof,
Having regard to the proposal from the Commission(1),
In cooperation with the European Parliament(2),
Having regard to the opinion of the Economic and Social
Committee(3),
Whereas it is necessary to develop the internal insurance market and, to
achieve this objective, it is desirable to make it easier for insuranceundertakingshaving their head office in the Community to provideservices in the Member States, thus making it possible for policy-
holders to have recourse not only to insurers established in their own
country, but also to insurers which have their head office in theCommunity and are established in other Member States;
Whereas, pursuant to the Treaty, any discrimination with regard to
freedom to provide services based on the fact that an undertaking isnot established in the Member State in which the services are providedhas been prohibited since the end of the transitional period; whereasthis prohibition applies to services provided from any establishment inthe Community, whether it isthe head office of an undertaking or an
agency or branch;
Whereas, for practical reasons, it is desirable to define the provision of
services taking into account both the insurer's establishment and the
place where the risk is situated; whereas therefore a definition of the
situation of the risk should also be adopted; whereas, moreover, it isdesirable to distinguish between the activity pursued by way of estab-lishment and the activity pursued by way of freedom to provideservices;
Whereas it is desirable to supplement the First Council Directive 73/
239/EEC of 24 July 1973 on the coordination of laws, regulations andadministrative provisions relating to the taking-up and pursuit of thebusiness of direct insurance other than life assurance(
4), hereinafter
referred to as the ‘first Directive’, as last amended by Directive 87/
343/EEC(5), in order particularly to clarify the powersand meansof
supervision vested in the supervisory authorities; whereas it is alsodesirable to lay down specific provisions regarding the taking-up,pursuit and supervision of activity by way of freedom to provideservices;
Whereas policy-holders who, by virtue of their status, their size or the
nature of the risk to be insured, do not require special protection in theState in which the risk is situated should be granted complete freedom
to avail themselves of the widest possible insurance market; whereas,
moreover, it isdes irable to guarantee other policy-holdersadequateprotection;1988L0357 — EN — 20.11.1990 — 001.001 — 2
(1) OJ No C 32, 12. 2. 1976, p. 2.
(2) OJ No C 36, 13. 2. 1978, p. 14, OJ No C 167, 27. 6. 1988 and Decision of
15 June 1988 (not yet published in the Official Journal).
(3) OJ No C 204, 30. 8. 1976, p. 13.
(4) OJ No L 228, 16. 8. 1973, p. 3.
(5) OJ No L 185, 4. 7. 1987, p. 72.
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Whereasthe concern to protect policy-holdersand to avoid any dis tur-
bance of competition justifies coordinating the relaxation of thematching assets rules, provided for by the first Directive;
Whereas the provisions in force in the Member States regarding insur-
ance contract law continue to differ; whereasthe freedom to choos e, asthe law applicable to the contract, a law other than that of the State inwhich the risk is situated may be granted in certain cases, in accor-dance with rules taking into account specific circumstances;
Whereas the scope of this Directive should include compulsory insur-
ance but should require the contract covering such insurance to be in
conformity with the specific provisions relating to such insurance, asprovided by the Member State imposing the insurance obligation;
Whereas the provisions of the first Directive on the transfer of portfolio
should be reinforced and supplemented by provisions specificallycovering the transfer of the portfolio of contracts concluded for the
provision of services to another undertaking;
Whereas the scope of the provisions specifically concerning freedom to
provide services should exclude certain risks, the application to whichof the said provisions is rendered inappropriate at this stage by thespecific rules adopted by the Member States' authorities, owing to thenature and social implications of such provisions; whereas, therefore,
these exclusions should be re-examined after this Directive has been
in force for a certain period;
Whereas, in the interests of protecting policy-holders, Member States
should, at the present stage in coordination, be allowed the option oflimiting the simultaneous pursuit of activity by way of freedom toprovide services and activity by way of establishment; whereas no
such limitation can be provided for where policy-holders do not require
thisprotection;
Whereas the taking-up and pursuit of freedom to provide services
should be subject to procedures guaranteeing the insurance undertak-ing'scompliance with the provis ionsregarding both financialguarantees and conditions of insurance; whereas these procedures may
be relaxed in cases where the activity by way of provision of services
covers policy-holders who, by virtue of their status, their size or thenature of the risk to be insured, do not require special protection inthe State in which the risk is situated;
Whereas it is necessary to initiate special cooperation with regard to
freedom to provide services between the competent supervisory autho-ritiesof the Member Statesand between thes e authoritiesand the
Commission; whereas provision should also be made for a system of
penaltiesto apply where the undertaking providing the s ervice failstocomply with the provisions of the Member State of provision ofservice;
Whereas, pending future coordination, the technical reserves should be
subject to the rules and supervision of the Member State of provision
of services where such provision of services involves risks in respect of
which the State receiving the service wishes to provide special protec-tion for policy-holders; whereas, however, if such concern to protectthe policy-holders is unjustified, the technical reserves continue to besubject to the rules and supervision of the Member State in which the
insurer is established;
Whereas some Member States do not subject insurance transactions to
any form of indirect taxation, while the majority apply special taxesand other formsof contribution, including s urchargesintended forcompensation bodies; whereas the structure and rate of these taxesand contributionsvary cons iderably between the Member Statesin
which they are applied; whereas it is desirable to avoid a situation
where existing differences lead to disturbances of competition in insur-ance services between Member States; whereas, pending futureharmonization, the application of the tax system and of other forms ofcontributionsprovided for by the Member State in which the ris k issituated is likely to remedy such mischief and whereas it is for the1988L0357 — EN — 20.11.1990 — 001.001 — 3
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Member States to establish a method of ensuring that such taxes and
contributionsare collected;
Whereasit isdes irable to prevent the uncoordinated application of this
Directive and of Council Directive 78/473/EEC of 30 May 1978 on thecoordination of laws, regulations and administrative provisions relatingto Community co-insurance(
1) from leading to the existence of three
different systems in every Member State; whereas, therefore, the
criteria defining ‘large risks’ in this Directive should also define risks
likely to be covered under Community co-insurance arrangements;
Whereasit isdes irable to take into account, within the meaning of
Article 8C of the Treaty, the extent of the effort which needsto bemade by certain economiess howing differencesin development;
whereas, therefore, it is desirable to grant certain Member States transi-
tional arrangementsfor the gradual application of the s pecificprovisions of this Directive relating to freedom to provide services,
HAS ADOPTED THIS DIRECTIVE:
TITLE I
General provisions
Article 1
The object of thisDirective is :
(a) to supplement the first Directive 73/239/EEC;
(b) to lay down special provisions relating to freedom to provide
services for the undertakings and in respect of the classes of insur-ance covered by that first Directive.
Article 2
For the purposes of this Directive:
(a) ‘first Directive’ means:
Directive 73/239/EEC;
(b) ‘undertaking’:
— for the purposes of applying Titles I and II, means:
any undertaking which hasreceived official authorization under
Article 6 or 23 of the first Directive,
— for the purposes of applying Title III and Title V, means:
any undertaking which hasreceived official authorization under
Article 6 of the first Directive;
(c) ‘establishment’:
meansthe head office, agency or branch of an undertaking, account
being taken of Article 3;
(d) ‘Member State where the risk is situated’ means:
— the Member State in which the property iss ituated, where the
ins urance relateseither to buildingsor to buildingsand their
contents, in so far as the contents are covered by the sameinsurance policy,
— the Member State of registration, where the insurance relates to
vehiclesof any type,
— the Member State where the policy-holder took out the policy
in the case of policies of a duration of four months or less
covering travel or holiday risks, whatever the class concerned,
— the Member State where the policy-holder hashishabitual res i-
dence or, if the policy-holder isa legal pers on, the MemberState where the latter's establishment, to which the contract1988L0357 — EN — 20.11.1990 — 001.001 — 4
(1) OJ No L 151, 7. 6. 1978, p. 25.
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relates, is situated, in all cases not explicitly covered by the
foregoing indents;
(e) ‘Member State of establishment’ means:
the Member State in which the establishment covering the risk is
situated;
(f) ‘Member State of provision of services’ means:
the Member State in which the risk is situated when it is covered
by an establishment situated in another Member State.
Article 3
For the purposes of the first Directive and of this Directive, any perma-
nent presence of an undertaking in the territory of a Member State shallbe treated in the same way as an agency or branch, even if thatpresence does not take the form of a branch or agency, but consists
merely of an office managed by the undertaking'sown s taff or by a
person who is independent but has permanent authority to act for theundertaking asan agency would.
Article 4
For the purposes of this Directive and the first Directive, general and
special policy conditions shall not include specific conditions intendedto meet, in an individual case, the particular circumstances of the riskto be covered.
TITLE II
Provisions supplementary to the first Directive
Article 5
The following isadded to Article 5 of the firs t Directive:
‘(d) “large risks” means:
(i) risks classified under classes 4, 5, 6, 7, 11 and 12 of point
A of the Annex;
(ii) risks classified under classes 14 and 15 of point A of the
Annex, where the policy-holder is engaged professionally
in an industrial or commercial activity or in one of the
liberal professions, and the risks relate to such activity;
(iii) risks classified under classes 8, 9, 13 and 16 of point A of
the Annex in so far as the policy-holder exceeds the limitsof at least two of the following three criteria:
first stage: until 31 December 1992:
— balance-sheet total: 12,4 million ECU,
— net turnover: 24 million ECU,
— average number of employeesduring the financial
year: 500.
second stage: from 1 January 1993:
— balance-sheet total: 6,2 million ECU,
— net turnover: 12,8 million ECU,
— average number of employeesduring the financial
year: 250.
If the policy-holder belongsto a group of undertakingsfor
which consolidated accounts within the meaning of Direc-tive 83/349/EEC(
1) are drawn up, the criteria mentioned
above shall be applied on the basis of the consolidated
accounts.
Each Member State may add to the category mentioned
under (iii) risks insured by professional associations, jointventuresor temporary groupings .’1988L0357 — EN — 20.11.1990 — 001.001 — 5
(1) OJ No L 193, 18. 7. 1983, p. 1.
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Article 6
For the purposes of applying the first subparagraph of Article 15 (2)
and Article 24 of the first Directive, the Member States shall complywith Annex 1 to thisDirective asregardsthe matching rules .
Article 7
1. The law applicable to contractsof ins urance referred to by this
Directive and covering risks situated within the Member States is deter-mined in accordance with the following provisions:
(a) Where a policy-holder hashishabitual res idence or central admin-
istration within the territory of the Member State in which the riskis situated, the law applicable to the insurance contract shall be thelaw of that Member State. However, where the law of that Member
State so allows, the parties may choose the law of another country.
(b) Where a policy-holder doesnot have hishabitual res idence or
central administration in the Member State in which the risk is situ-ated, the parties to the contract of insurance may choose to applyeither the law of the Member State in which the risk is situated orthe law of the country in which the policy-holder hashishabitual
residence or central administration.
(c) Where a policy-holder pursues a commercial or industrial activity
or a liberal profession and where the contract covers two or more
risks relating to these activities and situated in different MemberStates, the freedom of choice of the law applicable to the contractshall extend to the laws of those Member States and of the countryin which the policy-holder hashishabitual res idence or central
administration.
(d) Notwithstanding subparagraphs (b) and (c), where the Member
States referred to in those subparagraphs grant greater freedom ofchoice of the law applicable to the contract, the partiesmay takeadvantage of thisfreedom.
(e) Notwithstanding subparagraphs (a), (b) and (c), when the risks
covered by the contract are limited to eventsoccurring in oneMember State other than the Member State where the risk is situ-
ated, asdefined in Article 2 (d), the partiesmay alwayschoos e the
law of the former State.
(f) For the risks referred to in Article 5 (d) (i) of the first Directive,
the partiesto the contract may choos e any law.
(g) The fact that, in the cases referred to in subparagraph (a) or (f), the
parties have chosen a law shall not, where all the other elementsrelevant to the situation at the time of the choice are connectedwith one Member State only, prejudice the application of the
mandatory rulesof the law of that Member State, which means
the rulesfrom which the law of that Member State allowsno dero-gation by meansof a contract.
(h) The choice referred to in the preceding subparagraphs must be
expressed or demonstrated with reasonable certainty by the termsof the contract or the circumstances of the case. If this is not so,or if no choice hasbeen made, the contract s hall be governed by
the law of the country, from amongst those considered in the rele-
vant subparagraphs above, with which it is most closely connected.Nevertheless, a severable part of the contract which has a closerconnection with another country, from amongst those consideredin the relevant subparagraphs, may by way of exception begoverned by the law of that other country. The contract shall be
rebuttably presumed to be most closely connected with the Member
State in which the risk is situated.
(i) Where a State includes several territorial units, each of which has
itsown rulesof law concerning contractual obligations , each unitshall be considered as a country for the purposes of identifyingthe law applicable under thisDirective.
A Member State in which variousterritorial unitshave their own
rulesof law concerning contractual obligationss hall not be bound1988L0357 — EN — 20.11.1990 — 001.001 — 6
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to apply the provisions of this Directive to conflicts which arise
between the laws of those units.
2. Nothing in this Article shall restrict the application of the rules of
the law of the forum in a situation where they are mandatory, irrespec-tive of the law otherwise applicable to the contract.
If the law of a Member State so stipulates, the mandatory rules of the
law of the Member State in which the risk is situated or of the Member
State imposing the obligation to take out insurance may be applied if
and in so far as, under the law of those States, those rules must beapplied whatever the law applicable to the contract.
Where the contract covers risks situated in more than one Member
State, the contract is considered for the purposes of applying this para-
graph as constituting several contracts each relating to only one
Member State.
3. Subject to the preceding paragraphs, the Member States shall
apply to the insurance contracts referred to by this Directive theirgeneral rulesof private international law concerning contractual obliga-
tions.
Article 8
1. Under the conditions set out in this Article, insurance undertak-
ings may offer and conclude compulsory insurance contracts inaccordance with the rulesof thisDirective and of the firs t Directive.
2. When a Member State imposes an obligation to take out insur-
ance, the contract shall not satisfy that obligation unless it is inaccordance with the specific provisions relating to that insurance laiddown by that Member State.
3. When, in the case of compulsory insurance, the law of the
Member State in which the risk is situated and the law of the Member
State imposing the obligation to take out insurance contradict eachother, the latter shall prevail.
4. (a) Subject to subparagraphs (b) and (c) of this paragraph, the third
subparagraph of Article 7 (2) shall apply where the insurance
contract providescover in s everal Member Statesof which at
least one imposes an obligation to take out insurance.
(b) A Member State which, on the date of notification of thisDirec-
tive, requires that any undertaking established within its territory
must obtain approval for the general and special conditions of itscompulsory insurance, may also, by way of derogation fromArticles9 and 18, require s uch conditionsto be approved inthe case of any insurance undertaking offering such cover,
within itsterritory, under the conditionsprovided for in Article
12 (1).
(c) A Member State may, by way of derogation from Article 7, lay
down that the law applicable to a compulsory insurance contract
isthe law of the State which impos esthe obligation to take outinsurance.
(d) Where a Member State imposes compulsory insurance and the
insurer must notify the competent authorities of any cessationof cover, such cessation may be invoked against injured thirdparties only in the circumstances laid down in the legislation ofthat State.
5. (a) Each Member State shall communicate to the Commission the
risks against which insurance is compulsory under its legislation,stating:
— the specific legal provisions relating to that insurance,
— the particularswhich mus t be given in the certificate which
an insurer must issue to an insured person where that Staterequiresproof that the obligation to take out ins urance hasbeen complied with. A Member State may require that thoseparticularsinclude a declaration by the ins urer to the effect1988L0357 — EN — 20.11.1990 — 001.001 — 7
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that the contract complies with the specific provisions
relating to that insurance.
(b) The Commission shall publish the particulars referred to in
subparagraph (a) in the Official Journal of the European
Communities .
(c) A Member State shall accept, as proof that the insurance obliga-
tion hasbeen fulfilled, a certificate, the content of which isin
conformity with the second indent of subparagraph (a).
Article 9
1. The last subparagraph of Article 9 and the last subparagraph of
Article 11 (1) of the first Directive are replaced by the following:
‘However, the information referred to in (a) and (b) concerning the
general and special conditions and the scales of premiums shall notbe required in the case of risks referred to in Article 5 (d).’
2. Article 8 (3) and Article 10 (3) of the first Directive are replaced
by the following:
‘3. Thiscoordination s hall not prevent the Member Statesfrom
maintaining or introducing laws, regulations or administrative provi-sions concerning, in particular, the necessity for managers and
directorsto be technically qualified and the approval of articlesof
association, the general and special conditions of insurance policies,the scales of premiums and any other document necessary for thenormal exercise of supervision.
However, with regard to the risks referrred to in Article 5 (d), Member
States shall not lay down provisions requiring the approval orsystematic notification of general and special policy conditions, scalesof premiums, or forms and other printed documents which the under-
taking intends to use in its dealings with policy-holders. They may
require only non-systematic notification of these conditions and otherdocuments, for the purpose of verifying compliance with laws, regula-tions and administrative provisions in respect of such risks, and thisrequirement may not constitute a prior condition for an undertaking to
be able to carry on itsactivities .
With regard to the risks referred to in Article 5 (d), Member States
may not retain or introduce prior notification or approval of proposed
increases in premium rates except as part of a general price control
system.
This coordination shall also not prevent Member States from subjecting
undertakings requesting or having obtained authorization for class 18 inpoint A of the Annex to checkson their direct or indirect res ourcesinstaff and equipment, including the qualification of their medical teamsand the quality of the equipment, available to the undertakingsto meet
their commitments arising from this class of insurance.’
Article 10
The following paragraph isadded to Article 19 of the firs t Directive:
‘3. Each Member State shall take all steps necessary to ensure that
the authorities responsible for supervising insurance undertakings havethe powers and means necessary for supervision of the activities ofinsurance undertakings established within their territory, includingactivitiesengaged in outs ide that territory, in accordance with theCouncil Directives governing those activities and for the purpose of
seeing that they are implemented.
Those powers and means must, in particular, enable the supervisory
authoritiesto:
— make detailed inquiriesabout the undertaking'ss ituation and the
whole of its business, inter alia by:
— gathering information or requiring the submission of documents
concerning insurance business,1988L0357 — EN — 20.11.1990 — 001.001 — 8
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— carrying out on-the-spot investigations at the undertaking's
premises,
— take any measures with regard to the undertaking which are appro-
priate and necessary to ensure that the activities of the undertakingremain in conformity with the laws, regulations and administrativeprovisions with which the undertaking has to comply in eachMember State and in particular with the scheme of operations inso far as it remains mandatory, and to prevent, or remove any irre-
gularities prejudicial to the interests of policy-holders,
— ensure that measures required by the supervisory authorities are
carried out, if need be by enforcement, where appropriate throughjudicial channels.
Member States may also make provision for the supervisory authorities
to obtain any information regarding contractswhich are held by inter-mediaries.’
Article 11
1. Article 21 of the first Directive is hereby deleted.
2. Each Member State shall, on the conditions laid down by national
law, authorize undertakings which are established within its territory totransfer all or part of their portfolios of contracts for which that State isthe State where the risk is situated to an accepting office established inthat same Member State, if the supervisory authorities of the Member
State in which the head office of the accepting office islocated certify
that the latter possesses the necessary margin of solvency after takingthe transfer into account.
3. Each Member State shall, on the conditions laid down by national
law, authorize undertakings established within its territory to transfer
all or part of their portfoliosof contractsconcluded in the circum-stances referred to in Article 12 (1) to an accepting office establishedin the Member State of provision of services if the supervisory autho-ritiesof the Member State in which the head office of the acceptingoffice is located certify that the latter possesses the necessary margin
of solvency after taking the transfer into account.
4. Each Member State shall, on the conditions laid down by national
law, authorize undertakings established within its territory to transferall or part of their portfoliosof contractsconcluded in the circum-
stances referred to in Article 12 (1) to an accepting office established
in the same Member State if the supervisory authorities of the MemberState in which the head office of the accepting office islocated certifythat the accepting office possesses the necessary margin of solvencyafter taking the transfer into account and if it fulfils the conditions in
Articles 13 to 16 in the Member State of provision of services.
5. In the cases referred to in paragraphs 3 and 4, the supervisory
authoritiesof the Member State in which the trans ferring undertakingis established shall authorize the transfer after obtaining the agreement
of the supervisory authorities of the Member State of provision of
services.
6. If a Member State, on the conditionslaid down by national law,
authorizes undertakings established within its territory to transfer all or
part of their portfolios of contracts to an accepting office established in
another Member State which isnot the Member State of provis ion ofservices, it shall ensure that the following conditions are fulfilled:
— the supervisory authorities of the Member State in which the head
office of the accepting office islocated s hall certify that the latterpossesses the necessary margin of solvency after taking the transferinto account,
— the Member State in which the accepting office is established
agrees,
— the accepting office fulfilsthe conditionsin Articles13 to 16 in the
Member State of provision of services, the law of that MemberState provides for the possibility of such a transfer and that MemberState agreesto the trans fer.1988L0357 — EN — 20.11.1990 — 001.001 — 9
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7. A transfer authorized in accordance with this Article shall be
published, under the conditions laid down by national law, in theMember State in which the risk is situated. Such transfer shall be auto-
matically valid against the policy-holders, the insured persons and any
other person having rights and obligations arising out of the contractstransferred.
This provision shall not affect the right of Member States to provide
policy-holderswith the option of cancelling the contract within a givenperiod after the transfer.
TITLE III
Provisions peculiar to the freedom to provide services
Article 12
1. This Title shall apply where an undertaking, through an establish-
ment situated in a Member State, covers a risk situated, within themeaning of Article 2 (d), in another Member State; the latter shall be
the Member State of provision of services for the purposes of this Title.
2. This Title shall not apply to the transactions, undertakings and
institutions to which the first Directive does not apply, nor to the risksto be covered by the institutions under public law referred to in Article4 of that Directive.
This Title shall not apply to insurance contracts covering risks classi-
fied under the following numbersof point A of the Annex to the firs tDirective:
—N o1 :
asregardsaccidentsat work,
— No 13:
asregardsnuclear civil liability and pharmaceutical productsliabi-
lity,
— Nos9 and 13:
as regards compulsory insurance of building works.
These exclusions will be examined by the Council not later than 1 July
1998.
3. Pending the coordination referred to in Article 7 (2) (c) of the
first Directive, the Federal Republic of Germany may retain the prohi-bition on the simultaneous undertaking in its territory, under thearrangements for the provision of services, of health insurance with
other classes.
Article 12a
1. This Article shall apply where an undertaking, through an estab-
lishment situated in a Member State, covers a risk, other than carrier's
liability, classified under class 10 of point A of the Annex to Directive73/239/EEC which iss ituated in another Member State.
2. The Member State of provision of services shall require the
undertaking to become a member of and participate in the financingof itsnational bureau and itsnational guarantee fund.
The undertaking shall not, however, be required to make any payment
or contribution to the bureau and fund of the Member State of provi-
sion of services in respect of risks covered by way of provision of
services other than one calculated on the same basis as for undertakingscovering risks, other than carrier's liability, in class 10 through anestablishment situated in that Member State, by reference to itspremium income from that class in that Member State or the numberof risks in that class covered there.1988L0357 — EN — 20.11.1990 — 001.001 — 10
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3. This Directive shall not prevent an insurance undertaking
providing services from being required to comply with the rules in theMember State of provision of services concerning the cover of aggra-
vated risks, insofar as they apply to established undertakings.
4. The Member State of provision of services shall require the
undertaking to ensure that persons pursuing claims arising out of eventsoccurring in its territory are not placed in a less favourable situation asa result of the fact that the undertaking is covering a risk, other thancarrier's liability, in class 10 by way of provision of services rather
than through an establishment situated in that State.
For this purpose, the Member State of provision of services shall
require the undertaking to appoint a representative resident or estab-lished in its territory who shall collect all necessary information inrelation to claims, and shall possess sufficient powers to represent theundertaking in relation to persons suffering damage who could pursueclaims, including the payment of such claims, and to represent it or,
where necessary, to have it represented before the courts and authori-
ties of that Member State in relation to these claims.
The representative may also be required to represent the undertaking
before the competent authorities of the State of provision of serviceswith regard to checking the existence and validity of motor vehicleliability insurance policies.
The Member State of provision of services may not require that
appointee to undertake activitieson behalf of the undertaking which
appointed him other than those set out in the second and third subpar-agraphs. The appointee shall not take up the business of directinsurance on behalf of the said undertaking.
The appointment of the representative shall not in itself constitute the
opening of a branch or agency for the purpose of Article 6 (2) (b) ofDirective 73/239/EEC and the representative shall not be an establish-
ment within the meaning of Article 2 (c) of thisDirective.
Article 13
Member States' legislation shall provide that an undertaking established
in a Member State may cover within that State, by way of provision ofservices, at least:
— large risks as defined in Article 5 (d) of the first Directive,
— risks other than those defined in Article 5 (d) of the first Directive
coming within classes for which its establishment there has noauthorization.
Article 14
Any undertaking which intends to provide services shall first inform
the competent authoritiesof the head office Member State, and, where
appropriate, of the Member State of the establishment concerned, indi-
cating the Member State or Member Stateswithin the territory ofwhich it contemplates providing services and the nature of the riskswhich it proposes to cover.
Those authorities may require provision of the information or proof
referred to in Article 9 or 11 of the first Directive.
Article 15
1. Subject to the provisions of Article 16, each Member State within
the territory of which an undertaking intendsto provide s ervicesmay
make access to such activity subject to administrative authorization; to
that end, it may require that the undertaking:
(a) produce a certificate issued by the competent authorities of the
head office Member State attesting that it possesses for its activitiesasa whole the minimum s olvency margin calculated in accordancewith Articles16 and 17 of the firs t Directive and that the authori-zation, in accordance with Article 7 (1) of the said Directive,1988L0357 — EN — 20.11.1990 — 001.001 — 11
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enablesthe undertaking to operate outs ide the Member State of
establishment;
(b) produce a certificate issued by the competent authorities of the
Member State of establishment indicating the classes which the
undertaking has been authorized to practise and attesting that those
authorities do not object to the undertaking providing services;
(c) submit a scheme of operations containing the following particulars
— the nature of the risks which the undertaking proposes to cover
in the Member States of provision of services,
— the general and special conditions of the insurance policies
which it proposes to use there,
— the premium rateswhich the undertaking envis agesapplying for
each class of business,
— the formsand other printed documentswhich it intendsto us e
in its dealings with policy-holders, in so far as these are alsorequired of established undertakings.
Each Member State within the territory of which an undertaking
intends to provide services covering risks in class 10, other thancarrier'sliability, may require that the undertaking:
— notify the name and address of the claims representative referred to
in Article 12a (4);
— produce a declaration that the undertaking hasbecome a member of
the national bureau and the national guarantee fund of the MemberState of provision of services.
2. The competent authoritiesof the Member State of provis ion of
services may require that the particulars referred to in paragraph 1 (c)be supplied to them in the official language of that State.
3. The competent authoritiesof the Member State of provis ion of
services shall have a period of six months from receipt of the docu-mentsreferred to in paragraph 1 in which to grant or refus eauthorization on the basis of the compliance or non-compliance of the
particulars in the scheme of operations submitted by the undertaking
with the laws, regulations and administrative provisions applicable inthat State.
4. If the competent authoritiesof the Member State of provis ion of
services have not given a decision by the end of the period referred to
in paragraph 3, authorization shall be deemed to be refused.
5. Any decision to refuse authorization or to refuse a certificate as
referred to in paragraph 1 (a) or (b) must be accompanied by the
precise grounds and communicated to the undertaking in question.
6. Each Member State shall institute the right to take legal action in
the courts against a refusal of authorization or refusal to issue the certi-ficate referred to in paragraph 1 (a) or (b).
Article 16
1. Each Member State within the territory of which an undertaking
intends to provide services covering the risks referred to in Article 5
(d) of the first Directive shall require that the undertaking:
(a) produce a certificate issued by the competent authorities of the
head office Member State attesting that it possesses for its activitesasa whole the minimum s olvency margin calculated in accordance
with Articles16 and 17 of the firs t Directive and that the authori-
zation, in accordance with Article 7 (1) of the said Directive,enablesthe undertaking to operate outs ide the Member State ofestablishment;
(b) produce a certificate issued by the competent authorities of the
Member State of establishment indicating the classes which theundertaking has been authorized to practice and attesting that thoseauthorities do not object to the undertaking providing services;1988L0357 — EN — 20.11.1990 — 001.001 — 12
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(c) state the nature of the risks which it proposes to cover in the
Member State of provision of services.
Each Member State within the territory of which an undertaking
intends to provide services covering risks in class 10, other thancarrier'sliability, may require that the undertaking:
— notify the name and address of the claims representative referred to
in Article 12a (4);
— produce a declaration that the undertaking hasbecome a member of
the national bureau and the national guarantee fund of the MemberState of provision of services.
2. Each Member State shall institute the right to apply to the courts
in the event of a refusal to issue the certificate referred to in paragraph1 (a) or 1 (b).
3. The undertaking may commence activitiesasfrom the certified
date on which the authoritiesof the Member State of provis ion ofservices are in possession of the documents referred to in paragraph 1.
4. This Article shall also apply where the Member State, in the terri-
tory of which an undertaking intends to provide services covering risksother than those referred to in Article 5 (d) of the first Directive, does
not make access to such activity conditional on administrative authori-
zation.
Article 17
1. Where an undertaking referred to in Article 14 intendsto amend
the information referred to in Article 15 (1) (c) or Article 16 (1) (c), itshall submit the amendments to the competent authorities of theMember State of provision of services. These amendments shall enter
info force in accordance with the rulesin Articles15 (3) and 16 (3)
respectively.
2. Where an undertaking referred to in Article 14 intendsto extend
its activities to risks other than those referred to in Article 5 (d) of thefirst Directive, it shall follow the procedure described in Articles 14and 15.
3. Where an undertaking referred to in Article 14 intendsto extend
its activities to risks referred to in Article 5 (d) of the first Directive orArticle 16 (4) of this Directive, it shall follow the procedure describedin Articles14 and 16.
Article 18
1. Thiscoordination s hall not prevent the Member Statesfrom main-
taining or introducing laws, regulations or administrative provisionsconcerning, in particular, approval of general and special policy condi-tions, of forms and other printed documents for use in dealing withpolicy-holders, of scales of premiums and of any other documentnecessary for the normal exercise of supervision provided that the rules
of the Member State of establishment are not sufficient to achieve the
necessary level of protection and the requirements of the Member Stateof provision of services do not go beyond what is necessary in thatrespect.
2. However, with regard to the risks referred to in Article 5 (d) of
the first Directive, Member States shall not lay down provisionsrequiring approval or systematic notification of general and specialpolicy conditions, scales of premiums, forms and other printed docu-
mentswhich the undertaking intendsto us e in itsdealingswith
policy-holders. They may require only non-systematic notification ofthese conditions and other documents, for the purpose of verifyingcompliance with laws, regulations and administrative provisions inrespect of such risks, although this requirement may not constitute aprior condition in order for an undertaking to carry on itsactivities .1988L0357 — EN — 20.11.1990 — 001.001 — 13
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3. With regard to the risks referred to in Article 5 (d) of the first
Directive, Member Statesmay not retain or introduce prior notificationor approval of proposed increases in premium rates except as part of a
general price control system.
Article 19
1. Any undertaking providing services shall submit to the competent
authorities of the Member State of provision of services all documents
requested of it for the purposes of implementing this Article, in so faras undertakings established there are also obliged to do so.
2. If the competent authoritiesof a Member State as certain that an
undertaking providing services within its territory does not comply
with the legal rulesin force in that State which are applicable to it,
such authorities shall request the undertaking concerned to put an endto the irregular situation.
3. If the undertaking in question fails to comply with the request
referred to in paragraph 2, the competent authoritiesof the Member
State of provision of services shall inform the competent authorities ofthe Member State of establishment accordingly. The authorities of theMember State of establishment shall take all appropriate measures toensure that the undertaking concerned puts an end to the irregularsituation. The nature of those measures shall be communicated to the
authorities of the Member State of provision of services.
The competent authorities of the Member State of provision of services
may also apply to the competent authorities for the head office of theinsurance undertaking if the services are being provided by agencies or
branches.
4. If, despite the measures thus taken by the Member State of estab-
lishment, or because such measures prove inadequate or are lacking inthe Member State in question, the undertaking persists in violating the
legal rules in force in the Member State of provision of services, the
latter Member State may, after informing the supervisory authoritiesof the Member State of establishment, take appropriate measures toprevent further irregularities, including, in so far as it is strictly neces-sary, the prevention of the further conclusion of insurance contracts bythat undertaking by way of provision of services within its territory. In
the case of risks other than those referred to in Article 5 (d) of the first
Directive, such measures shall include withdrawal of the authorizationreferred to in Article 15. The Member States shall ensure that withintheir territory it is possible to make the notifications necessary for thesemeasures.
5. These provisions shall not affect the right of Member States to
punish irregularities committed within their territory.
6. If the undertaking which hascommitted the offence hasan es tab-
lishment or possesses property in the Member State of provision of
services, the supervisory authorities of the latter may, in accordancewith national legislation, apply the administrative penalties prescribedfor that offence by way of enforcement against that establishment orproperty.
7. Any measure adopted pursuant to paragraphs 2 to 6 involving
penalties or restrictions on the provision of services must be properlyjustified and communicated to the undertaking concerned. Every suchmeasure shall be subject to the right to apply to the courts in theMember State in which the authoritiesadopted it.
8. Where measures have been taken pursuant to Article 20 of the
first Directive, the competent authorities of the Member State of provi-sion of services shall be informed of them by the authority which hastaken them and shall, where the measures have been taken under theterms of paragraphs 1 and 3 of the said Article, take any steps neces-
sary to safeguard the interests of insured persons.
In the event of withdrawal of authorization on the basis of Article 22 of
the first Directive, the competent authorities of the Member State ofprovision of services shall be informed of such action and shall take1988L0357 — EN — 20.11.1990 — 001.001 — 14
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appropriate measures to prevent the establishment concerned from
continuing to conclude insurance contracts by way of provision ofservices within the territory of that State.
9. Every two years the Commission shall submit to the Council a
report summarizing the number and type of cases in which, in eachMember State, decisions refusing authorizations have been communi-cated under Article 15 or measures have been taken in accordancewith paragraph 4. Member States shall cooperate with the Commission
by providing it with the information required for thisreport.
Article 20
In the event of an insurance undertaking being wound up, commitments
arising from contracts underwritten in the course of the provision ofservices shall be met in the same way as those arising under that under-
taking's other insurance contracts, without distinction of nationality as
far asthe ins ured and the beneficiariesare concerned.
Article 21
1. Where insurance is offered by way of provision of services, the
policy-holder shall, before any commitment is entered into, beinformed of the Member State in which the head office, agency or
branch with which the contract isto be concluded ises tablis hed.
Any document issued to the policy-holder must contain the information
referred to in the preceding subparagraph.
The requirements in the first two subparagraphs shall not apply to the
risks referred to in Article 5 (d) of the first Directive.
2. The contract or any other document granting cover, together with
the insurance proposal where it is binding upon the proposer, mustspecify the address of the insurance establishment which is grantingthe cover and also that of the head office.
Each Member State may require that the name and address of the
representative of the insurance undertaking also appear in the above-mentioned documents.
Article 22
1. Every establishment must inform its supervisory authority in
respect of operations effected by way of provision of services of the
amount of the premiums, without deduction of reinsurance, receivableby Member State and by group of classes. The groups of classes shallbe defined asfollows :
— accident and sickness (1 and 2),
— motor insurance (3, 7 and 10, the figures relating to class 10,
excluding carrier'sliability, being s pecified),
— fire and other damage to property (8 and 9),— aviation, marine and transport (4, 5, 6, 7, 11 and 12),— general liability (13),— credit and suretyship (14 and 15),— other classes (16, 17 and 18).
The supervisory authority of each Member State shall forward this
information to the supervisory authorities of each of the Member States
of provision of services.
2. Where an establishment earns in a Member State, in respect of
the operations referred to in the first subparagraph of paragraph 1, avolume of premiums, without deduction of reinsurance, higher than2 500 000 ECU, it must keep an underwriting account, comprising theitems listed in Annex 2A or 2B, broken down by group of classes forthat Member State.1988L0357 — EN — 20.11.1990 — 001.001 — 15
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However, where an undertaking, with all its establishments taken
together, earnsin a Member State, in res pect of the operationsreferredto in the first subparagraph of paragraph 1, a volume of premiums,
without deduction of reinsurance, higher than 2 500 000 ECU, the
supervisory authority of the Member State of provision of servicesmay ask the supervisory authority of the Member State of the headoffice that an underwriting account be kept, in future, for the opera-tions effected in its country by each of the establishments of that
undertaking.
The underwriting account referred to in the first or second subpara-
graph of this paragraph shall be forwarded by the supervisoryauthority of the Member State of establishment to the supervisoryauthority of the Member State of provision of services on the latter'srequest.
Article 23
1. Where the provision of services is subject to authorization by the
Member State of provision of services, the amount of the technicalreserves relating to the contracts concerned shall be determined,
pending further harmonization, under the supervision of that Member
State in accordance with the rulesit haslaid down or, failing s uchrules, in accordance with established practice in that Member State.The covering of these reserves by equivalent and matching assets andthe localization of those assets shall be under the supervision of thatMember State in accordance with itsrulesor practice.
2. In all other cases, determination of the amount of the technical
reserves, and their covering by equivalent and matching assets and the
localization of those assets shall be under the supervision of theMember State of establishment, in accordance with its rules or practice.
3. The Member State of establishment shall ensure that the technical
reserves relating to all the contracts which the undertaking concludesthrough the establishment concerned are sufficient, and that they arecovered by equivalent and matching assets.
4. In the case referred to in paragraph 1, the Member State of estab-
lishment and the Member State of provision of services shall exchange
any information necessary for carrying out their respective duties underparagraphs1 and 3.
Article 24
Notwithstanding this Directive, the Member States shall be entitled to
require undertakings operating by way of provision of services in theirterritories to join and participate in any scheme designed to guaranteethe payment of insurance claims to policy-holders and injured thirdparties, on the same terms as established undertakings.
Article 25
Without prejudice to any subsequent harmonization, every insurance
contract concluded by way of provision of services shall be subjectexclusively to the indirect taxes and parafiscal charges on insurance
premiums in the Member State in which the risk is situated within the
meaning of Article 2 (d), and also, with regard to Spain, to thesurcharges legally established in favour of the Spanish ‘Consorcio decompensación de Seguros’ for the fulfilment of its functions relatingto the compensation of losses arising from extraordinary events occur-ring in that Member State.
By way of derogation from the first indent of Article 2 (d), and for
application of thisArticle, the moveable property contained in a
building situated in the territory of a Member State, except for goodsin commercial transit, shall be a risk situated in that Member State,even though the building and itscontentsare not covered by the s ameinsurance policy.
The law applicable to the contract pursuant to Article 7 shall not affect
the fiscal arrangements applicable.1988L0357 — EN — 20.11.1990 — 001.001 — 16
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Each Member State shall, subject to future harmonization, apply to
those undertakings which provide services in its territory, its ownnational provisions for measures to ensure the collection of indirect
taxes and parafiscal charges due under the first subparagraph.
Article 26
1. The risks which may be covered by way of Community co-insur-
ance within the meaning of Directive 78/473/EEC shall be those
defined in Article 5 (d) of the first Directive.
2. The provisions of this Directive regarding the risks defined in
Article 5 (d) of the first Directive shall apply to the leading insurer.
TITLE IV
Transitional arrangements
Article 27
1. Greece, Ireland, Spain and Portugal may apply the following tran-
sitional arrangements:
(i) until 31 December 1992, they may apply, to all risks, the regime
other than that for risks referred to in Article 5 (d) of the first
Directive,
(ii) from 1 January 1993 to 31 December 1994, the regime for large
risks shall apply to risks referred to under (i) and (ii) of Article 5
(d) of the first Directive; for risks referred to under (iii) of the
abovementioned Article 5 (d), these Member States shall fix thethresholds to apply therefor;
(iii)Spain
— from 1 January 1995 to 31 December 1996, the thresholds of
the first stage described in Article 5 (d) (iii) of the first Direc-tive shall apply,
— from 1 January 1997, the thresholds of the second stage shall
apply.
Portugal, Ireland and Greece
— from 1 January 1995 to 31 December 1998 the thresholds of
the first stage described in Article 5 (d) (iii) of the first Direc-
tive shall apply,
— from 1 January 1999 the thresholds of the second stage shall
apply.
The derogation allowed from 1 January 1995 shall only apply to
contracts covering risks classified under classes 3, 8, 9, 10, 13 and 16
situated exclusively in one of the four Member States benefiting fromthe transitional arrangements.
2. Until 31 December 1994, Article 26 (1) of thisDirective s hall not
apply to risks situated in the four Member States listed in this Article.For the transitional period from 1 January 1995, the risks defined underArticle 5 (d) (iii) of the first Directive situated in these Member Statesand capable of being covered by Community co-insurance within the
meaning of Directive 78/473/EEC shall be those which exceed the
thresholds referred to in paragraph 1 (iii) of this Article.
TITLE V
Final provisions
Article 28
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.
Every Member State shall inform the Commission of any major diffi-
cultiesto which application of thisDirective givesris e, inter alia any1988L0357 — EN — 20.11.1990 — 001.001 — 17
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arising if a Member State becomes aware of an abnormal transfer of
insurance business to the detriment of undertakings established in itsterritory and to the advantage of branchesand agencieslocated jus t
beyond itsborders .
The Commission and the competent authorities of the Member States
concerned shall examine these difficulties as quickly as possible inorder to find an appropriate solution.
Where necessary, the Commission shall submit appropriate proposals to
the Council.
Article 29
The Commission shall forward to the Council regular reports, the first
on 1 July 1993, on the development of the market in insurance trans-acted under conditions of freedom to provide services.
Article 30
Where thisDirective makesreference to the ECU, the exchange value
in national currenciesto be us ed with effect from 31 December of each
year shall be the value which applies on the last day of the precedingOctober for which exchange valuesfor the ECU are available in allCommunity currencies.
Article 2 of Directive 76/580/EEC(
1) shall apply only to Articles 3, 16
and 17 of the first Directive.
Article 31
Every five years, the Council, acting on a proposal from the Commis-
sion, shall review and if necessary amend any amounts expressed inECU in thisDirective, taking into account changesin the economic
and monetary situation of the Community.
Article 32
Member States shall amend their national provisions to comply with
thisDirective within 18 monthsof the date of itsnotification(
2) and
shall forthwith inform the Commission thereof.
The provisions amended in accordance with this Article shall be
applied within 24 monthsof the date of the notification of the Direc-tive.
Article 33
Upon notification of this Directive, Member States shall ensure that the
texts of the main laws, regulations or administrative provisions whichthey adopt in the field covered by thisDirective are communicated to
the Commission.
Article 34
The Annexess hall form an integral part of thisDirective.
Article 35
This Directive is addressed to the Member States.1988L0357 — EN — 20.11.1990 — 001.001 — 18
(1) OJ No L 189, 13. 9. 1976, p. 13.
(2) ThisDirective wasnotified to Member Stateson 30 June 1988.
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ANNEX 1
MATCHING RULES
The currency in which the insurer's commitments are payable shall be deter-
mined in accordance with the following rules:
1. Where the cover provided by a contract is expressed in terms of a particular
currency, the insurer's commitments are considered to be payable in that
currency.
2. Where the cover provided by a contract is not expressed in terms of any
currency, the insurer's commitments are considered to be payable in the
currency of the country in which the risk is situated. However, the insurer
may choose the currency in which the premium is expressed if there are
justifiable grounds for exercising such a choice.
Thiscould be the cas e if, from the time the contract isentered into, it
appearslikely that a claim will be paid in the currency of the premium and
not in the currency of the country in which the risk is situated.
3. The Member States may authorize the insurer to consider that the currency in
which he must provide cover will be either that which he will use in accor-
dance with experience acquired or, in the absence of such experience, the
currency of the country in which he is established:
— for contracts covering risks classified under classes 4, 5, 6, 7, 11, 12 and
13 (producers' liability only), and
— for contracts covering the risks classified under other classes where, in
accordance with the nature of the risks, the cover is to be provided in a
currency other than that which would result from the application of the
above procedures.
4. Where a claim has been reported to an insurer and is payable in a specified
currency other than the currency resulting from application of the above
procedures, the insurer's commitments shall be considered to be payable in
that currency, and in particular the currency in which the compensation to
be paid by the insurer has been determined by a court judgment or by agree-
ment between the insurer and the insured.
5. Where a claim is assessed in a currency which is known to the insurer in
advance but which isdifferent from the currency res ulting from application
of the above procedures, the insurers may consider their commitments to be
payable in that currency.
6. The Member Statesmay authorize undertakingsnot to cover their technical
reserves by matching assets if application of the above procedures would
result in the undertaking — whether head office or branch — being obliged,
in order to comply with the matching principle, to hold assets in a currency
amounting to not more than 7 % of the assets existing in other currencies.
However:
(a) in the case of technical reserve assets to be matched in Greek drachmas,
Irish pounds and Portuguese escudos, this amount shall not exceed:
— 1 million ECU during a transitional period ending 31 December
1992,
— 2 million ECU from 1 January 1993 to 31 December 1998;
(b) in the case of technical reserve assets to be matched in Belgian francs,
Luxembourg francs and Spanish pesetas, this amount shall not exceed 2
million ECU during a transitional period ending 31 December 1996.
From the end of the transitional periods defined under (a) and (b), the general
regime shall apply for these currencies, unless the Council decides otherwise.
7. The Member Statesmay choos e not to require undertakings— whether head
officesor branches— to apply the matching principle where commitments
are payable in a currency other than the currency of one of the Community
Member States, if investments in that currency are regulated, if the currency
is subject to transfer restrictions or if, for similar reasons, it is not suitable for
covering technical reserves.
8. The Member Statesmay authorize undertakings— whether head officesor
branches — not to hold matching assets to cover an amount not exceeding
20 % of their commitmentsin a particular currency.
However, total assets in all currencies combined must be at least equal to
total commitmentsin all currenciescombined.1988L0357 — EN — 20.11.1990 — 001.001 — 19
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9. Each Member State may provide that, whenever under the preceding proce-
dures a commitment has to be covered by assets expressed in the currency of
a Member State, this requirement shall also be considered to be satisfied
when up to 50 % of the assets in expressed in ECU.1988L0357 — EN — 20.11.1990 — 001.001 — 20
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ANNEX 2A
Underwriting account
1. Total gross premiums earned
2. Total cost of claims3. Commission costs
4. Gross underwriting result1988L0357 — EN — 20.11.1990 — 001.001 — 21
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ANNEX 2B
Underwriting account
1. Gross premiums for the last underwriting year
2. Gross claims in the last underwriting year (including reserve at the end of
underwriting year)
3. Commission costs
4. Gross underwriting result1988L0357 — EN — 20.11.1990 — 001.001 — 22