1973L0239 — EN — 07.08.1995 — 010.001 — 1
This document is meant purely as a documentation tool and the institutions do not assume any liability for its contents
►B FIRSTCOUNCILDIRECTIVE
of24July1973
on the coordination of laws, Regulations and administrative provisions relating to the taking-up
andpursuitofthebusinessofdirectinsuranceotherthanlifeassurance
(73/239/EEC)
(OJ L 228, 16.8.1973, p. 3)
Amended by:
Official Journal
No page date
►M1Council Directive 76/580/EEC of 29 June 1976 L 189 13 13.7.1976
►M2Council Directive 84/641/EEC of 10 December 1984 L 339 21 27.12.1984
►M3Council Directive 87/343/EEC of 22 June 1987 L 185 72 4.7.1987
►M4Council Directive 87/344/EEC of 22 June 1987 L 185 77 4.7.1987
►M5Second Council Directive 88/357/EEC of 22 June 1988 L 172 1 4.7.1988
►M6Council Directive 90/618/EEC of 8 November 1990 L 330 44 29.11.1990
►M7Council Directive 92/49/EEC of 18 June 1992 L 228 1 11.8.1992
►M8European Parliament and Council Directive 95/26/EC of 29 June 1995 L 168 7 18.7.1995
Amended by:
►A1Act of Accession of Greece L 291 17 19.11.1979
►A2Act of Accession of Spain and Portugal L 302 23 15.11.1985
►A3Act of Accession of Austria, Sweden and Finland C 241 21 29.8.1994
(adapted by Council Decision 95/1/EC, Euratom, ECSC) L 1 1 1.1.1995
Corrected by:►
C1Corrigendum, OJ L 5, 7.1.1978, p. 27 (73/239/EEC)
NB: This consolidated version contains references to the European unit of account and/or the ecu, which from 1 January 1999
should be understood as references to the euro — Council Regulation (EEC) No 3308/80 (OJ L 345, 20.12.1980, p. 1) andCouncil Regulation (EC) No 1103/97 (OJ L 162, 19.6.1997, p. 1).
▼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);
Whereasby virtue of the General Programme the removal of res tric-
tions on the establishment of agencies and branches is, in the case ofthe direct insurance business, dependent on the coordination of theconditions for the taking-up and pursuit of this business; whereas such
coodination should be effected in the first place in respect of direct
insurance other than life assurance;
Whereas in order to facilitate the taking-up and pursuit of the business
of insurance, it is essential to eliminate certain divergencies which existbetween national supervisory legislation; whereas in order to achieve
this objective, and at the same time ensure adequate protection for
insured and third parties in all the Member States, it is desirable tocoordinate, in particular, the provisions relating to the financial guaran-tees required of insurance undertakings;
Whereas a classification of risks in the different classes of insurance is
necessary in order to determine, in particular, the activities subject to a
compulsory authorization and the amount of the minimum guaranteefund fixed for the class of insurance concerned;
Whereasit isdes irable to exclude from the application of thisDirective
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;
Whereasthe variouslawscontain different rulesasto the s imultaneous
undertaking of health insurance, credit and suretyship insurance andinsurance in respect of recourse against third parties and legal defence,whether with one another or with other classes of insurance; whereascontinuance of thisdivergence after the abolition of res trictionson 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 — 07.08.1995 — 010.001 — 2
(1) OJ No 2, 15. 1. 1962, p. 36/62.
(2) OJ No C 27, 28. 3. 1968, p. 15.
(3) OJ No 158, 18. 7. 1967, p. 1.
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Whereas it is desirable to bring the classes of insurance known as
transport classes bearing Nos 4, 5, 6, 7 and 12 in Paragraph A of theAnnex, and the credit insurance classes bearing Nos 14 and 15 in para-
graph A of the Annex, under more flexible rulesin view of the
continual fluctuationsin conditionsaffecting goodsand credit;
Whereasthe s earch for a common method of calculating technical
reserves is at present the subject of studies at Community level;whereas it therefore appears to be desirable to reserve the attainmentof coordination in thismatter, aswell asques tionsrelating to the deter-
mination of categories of investments and the valuation of assets, for
subsequent Directives;
Whereas it is necessary that insurance undertakings should possess,
over and above technical reserves of sufficient amount to meet theirunderwriting liabilities, a supplementary reserve, to be known as thesolvency margin, and represented by free assets, in order to provide
against business fluctuations; whereas in order to ensure that the
requirements imposed for such purposes are determined according toobjective criteria, whereby undertakings of the same size are placedon an equal footing asregardscompetition, it isdes irable to providethat such margin shall be related to the overall volume of business ofthe undertaking and be determined by reference to two indicesof
security, one based on premiums and the other on claims;
Whereasit isdes irable to require a minimum guarantee fund related to
the size of the risk in the classes undertaken, in order to ensure thatundertakings possess adequate resources when they are set up and thatin the subsequent course of business the solvency margin shall in noevent fall below a minimum of security;
Whereas it is necessary to make provision for the case where the finan-
cial condition of the undertaking becomess uch that it isdifficult for it
to meet itsunderwriting liabilities ;
Whereasthe coordinated rulesconcerning the taking-up and purs uit of
the business or direct insurance within the Community should, in prin-ciple, apply to all undertakingsentering the market and, cons equently,also to agencies and branches where the head office of the undertaking
is situated outside the Community; whereas it is, nevertheless, desirable
as regards the methods of 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 theCommunity;
Whereas it is, however, desirable to permit the relaxation of such
special conditions, while observing the principle that such agencies
and branchess hould not obtain more favourable treatment than under-takingswithin 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, subject
to the application of Article 53 of the Treaty;
Whereasit isimportant 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
1. This Directive concerns the taking-up and pursuit of the self-
employed activity of direct insurance, including the provision of assis-tance referred to in paragraph 2, carried on by undertakingswhich are1973L0239 — EN — 07.08.1995 — 010.001 — 3
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established in the territory of a Member State or which wish to become
established there.
2. The assistance activity shall be the assistance provided for
persons who get into difficulties while travelling, while away fromhome or while away from their permanent residence. It shall consistin undertaking, against the prior payment of a premium, to make aid
immediately available to the beneficiary under an assistance contract
where that person is in difficulties following the occurrence of achance event, in the cases and under the conditions set out in thecontract.
The aid may consist in the provision of benefits in cash or in kind. The
provision of benefits in kind may also be effected by means of the staffand equipment of the person providing them.
The assistance activity does not cover servicing, maintenance, after-
sales service or the mere indication or provision of aid as an inter-
mediary.
3. The classification by classes of the activity referred to in this
Article appearsin the Annex.
Article 2
ThisDirective doesnot apply to:
1. The following kindsof ins urance:
(a) Life assurance, that is to say, the branch of insurance which
comprises, in particular, assurance on survival to a stipulatedage only, assurance on death only, assurance on survival to astipulated age or an earlier death, life assurance with return of
premiums, tontines, marriage assurance, and birth assurance;
(b) Annuities;
(c) Supplementary insurance carried on by life-assurance undertak-
ings, that is to say, insurance against personal injury including
incapacity for employment, insurance against death resultingfrom an accident, and insurance against disability resultingfrom an accident or sickness, where these various kinds of insur-ance are underwritten in addition to life assurance;
(d) Insurance forming part of a statutory system of social security;
(e) The type of insurance existing in Ireland and the United
Kingdom known as ‘permanent health insurance not subject tocancellation’.
2. The following operations:
(a) Capital redemption operations, as defined by the law in each
Member State;
(b) Operations of provident and mutual benefit institutions whose
benefitsvary according to the res ourcesavailable and in whichthe contributionsof the membersare determined on a flat-ratebasis;
(c) Operationscarried out by organizationsnot having a legal
personality with the purpose of providing mutual cover for their
memberswithout there being any payment of premiumsor
constitution of technical reserves;
(d) Pending further coordination, export credit insurance operations
for the account of or guaranteed by the State, or where the State
isthe ins urer.
3. The assistance activity in which liability is limited to the following
operationsprovided in the event of an accident or breakdown invol-1973L0239 — EN — 07.08.1995 — 010.001 — 4
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ving a road vehicle which normally occursin the territory of the
Member State of the undertaking providing cover:
— an on-the-spot breakdown service for which the undertaking
providing cover uses, in most circumstances, its own staff andequipment,
— the conveyance of the vehicle to the nearest or the most appro-
priate location at which repairsmay be carried out and thepossible accompaniment, normally by the same means of assis-tance, of the driver and passengers to the nearest location fromwhere they may continue their journey by other means,
— if provided for by the Member State of the undertaking
providing cover, the conveyance of the vehicle, possibly accom-panied by the driver and passengers, to their home, point ofdeparture or original destination within the same State,
unless such operations are carried out by an undertaking subject to
thisDirective.
In the cases referred to in the first two indents, the condition that the
accident or breakdown must have happened in the territory of theMember State of the undertaking providing cover
(a) shall not apply where the latter is a body of which the benefi-
ciary isa member and the breakdown s ervice or conveyance of
the vehicle is provided simply on presentation of a membershipcard, without any additional premium being paid, by a similarbody in the country concerned on the basis of a reciprocalagreement;
(b) shall not preclude the provision of such assistance in Ireland and
the United Kingdom by a single body operating in both States.
In the circumstances referred to in the third indent, where the acci-
dent or the breakdown hasoccurred in the territory of Ireland or, inthe case of the United Kingdom, in the territory of Northern Ireland,
the vehicle, possibly accompanied by the driver and passengers, may
be conveyed to their home, point of departure or original destinationwithin either territory.
Moreover, the Directive does not concern assistance operations
carried out on the occasion of an accident to or the breakdown of aroad vehicle and consisting in conveying the vehicle which has beeninvolved in an accident or hasbroken down outs ide the territory of
the Grand Duchy of Luxembourg, possibly accompanied by the
driver and passengers, to their home, where such operations arecarried out by the Automobile Club of the Grand Duchy of Luxem-bourg.
Undertakingss ubject to thisDirective may engage in the activity
referred to under thispoint only if they have received authorizationfor class 18 in point A of the Annex without prejudice to point C ofthe said Annex. In that event this Directive shall apply to the opera-
tionsin ques tion.
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 contributionsor reducing their benefits ,
— their business does not cover liability risks — unless the latter
constitute ancillary cover within the meaning of subparagraph (c)of the Annex — or credit and suretyship risks,
— the annual contribution income for the activitiescovered by this
Directive must not exceed one million units of account,
and
— at least half of the contribution income from the activities covered
by this Directive must come from persons who are members of themutual association.1973L0239 — EN — 07.08.1995 — 010.001 — 5
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ThisDirective s hall not apply to undertakingswhich fulfil the
following conditions:
— the undertaking doesnot purs ue any activity falling within the
scope of this Directive other than the one described in class 18 inpoint A of the Annex,
— this activity is carried out exclusively on a local basis and consists
only of benefitsin kind, and
— the total annual income collected in respect of the activity of assis-
tance to persons who get into difficulties does not exceed
200 000 ECU.
2. This Directive shall not, moreover, apply to mutual associations
which have concluded with other associations of this nature an agree-
ment which provides for the full reinsurance of the insurance policiesissued by them or under which the concessionary undertaking is tomeet the liabilities arising under such policies in the place of theceding undertaking.
In such a case the concessionary undertaking shall be subject to the
rulesof thisDirective.
Article 4
This Directive shall not apply to the following institutions unless their
statutes or the law are amended as regards capacity:
(a)In Germany
The following institutions under public law enjoying a monopoly
(Monopolanstalten):
1. Badische Gebäudeversicherungsanstalt, Karlsruhe,
2. Bayerische Landesbrandversicherungsanstalt, Munich,3. Bayerische Landestierversicherungsanstalt, Schlachtviehversi-
cherung, Munich,
4. Braunschweigische Landesbrandversicherungsanstalt, Bruns-
wick,
5. Hamburger Feuerkasse, Hamburg,
6. Hessische Brandversicherungsanstalt (Hessische Brandversi-
cherungskammer), Darmstadt,
7. Hessische Brandversicherungsanstalt, Kassel,
8. Hohenzollernsche Feuerversicherungsanstalt, Sigmaringen,
9. Lippische Landesbrandversicherungsanstalt, Detmold,
10. Nassauische Brandversicherungsanstalt, Wiesbaden,
11. Oldenburgische Landesbrandkasse, Oldenburg,12. Ostfriesische Landschaftliche Brandkasse, Aurich,
13. Feuersozietät Berlin, Berlin,
14. Württembergische Gebäudebrandversicherungsanstalt, Stuttgart.
However, territorial capacity shall not be regarded as modified in
the case of a merger between such institutions which has the effect
of maintaining for the benefit of the new institution the territorialcapacity of the institutions which have merged, nor shall capacityas to the classes of insurance be regarded as modified if one ofthese institutions takes over in respect of the same territory one or
more of the classes of another such institution.
The following semi-public institutions:
1. Postbeamtenkrankenkasse,
2. Krankenversorgung der Bundesbahnbeamten;
(b)In France
The following institutions:
1. Caisse départementale des incendiés des Ardennes,1973L0239 — EN — 07.08.1995 — 010.001 — 6
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2. Caisse départementale des incendiés de la Côte-d'Or,
3. Caisse départementale des incendiés de la Marne,
4. Caisse départementale des incendiés de la Meuse,
5. Caisse départementale des incendiés de la Somme,
6. Caisse départementale grêle du Gers,
7. Caisse départementale grêle de l'Hérault;
(c)In Ireland
Voluntary Health Insurance Board;
(d)In Italy
The Cassa di Previdenza per l'assicurazione degli sportivi (Spor-
tass);
(e)In the United Kingdom
The Crown Agents;
(f)In Denmark
FalcksRednings korpsA/S, København;
(g)In Spain
The following institutions:
1. Comisaría de Seguro Obligatorio de Viajeros,
2. Consorcio de Compensación de Seguros,
3. Fondo Nacional de Garantía de Riesgos de la Circulación.
Article 5
For the purposes of this Directive:
(a) ‘Unit of account’ meansthe European unit of account (EUA) as
defined by Commission Decision 3289/75/ECSC (1). Wherever this
Directive refersto the unit of account, the convers ion value innational currency to be adopted shall, as from 31 December ofeach year, be that of the last day of the preceding month ofOctober for which EUA conversion values are available in all the
Community currencies;
(b) ‘Matching assets’ means the representation of underwriting liabil-
ities expressed 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 be
construed 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 theMember State where they are to be liquidated;
(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 inan industrial or commercial activity or in one of the liberalprofessions, and the risks relate to such activity;1973L0239 — EN — 07.08.1995 — 010.001 — 7
(1) OJ No L 327, 19. 12. 1975, p. 4.▼M2
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(iii)►M6risks classified under classes 3, 8, 9, 10, 13 and 16 of
point A of the Annex ◄in so far as the policy-holder exceeds
the limitsof at leas t 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 Directive
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, joint venturesor temporary groupings.
TitleII— Rulesapplicabletoundertakingswhoseheadofficesare
situatedwithintheCommunity
SectionA: Conditionsofadmission
Article 6
The taking up of the business of direct insurance shall be subject to
prior official authorization.
Such authorization shall be sought from the competent authorities of
the home Member State by:
(a) any undertaking which establishes its head office within the terri-
tory of that State;
(b) any undertaking which, having received the authorization referred
to in the first subparagraph, extends its business to an entire classor to other classes.
Article 7
1. Authorization shall be valid for the entire Community. It shall
permit an undertaking to carry on business there, under either the rightof establishment or the freedom to provide services.
2. Authorization shall be granted for a particular class of insurance.
It shall cover the entire class, unless the applicant wishes to cover onlysome of the risks pertaining to that class, as listed in point A of theAnnex.
However:
(a) Member States may grant authorization for the groups of classes
listed in point B of the Annex, attaching to them the appropriatedenominationss pecified therein;
(b) authorization granted for one class or a group of classes shall also
be valid for the purpose of covering ancillary risks included inanother class if the conditions imposed in point C of the Annexare fulfilled.1973L0239 — EN — 07.08.1995 — 010.001 — 8
(1) OJ No L 193, 18. 7. 1983, p. 1.▼B
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Article 8
1. The home Member State shall require every insurance under-
taking for which authorization iss ought to:
(a) adopt one of the following forms:
— in the case of the Kingdom of Belgium: ‘société anonyme —
naamloze vennootschap’ — , ‘société en commandite paractions— commanditaire vennoots chap op aandelen’ — ,‘association d'assurance mutuelle — onderlinge
verzekeringsvereniging’ — , ‘société coopérative — coöpera-
tieve vennootschap’;
— in the case of the Kingdom of Denmark: ‘aktieselskaber’,
‘gensidige selskaber’;
— in the case of the Federal Republic of Germany: ‘Aktienge-
sellschaft’, ‘Versicherungsverein auf Gegenseitigkeit’,
‘Öffentlich-rechtliches Wettbewerbsversicherungsunternehmen’;
— in the case of the French Republic: ‘société anonyme’, ‘société
d'assurance mutuelle’, ‘institution de prévoyance régie par lecode de la sécurité sociale’, ‘institution de prévoyance régiepar le code rural’ and ‘mutuellesrégiespar le code de la mutua-lité’;
— in the case 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 assicurazione’;
— in the case of the Grand Duchy of Luxembourg: ‘société
anonyme’, ‘société en commandite par actions’, ‘association
d'assurances mutuelles’, ‘société coopérative’;
— in the case of the Kingdom of the Netherlands: ‘naamloze
vennootschap’, ‘onderlinge waarborgmaatschappij’;
— in the case of the United Kingdom: incorporated companies
limited by shares or by guarantee or unlimited, societies regis-
tered under the Industrial and Provident Societies Acts,
societies registered under the Friendly Societies Acts, the asso-ciation of underwritersknown asLloyd's ;
— in the case of the Hellenic Republic: ‘ ανώνυµη εταιρία ’,
‘αλληλασφαλιστικός συνεταιρισµός ’;
— in the case of the Kingdom of Spain: ‘sociedad anónima’, ‘soci-
edad mutua’, ‘sociedad cooperativa’;
— in the case of the Portuguese Republic: ‘sociedade anónima’,
‘mútua de seguros’;
— in the case of the Republic of Austria: ‘Aktiengesellschaft’,
‘Versicherungsverein auf Gegenseitigkeit’;
— in the case of the Republic of Finland: ‘keskinäinen
vakuutusyhtiö — ömsesidigt försäkringsbolag’ — ,‘vakuutusosakeyhtiö — försäkringsaktiebolag’ — ,‘vakuutusyhdistys — försäkringsförening’;
— in the case of the Kingdom of Sweden: ‘försäkringsaktiebolag’,
‘ömsesidiga försäkringsbolag’, ‘understödsföreningar’.
An insurance undertaking may also adopt the form of a European
Company (SE) when that has been established.
Furthermore, Member Statesmay, where appropriate, s et up under-
takingsin any public-law form provided that s uch bodieshave as
their objectsins urance operationsunder conditionsequivalent to
those under which private-law undertakings operate;
(b) limit its objects to the business of insurance and operations arising
directly therefrom, to the exclusion of all other commercial busi-
ness;
(c) submit a scheme of operations in accordance with Article 9;
(d) possess the minimum guarantee fund provided for in Article 17 (2);1973L0239 — EN — 07.08.1995 — 010.001 — 9
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(e) be effectively run by persons of good repute with appropriate
professional qualifications or experience.
Moreover, where close links exist between the insurance undertaking
and other natural or legal persons, the competent authorities shall grantauthorization only if those links do not prevent the effective exercise oftheir supervisory functions.
The competent authorities shall also refuse authorization if the laws,
regulations or administrative provisions of a non-member countrygoverning one or more natural or legal persons with which the under-
taking has close links, or difficulties involved in their enforcement,
prevent the effective exercise of their supervisory functions.
The competent authorities shall require insurance undertaking to
provide them with the information they require to monitor compliance
with the conditions referred to in this paragraph on a continuous basis.
1a. Member States shall require that the head offices of insurance
undertakings be situated in the same Member State as their registeredoffices.
2. An undertaking seeking authorization to extend its business to
other classes or to extend an authorization covering only some of the
risks pertaining to one class shall be required to submit a scheme ofoperationsin accordance with Article 9.
It shall, furthermore, be required to show proof that it possesses the
solvency margin provided for in Article 16 and, if with regard to suchother classes Article 17 (2) requires a higher minimum guarantee fundthan before, that is possesses that minimum.
3. Nothing in thisDirective s hall prevent Member Statesfrom main-
taining in force or introducing laws, regulations or administrativeprovisions requiring approval of the memorandum and articles of asso-ciation and communication of any other documents necessary for the
normal exercise of supervision.
Member States shall not, however, adopt provisions requiring the prior
approval or systematic notification of general and special policy condi-
tions, scales of premiums and forms and other printed documents
which an undertaking intends to use in its dealings with policyholders.
Member Statesmay not retain or introduce prior notification or
approval of proposed increases in premium rates except as part of
general price-control systems.
Nothing in this Directive shall prevent Member States from subjecting
undertakings seeking or having obtained authorization for class 18 in
point 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 such undertakings to meettheir commitments arising out of this class of insurance.
4. The abovementioned provisions may not require that any applica-
tion for authorization be considered in the light of the economicrequirementsof the market.
Article 9
The scheme of operations referred to in Article 8 (1) (c) shall include
particularsor proof concerning:
(a) the nature of the risks which the undertaking proposes to cover;
(b) the guiding principlesasto reins urance;
(c) the itemscons tituting the minimum guarantee fund;
(d) estimates of the costs of setting up the administrative services and
the organization for securing business; the financial resourcesintended to meet those costs and, if the risks to be covered are clas-sified in class 18 in point A of the Annex, the resources at theundertaking's disposal for the provision of the assistance promised1973L0239 — EN — 07.08.1995 — 010.001 — 10
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and, in addition, for the first three financial years:
(e) estimates of management expenses other than installation costs, in
particular current general expenses and commissions;
(f) estimates of premiums or contributions and claims;
(g) a forecast balance sheet;
(h) estimates of the financial resources intended to cover underwriting
liabilitiesand the s olvency margin.
Article 10
1. An insurance undertaking that proposes to establish a branch
within the territory of another Member State shall notify the competent
authoritiesof itshome Member State.
2. The Member States shall require every insurance undertaking that
proposes to establish a branch within the territory of another MemberState to provide the following information when effecting the notifica-
tion provided for in paragraph 1:
(a) the Member State within the territory of which it proposes to estab-
lish a branch;
(b) a scheme of operations setting out, inter alia, the types of business
envisaged and the structural organization of the branch;
(c) the address in the Member State of the branch from which docu-
mentsmay be obtained and to which they may be delivered, it
being understood that that address shall be the one to which all
communicationsto the authorized agent are s ent;
(d) the name of the branch's authorized agent, who must possess suffi-
cient powersto bind the undertaking in relation to third partiesandto represent it in relations with the authorities and courts of theMember State of the branch. With regard to Lloyd's, in the eventof any litigation in the Member State of the branch arising out ofunderwritten commitments, the insured persons must not be treated
less favourably than if the litigation had been brought against busi-
nesses of a conventional type. The authorized agent must,therefore, possess sufficient powers for proceedings to be takenagainst him and must in that capacity be able to bind the Lloyd'sunderwritersconcerned.
Where the undertaking intendsitsbranch to cover ris ksin clas s10 of
point A of the Annex, not including carrier'sliability, it mus t produce adeclaration that it hasbecome a member of the national bureau and thenational guarantee fund of the Member State of the branch.
3. Unless the competent authorities of the home Member State have
reason to doubt the adequacy of the administrative structure or thefinancial situation of the insurance undertaking or the good repute andprofessional qualifications or experience of the directors or managers
or the authorized agent, taking into account the business planned, they
shall within three months of receiving all the information referred to inparagraph 2 communicate that information to the competent authoritiesof the Member State of the branch and shall inform the undertakingconcerned accordingly.
The competent authorities of the home Member State shall also attest
that the insurance undertaking has the minimum solvency margincalculated in accordance with Articles16 and 17.
Where the competent authoritiesof the home Member State refus e to
communicate the information referred to in paragraph 2 to the compe-tent authoritiesof the Member State of the branch they s hall give thereasons for their refusal to the undertaking concerned within threemonths of receiving all the information in question. That refusal orfailure to act may be subject to a right to apply to the courts in the
home Member State.
4. Before the branch of an insurance undertaking starts business, the
competent authoritiesof the Member State of the branch s hall, withintwo monthsof receiving the information referred to in paragraph 3,1973L0239 — EN — 07.08.1995 — 010.001 — 11
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inform the competent authority of the home Member State, if appro-
priate, of the conditionsunder which, in the interes t of the generalgood, that business must be carried on in the Member State of the
branch.
5. On receiving a communication from the competent authoritiesof
the Member State of the branch or, if no communication isreceivedfrom them, on expiry of the period provided for in paragraph 4, thebranch may be established and start business.
6. In the event of a change in any of the particularscommunicated
under paragraph 2 (b), (c) or (d), an insurance undertaking shall give
written notice of the change to the competent authoritiesof the home
Member State and of the Member State of the branch at least onemonth before making the change so that the competent authorities ofthe home Member State and the competent authoritiesof the MemberState of the branch may fulfil their respective roles under paragraphs 3and 4.
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 authoritieshave 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
1. The financial supervision of an insurance undertaking, including
that of the business it carries on either through branches or under thefreedom to provide services, shall be the sole responsibility of the
home Member State.
2. That financial supervision shall include verification, with respect
to the insurance undertaking's entire business, of its state of solvency,of the establishment of technical provisions and of the assets coveringthem in accordance with the ruleslaid down or practicesfollowed inthe home Member State under provisions adopted at Community level.
Where the undertaking in question is authorized to cover the risks clas-
sified in class 18 in point A of the Annex, supervision shall extend to
monitoring of the technical resources which the undertaking has at its
disposal for the purpose of carrying out the assistance operations it hasundertaken to perform, where the law of the home Member Stateprovides for the monitoring of such resources.
3. The competent authoritiesof the home Member State s hall
require every insurance undertaking to have sound administrative and
accounting procedures and adequate internal control mechanisms.
Article 14
The Member State of the branch shall provide that where an insurance
undertaking authorized in another Member State carries on business
through a branch the competent authoritiesof the home Member Statemay, after having informed the competent authoritiesof the MemberState of the branch, carry out themselves or through the intermediaryof persons they appoint for that purpose on-the-spot verification of theinformation necessary to ensure the financial supervision of the under-1973L0239 — EN — 07.08.1995 — 010.001 — 12
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taking. The authoritiesof the Member State of the branch may partici-
pate in that verification.
Article 15
1. The home Member State shall require every insurance under-
taking to establish adequate technical provisions in respect of itsentire business.
The amount of such technical provisions shall be determined in accor-
dance with the ruleslaid down in Directive 91/674/EEC.
2. The home Member State shall require every insurance under-
taking to cover the technical provisions in respect of its entirebusiness by matching assets in accordance with Article 6 of Directive
88/357/EEC. In respect of risks situated within the European Commu-
nity, those assets must be localized within the Community. MemberStates shall not require insurance undertakings to localize their assetsin any particular Member State. The home Member State may,however, permit relaxations in the rules on the localization of assets.
3. If the home Member State allowsany technical provis ionsto be
covered by claims against reinsurers, it shall fix the percentage soallowed. In such cases, it may not specify the localization of the assetsrepresenting such claims.
Article 15a
1. Member States shall require every insurance undertaking with a
head office within their territorieswhich underwritesris ksincluded inclass 14 in point A of the Annex (hereinafter referred to as ‘creditinsurance’) to set up an equalization reserve for the purpose of offset-
ting any technical deficit or above-average claimsration aris ing in that
class in any financial year.
2. The equalization reserve shall be calculated in accordance with
the ruleslaid down by the home Member State in accordance withone of the four methods set out in point D of the Annex, which shall
be regarded asequivalent.
3. Up to the amount calculated in accordance with the methodss et
out in point D of the Annex, the equalization reserve shall be disre-garded for the purpose of calculating the solvency margin.
4. Member Statesmay exempt ins urance undertakingswith head
officeswithin their territoriesfrom the obligation to s et up equalizationreserves for credit insurance business where the premiums or contribu-tions receivable in respect of credit insurance are less than 4 % of thetotal premiumsor contributionsreceivable by them and les sthan ECU
2 500 000.
Article 16
1. The home Member State shall require every insurance under-
taking to establish an adequate solvency margin in respect of its entire
business.
The solvency margin shall correspond to the assets of the undertaking
free of any foreseeable liabilities less any intangible items. In particularthe following shall be included:
— the paid-up share capital or, in the case of a mutual insurance
undertaking, the effective initial fund plusany members ' accountswhich meet all the following criteria:
(a) the memorandum and articles of association must stipulate that
paymentsmay be made from thes e accountsto membersonlyinsofar as this does not cause the solvency margin to fall belowthe required level, or, after the dissolution of the undertaking, ifall the undertaking'sother debtshave been s ettled;1973L0239 — EN — 07.08.1995 — 010.001 — 13
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(b) the memorandum and articles of association must stipulate, with
respect to any such payments for reasons other than the indivi-dual termination of membership, that the competent authorities
must be notified at least one month in advance and can prohibit
the payment within that period and
(c) the relevant provisions of the memorandum and articles of asso-
ciation may be amended only after the competent authoritieshave declared that they have no objection to the amendment,without prejudice to the criteria stated in (a) and (b);
— one-half of the unpaid share capital or initial fund, once the paid-up
part amountsto 25 % of that s hare capital or fund,
— reserves (statutory reserves and free reserves) not corresponding to
underwriting liabilities,
— any profitsbrought forward,— in the case of mutual or mutal-type association with variable contri-
butions, any claim which it has against its members by way of a
call for supplementary contribution, within the financial year, upto one-half of the difference between the maximum contributionsand the contributionsactually called in, and s ubject to a limit of50 % of the margin,
— at the request of and on the production of proof by the insurance
undertaking, any hidden reserves arising out of the undervaluationof assets, insofar as those hidden reserves are not of an exceptionalnature,
— cumulative preferential share capital and subordinated loan capital
may be included but, if so, only up to 50 % of the margin, nomore than 25 % of which shall consist of subordinated loans witha fixed maturity, or fixed-term cumulative preferential share capital,if the following minimum criteria are met:
(a) in the event of the bankruptcy or liquidation of the insurance
undertaking, binding agreements must exist under which thesubordinated loan capital or preferential share capital ranks after
the claimsof all other creditorsand isnot to be repaid until all
other debts outstanding at the time have been settled.
Subordinated loan capital must fulfil the following additional condi-
tions:
(b) only fully paid-up fundsmay be taken into account;
(c) for loanswith a fixed maturity, the original maturity mus t be at
least five years. No later than one year before the repaymentdate the insurance undertaking must submit to the competent
authorities for their approval a plan showing how the solvency
margin will be kept at or brought to the required level atmaturity, unless the extent to which the loan may rank as acomponent of the solvency margin is gradually reduced duringat least the last five years before the repayment date. The
competent authoritiesmay authorize the early repayment of
such loans provided application is made by the issuing insur-ance undertaking and itss olvency margin will not fall belowthe required level;
(d) loansthe maturity of which isnot fixed mus t be repayable only
subject to five years' notice unless the loans are no longerconsidered a component of the solvency margin or unless the
prior consent of the competent authorities is specifically
required for early repayment. In the latter event the insuranceundertaking must notify the competent authorities at least sixmonths before the date of the proposed repayment, specifyingthe actual and required solvency margins both before and after
that repayment. The competent authoritiess hall authorize
repayment only if the insurance undertaking's solvency marginwill not fall below the required level;
(e) the loan agreement must not include any clause providing that
in specified circumstances, other than the winding-up of theinsurance undertaking, the debt will become repayable beforethe agreed repayment dates;1973L0239 — EN — 07.08.1995 — 010.001 — 14
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(f) the loan agreement may be amended only after the competent
authoritieshave declared that they have no objection to theamendment;
— securities with no specified maturity date and other instruments that
fulfil the following conditions, including cumulative preferentialshares other than those mentioned in the preceding indent, up to50 % of the margin for the total of such securities and the subordi-
nated loan capital referred to in the preceding indent:
(a) they may not be repaid on the initiative of the bearer or without
the prior consent of the competent authority;
(b) the contract of issue must enable the insurance undertaking to
defer the payment of interest on the loan;
(c) the lender's claims on the insurance undertaking must rank
entirely after those of all non-subordinated creditors;
(d) the documents governing the issue of the securities must
provide for the loss-absorption capacity of the debt and unpaidinterest, while enabling the insurance undertaking to continueits business;
(e) only fully paid-up amountsmay be taken into account.
2. The solvency margin shall be determined on the basis either of
the annual amount of premiumsor contributions , or of the averageburden of claims for the past three financial years. ►
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however, of undertakings which essentially underwrite only one ormore of the risks of credit, storm, hail or frost, the last seven financial
yearss hall be taken asthe reference period 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 two
results:
first result (premium basis):
— the premiumsor contributions(inclus ive of chargesancillary to
premiums or contributions) due in respect of all direct business in
the last financial year for all financial years, shall be aggregated,
— to thisaggregate there s hall 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
premiumsor contributionscancelled in the las t financial year, aswell asthe total amount of taxesand leviespertaining to thepremiumsor contributionsentering into the aggregate.
The amount so obtained shall be divided into two portions, the first
portion extending up to 10 million unitsof account, the s econdcomprising 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 claimsremaining 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 thisaggregate there s hall be added the amount of claimspaid in
respect of reinsurances or retrocessions accepted during the sameperiods,
— to this sum there shall be added the amount of provisions or
reserves for outstanding claims established at the end of the lastfinancial year both for direct business and for reinsurance accep-tances,1973L0239 — EN — 07.08.1995 — 010.001 — 15
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— from this sum there shall be deducted the amount of
►C1recoverieseffected ◄during the periodss pecified in (2),
— from the sum then remaining, there shall be deducted the amount of
provisions or reserves for outstanding claims established at thecommencement of the second financial year preceding the last
financial year for which there are accounts, both for direct business
and for reinsurance acceptances.
One-third, or one-seventh, of the amount so obtained, according to the
period of reference established in (2), shall be divided into twoportions, the first extending up to seven million units of account andthe second comprising the excess; 26 % and 23 % of these portionsrespectively shall be calculated and added together.
The second result shall be obtained by multiplying the sum so obtained
by the ratio existing in respect of the last financial year between the
amount of claims remaining to be borne by the business after transfersfor reinsurance and the gross amount of claims; this ratio may in nocase be less than 50 %.
In the case of the risks listed under No 18 in point A of the Annex, the
amount of claims paid used to calculate the second result (claims basis)
shall be the costs borne by the undertaking in respect of assistance
given. Such costs shall be calculated in accordance with the nationalprovisions of the Member State in whose territory the head office ofthe undertaking iss ituated.
4. The fractionsapplicable to the portionsreferred to in (3) s hall
each be reduced to a third in the case of health insurance practised on
a similar technical basis to that of life assurance, if
— the premiums paid are calculated on the basis of sickness tables
according to the mathematical method applied in insurance,
— a reserve is set up for 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 paymentseven 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 ofnet premiums, which shall be multiplied by a flat-rate percentage fixedannually by ►
C1the supervisory authority of the head office. ◄This
flat-rate percentage must be calculated on the basis of the most recent
statistical data on commissions paid.
The details, together with the relevant calculations shall be sent to the
authorities of the countries where Lloyd's is established.
Article 17
1. One-third of the solvency margin shall constitute the guarantee
fund.
2. (a) The guarantee fund may not, however, be less than:
— 1 400 000 ECU in the case where all or some of the risks
included in the class listed in point A of the Annex under
No 14 are covered. This provision shall apply to every
undertaking for which the annual amount of premiumsorcontributions due in this class for each of the last threefinancial yearsexceeded 2 500 000 ECU or 4 % of the totalamount of premiumsor contributionsreceivable by theundertaking concerned,
— 400 000 ECU in the case where all or some of the risks
included in one of the classes listed in point A of the Annex1973L0239 — EN — 07.08.1995 — 010.001 — 16
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under Nos 10, 11, 12, 13 and 15 and, insofar as the first
indent doesnot apply, No 14,
— 300 000 ECU in the case where call or some of the risks
included in one of the classes listed in point A of the Annexunder Nos1, 2, 3, 4, 5, 6, 7, 8, 16 and 18 are covered,
— 200 000 units of account in the case where all or some of the
risks included in one of the classes listed in point A of theAnnex under Nos9 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 the
highest amount is required shall be taken into account;
(c) Any Member State may provide for a one-fourth reduction of
the minimum guarantee fund in the case of mutual associationsand mutual-type associations;
(d) Where an undertaking carrying on credit insurance is required to
increase the fund referred to in subparagraph (a), first indent, to
1 400 000 ECU, the Member State concerned shall allow suchundertaking:
— a period of three yearsin which to bring the fund up to
1 000 000 ECU,
— a period of five yearsto bring the fund up to 1 200 000 ECU,— a period of seven years to bring the fund up to
1 400 000 ECU.
These periods shall run from the date from which the conditions
referred to in the first indent of subparagraph (a) are fulfilled.
Article 18
1. Member States shall not prescribe any rules as to the choice of
the assets that need not be used as cover for the technical provisionsreferred to in Article 15.
2. Subject to Article 15 (2), Article 20 (1), (2), (3) and (5) and the
last subparagraph of Article 22 (1), Member States shall not restrainthe free disposal of those assets, whether movable or immovable, thatform part of the assets of authorized insurance undertakings.
3. Paragraphs 1 and 2 shall not preclude any measures which
Member States, while safeguarding the interests of the isured persons,are entitled to take asownersor membersof or partnersto the under-
takingsin ques tion.
Article 19
1. Each Member State shall require every undertaking whose head
office iss ituated in itsterritory to produce an annual account, coveringall types of operation, of its financial situation, solvency and, as
regards cover for risks listed under No 18 in point A of the Annex,
other resources available to them for meeting their liabilities, whereits laws provide for supervision of such resources.
1a. In respect of credit insurance, the undertaking shall make avail-
able to the supervisory authority accounts showing both the technicalresults and the technical reserves relating to that business.
2. Member States shall require insurance undertakings with head
officeswithin their territoriesto render periodically the returns ,together with statistical documents, which are necessary for thepurposes of supervision. The competent authorities shall provide each1973L0239 — EN — 07.08.1995 — 010.001 — 17
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other with any documentsand information that are us eful for the
purposes of supervision.
3. Every Member State shall take all steps necessary to ensure that
the competent authorities have the powers and means necessary for the
supervision of the business of insurance undertakings with head officeswithin their territories, including business carried on outwith thoseterritories, in accordance with the Council Directives governing suchbusiness and for the purpose of seeing that they are implemented.
These powers and means must, in particular, enable the competent
authoritiesto:
(a) make detailed enquiriesregarding an undertaking'ss ituation and
the whole of its business, inter alia, by:
— gathering information or requiring the submission of documents
concerning its insurance business,
— carrying out on-the-spot investigations at the undertaking's
premises;
(b) take any measures with regard to an undertaking, its directors or
managersor the pers onswho control it, that are appropriate and
necessary to ensure that that undertaking's business continues to
comply with the laws, regulations and administrative provisionswith which the undertaking must comply in each Member Stateand in particular with the scheme of operations insofar as itremainsmandatory, and to prevent or remedy any irregularitiesprejudicial to the interests of insured persons;
(c) ensure that those measures are carried out, if need be by enforce-
ment and where appropriate through judicial channels.
Member States may also make provision for the competent authorities
to obtain any information regarding contractswhich are held by inter-
mediaries.
Article 20
1. If an undertaking doesnot comply with Article 15, the competent
authority of its home Member State may prohibit the free disposal ofits assets after having communicated its intention to the competentauthorities of the Member States in which the risks are situated.
2. For the purposes of restoring the financial situation of an under-
taking the solvency margin of which has fallen below the minimum
required under Article 16 (3), the competent authority of the home
Member State shall require that a plan for the restoration of a soundfinancial situation be submitted for its approval.
In exceptional circumstances, if the competent authority is of the
opinion that the financial situation of the undertaking will deterioratefurther, it may also restrict or prohibit the free disposal of the under-
taking's assets. It shall inform the authorities of other Member States
within the territories of which the undertaking carries on business ofany measures it has taken and the latter shall, at the request of theformer, take the same measures.
3. If the solvency margin falls below the guarantee fund as defined
in Article 17, the competent authority of the home Member State shall
require the undertaking to submit a short-term finance scheme for its
approval.
It may also restrict or prohibit the free disposal of the undertaking's
assets. It shall inform the authorities of other Member States withinthe territories of which the undertaking carries on business accordinglyand the latter shall, at the request of the former, take the same
measures.
4. The competent authorities may further take all measures neces-
sary to safeguard the interests of insured persons in the cases providedfor in paragraphs1, 2 and 3.
5. Each Member State shall take the measures necessary to be able,
in accordance with its national law, to prohibit the free disposal of1973L0239 — EN — 07.08.1995 — 010.001 — 18
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assets located within its territory at the request, in the cases provided
for in paragraphs1, 2 and 3, of the undertaking'shome Member State,which shall designate the assets to be covered by such measures.
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 possess
the necessary solvency margin, due account being taken of the assign-
ment.
The supervisory authorities concerned shall consult each other before
approving such assignment.
2. Once approved by the competent supervisory authority, such
assignment shall affect directly the policy-holders or insured
concerned.
SectionC: Withdrawalofauthorization
Article 22
1. Authorization granted to an insurance undertaking by the compe-
tent authority of itshome Member State may be withdrawn by thatauthority if that undertaking:
(a) does not make use of that authorization within 12 months,
expressly renounces it or ceases to carry on business for morethan six months, unless the Member State concerned has made
provision for authorization to lapse in such cases;
(b) no longer fulfils the conditions for admission;
(c) hasbeen unable, within the time allowed, to take the meas ures
specified in the restoration plan or finance scheme referred to inArticle 20;
(d) fails seriously in its obligation under the regulations to which it is
subject.
In the event of the withdrawal or lapse of authorization, the competent
authority of the home Member State shall notify the competent autho-ritiesof the other Member Statesaccordingly, and they s hall takeappropriate measures to prevent the undertaking from commencingnew operations within their territories, under either the right of estab-
lishment or the freedom to provide services. The home Member State's
competent authority shall, in conjunction with those authorities, take allmeasures necessary to safeguard the interests of insured persons and, inparticular, shall restrict the free disposal of the undertaking's assets inaccordance with Article 20 (1), (2), second subparagraph, or (3),
second subparagraph.
2. Any decision to withdraw authorization shall be supported by
precise reasons and communicated to the undertaking in question.
Title IIIA— Rulesapplicabletoagencies or branchesestablished
within the Community and belonging to undertakings whose head
officesareoutsidetheCommunity
Article 23
1. Each Member State shall make access to the business referred to
in Article 1 by any undertaking whose head office is outside theCommunity subject to an official authorization.
2. A Member State may grant an authorization if the undertaking
fulfils at least the following conditions:
(a) It is entitled to undertake insurance business under its national law;1973L0239 — EN — 07.08.1995 — 010.001 — 19
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(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 keep there all the records relating to the businesstransacted;
(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 amountprescribed in Article 17 (2), in respect of the guarantee fund, anddeposits one-fourth of the minimum amount as security;
(f) It undertakesto keep a margin of s olvency in accordance with the
requirementsreferred 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 Statess hall 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 all
foreseeable liabilities, less any intangible items. The solvency margin
shall be calculated in accordance with the provisions of Article 16 (3).However, for the purpose of calculating this margin, account shall betaken only of the premiumsor contributionsand claimspertaining tothe business effected by the agency or branch concerned.
2. One-third of the solvency margin shall constitute the guarantee
fund. The guarantee fund may not be less than one-half of theminimum required under Article 17 (2). The initial deposit lodged inaccordance with Article 23 (2) (e) shall be counted towards such guar-antee fund.
3. The assets representing the solvency margin must be kept within
the country where the business is carried on up to the amount of the
guarantee fund and the excess, within the Community.
Article 26
1. Any undertaking which hasreques ted or obtained authorization
from more than one Member State may apply for the following advan-
tageswhich may be granted only jointly:
(a) the solvency margin referred to in Article 25 shall be calculated in
relation to the entire business which it carries on within theCommunity; in such case, account shall be taken only of the opera-tions effected by all the agencies or branches established within the
Community for the purposes of this calculation;
(b) the deposit required under Article 23 (2) (e) shall be lodged in only
one of those Member States;1973L0239 — EN — 07.08.1995 — 010.001 — 20
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(c) the assets representing the guarantee fund shall be localized in any
one of the Member Statesin which it carrieson itsactivities .
2. Application to benefit from the advantagesprovided for in para-
graph 1 shall be made to the competent authorities of the Member
States concerned. The application must state the authority of theMember State which in future is to supervise the solvency of the entirebusiness of the agencies or branches established within the Community.Reasons must be given for the choice of authority made by the under-taking. The deposit shall be lodged with that Member State.
3. The advantagesprovided for in paragraph 1 may only be granted
if the competent authoritiesof all Member Statesin which an applica-tion hasbeen made agree to them. They s hall take effect from the timewhen the selected supervisory authority informs the other supervisoryauthorities that it will supervise the state of solvency of the entire busi-ness of the agencies or branches within the Community.
The supervisory authority selected shall obtain from the other Member
States the information necessary for the supervision of the overallsolvency of the agencies and branches established in their territory.
4. At the request of one or more of the Member States concerned,
the advantages granted under this Article shall be withdrawn simulta-neously by all Member States concerned.
Article 27
The provisions of Articles 19 and 20 shall also apply in relation to
agenciesand branchesof undertakingsto which thisTitle applies .
Asregardsthe application of Article 20, where an undertaking qualifies
for the advantagesprovided for in Article 26 (1), the authority res pon-
sible for verifying the solvency of agencies or branches established
within the Community with respect to their entire business shall betreated in the same way as the authority of the State in the territory ofwhich the head office of a Community undertaking iss ituated.
Article 28
In the case of a withdrawal of authorization by the authority referred to
in Article 26 (2), thisauthority s hall notify the authoritiesof the other
Member Stateswhere the undertaking operatesand the latter s upervi-sory authorities shall take the appropriate measures. If the reason forthe withdrawal of the authorization isthe 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 28a
1. Under the conditionslaid down by national law, each Member
State shall authorize agencies and branches set up within its territoryand covered by thisTitle to trans fer all or part of their portfoliosof
contracts to an accepting office established in the same Member State
if the competent authoritiesof that Member State or, if appropriate, ofthe Member State referred to in Article 26 certify that after taking thetransfer into account the accepting office possesses the necessarysolvency margin.
2. Under the conditionslaid down by national law, each Member
State shall authorize agencies and branches set up within its territory
and covered by thisTitle to trans fer all or part of their portfoliosofcontractsto an ins urance undertaking with a head office in anotherMember State if the competent authoritiesof that Member State certifythat after taking the transfer into account the accepting office possessesthe necessary solvency margin.1973L0239 — EN — 07.08.1995 — 010.001 — 21
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3. If under the conditionslaid down by national law a Member State
authorizesagenciesand branchess et up within itsterritory and coveredby thisTitle to trans fer all or part of their portfoliosof contractsto an
agency or branch covered by thisTitle and s et up within the territory of
another Member State it shall ensure that the competent authorities ofthe Member State of the accepting office or, if appropriate, of theMember State referred to in Article 26 certify that after taking thetransfer into account the accepting office possesses the necessary
solvency margin, that the law of the Member State of the accepting
office permits such a transfer and that that State has agreed to thetransfer.
4. In the circumstances referred to in paragraphs 1, 2 and 3 the
Member State in which the transferring agency or branch is situated
shall authorize the transfer after obtaining the agreement of the compe-
tent authorities of the Member State in which the risks are situated,where different from the Member State in which the transferringagency or branch iss ituated.
5. The competent authorities of the Member States consulted shall
give their opinion or consent to the competent authorities of the homeMember State of the transferring insurance undertaking within threemonths of receiving a request; the absence of any response from theauthorities consulted within that period shall be considered equivalentto a favourable opinion or tacit consent.
6. A transfer authorized in accordance with this Article shall be
published as laid down by national law in the Member State in whichthe risk is situated. Such transfers shall automatically be valid againstpolicyholders, insured persons and any other persons having rights or
obligations arising out of the contracts transferred.
This provision shall not affect the Member States' right to give policy-
holdersthe option of cancelling contractswithin a fixed period after atransfer.
Article 29
The Community may, by meansof agreementsconcluded purs uant to
the Treaty with one or more third countries, agree to the application
of provisions different to those provided for in this Title, for thepurpose of ensuring, under conditions of reciprocity, adequate protec-tion for insured persons in the Member States.
Title III B — Rules applicable to subsidiaries of parent undertak-
ingsgovernedbythelawsofathirdcountryandtoacquisitionsof
holdingsbysuchparentundertakings
Article 29a
The competent authoritiesof the Member Statess hall inform the
Commission:
(a) of any authorization of a direct or indirect subsidiary, one or more
parent undertakingsof which are governed by the lawsof a third
country. The Commission shall inform the Insurance Committeeto be established by the Council on proposal by the Commission;
(b) whenever such a parent undertaking acquires a holding in a
Community insurance undertaking which would turn the latter intoits subsidiary. The Commission shall inform the InsuranceCommittee to be established by the Council on proposal by the
Commission accordingly.
When authorization is granted to the direct or indirect subsidiary of one
or more parent undertakingsgoverned by the law of third countries , thestructure of the group shall be specified in the notification which thecompetent authorities shall address to the Commission.1973L0239 — EN — 07.08.1995 — 010.001 — 22
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Article 29b
1. Member States shall inform the Commission of any general diffi-
culties encountered by their insurance undertakings in establishingthemselves or carrying on their activities in a third country.
2. Initially not later than six months before the application of this
Directive, and thereafter periodically, the Commission shall draw up a
report examining the treatment accorded to Community insurance
undertakingsin third countries , in the termsreferred to in paragraphs3 and 4, as regards establishment and the carrying on of insuranceactivities, and the acquisition of holdings in third-country insuranceundertakings. The Commission shall submit those reports to the
Council, together with any appropriate proposals.
3. Whenever it appears to the Commission, either on the basis of the
reportsreferred to in paragraph 2 or on the bas isof other information,that a third country isnot granting Community ins urance undertakingseffective market access comparable to that granted by the Community
to insurance undertakings from that third country, the Commission may
submit proposals to the Council for the appropriate mandate for nego-tiation with a view to obtaining comparable competitive opportunitiesfor Community insurance undertakings. The Council shall decide by aqualified majority.
4. Whenever it appears to the Commission, either on the basis of the
reportsreferred to in paragraph 2 or on the bas isof other information,that Community insurance undertakings in a third country are notreceiving national treatment offering the same competitive opportu-nities as are available to domestic insurance undertakings and that the
conditionsof effective market acces sare not being fulfilled, the
Commission may initiate negotiations in order to remedy the situation.
In the circumstances described in the first subparagraph, it may also be
decided at any time, and in addition to initiating negotiations, in accor-
dance with the procedure laid down in the Act establishing the
Insurance Committee referred to in Article 29a, that the competentauthorities of the Member States must limit or suspend their decisions:
— regarding requests pending at the moment of the decision or future
requests for authorizations, and
— regarding the acquisition of holdings by direct or indirect parent
undertakingsgoverned by the lawsof the third country in ques tion.
The duration of the measures referred to may not exceed three months.
Before the end of that three-month period, and in the light of the
results of the negotiations, the Council may, acting on a proposalfrom the Commission, decide by a qualified majority that the measuresshall be continued.
Such limitations or suspension may not apply to the setting up of subsi-
diaries by insurance undertakings or their subsidiaries duly authorizedin the Community, or to the acquisition of holdings in Communityinsurance undertakings by such undertakings or subsidiaries.
5. Whenever it appears to the Commission that one of the situations
described in paragraphs 3 and 4 has arisen, the Member States shallinform it at itsreques t:
(a) of any request for the authorization of a direct or indirect
subsidiary, one or more parent undertakings of which are governed
by the lawsof the third country in ques tion;
(b) of any plansfor s uch an undertaking to acquire a holding in a
Community insurance undertaking such that the latter wouldbecome the subsidiary of the former.
This obligation to provide information shall lapse once an agreement is
concluded with the third country referred to in paragraph 3 or 4 or
when the measures referred to in the second and third subparagraphsof paragraph 4 cease to apply.
6. Measures taken under this Article shall comply with the Commu-
nity'sobligationsunder any international agreements , bilateral or1973L0239 — EN — 07.08.1995 — 010.001 — 23
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multilateral, governing the taking-up and pursuit of the business of
insurance undertakings.
TitleIV— Transitionalandotherprovisions
Article 30
1. Member Statess hall allow undertakingsreferred 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 thisDirective, in order to comply withthe requirementsof Articles16 and 17.
2. Furthermore, Member Statesmay:
(a) allow any undertakingsreferred 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 undertakingsreferred to in (1) whos e 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. Undertakingsdes iring to extend their operationswithin the
meaning of Article 8 (2) or Article 10 may not do so unless they
comply immediately with the rulesof thisDirective. However, the
undertakingsreferred to in paragraph (2) (b) which within the nationalterritory extend their business to other classes of insurance or to otherpartsof s uch territory may be exempted for a period of ten yearsfromthe 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. Undertakingss et up in the United Kingdom ‘by Royal Charter’or ‘by private Act’ or ‘by special public Act’ may continue to carry
on their business in their present form for an unlimited period.
Undertakingsin 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 yearsfrom the date of notification of thisDirective.
The Member States in question shall draw up a list of such undertak-
ingsand communicate it to the other Member Statesand 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 Statess hall allow agenciesor branchesreferred to in Title III
which, at the entry into force of the implementing measures to this1973L0239 — EN — 07.08.1995 — 010.001 — 24
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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 conditionsof Article 25.
Article 32
During a period which terminatesat 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-tionsgranted purs uant to Article 15 (2) in favour of the undertakingsofMember 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-cultieswhich may aris e in the application of thisDirective.
Article 34
1. The Commission shall submit to the Council, within six years
from the date of notification of thisDirective, 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
reportsto the Council before the end of the trans itional period providedfor in Article 30 (1).
Article 35
Member States shall amend their national provisions to comply with
thisDirective within 18 monthsof itsnotification and s hall forthwithinform the Commission thereof.
The provisions thus amended shall, subject to Articles 30, 31 and 32,
be applied within 30 monthsfrom 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 thisDirective 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 — 07.08.1995 — 010.001 — 25
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ANNEX
A.Classificationofrisksaccordingtoclassesofinsurance
1.Accident (including industrial injury and occupational diseases)
— fixed pecuniary benefits
— benefitsin the nature of indemnity— combinationsof the two
— injury to passengers
2.Sickness
— fixed pecuniary benefits
— benefitsin the nature of indemnity— combinationsof the two
3.Land vehicles (other than railway rolling stock)
All damage to or loss of
— land motor vehicles
— land vehiclesother 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 forcesother than s torm— 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'sliability)
11.Aircraft liability
All liability arising out of the use of aircraft (including carrier's liability)1973L0239 — EN — 07.08.1995 — 010.001 — 26
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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 formsof financial los s
17.Legal expenses
Legal expenses and costs of litigation
18.Assistance
Assistance for persons who get into difficulties while travelling, while
away from home or while away from their permanent residence
The risks included in a class may not be included in any other class
except 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 Suretyship Insur-
ance’;
(h) All classes, it shall be named at the choice of the Member State in ques-
tion, which shall notifiy the other Member States and the Commission of
itschoice.1973L0239 — EN — 07.08.1995 — 010.001 — 27
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C.Ancillaryrisks
An undertaking obtaining an authorization for a principal risk belonging to
one class or a group of classes may also insure risks included in another
class without an authorization being necessary for them if they:
— are connected with the principal risk,
— concern the object which is covered against the principal risk, and— are covered by the contract insuring the principal risk.
However, the risks included in classes 14, 15 and 17 in point A may not be
regarded as risks ancillary to other classes.
Nonetheless, the risk included in class 17 (legal expenses insurance) may be
regarded as an ancillary risk of class 18 where the conditions laid down in
the first subparagraph are fulfilled, where the main risk relates solely to the
assistance provided for persons who fall into difficulties while travelling,
while away from home or while away from their permanent residence.
Legal expenses insurance may also be regarded as an ancillary risk under the
conditions set out in the first subparagraph where it concerns disputes or
risks arising out of, or in connection with, the use of seagoing vessels.
D.Methods of calculating the equalization reserve for the credit insurance
class
Method No 11. In respect of the risks included in the class of insurance in point A No 14
(hereinafter referred to as ‘credit insurance’), the undertaking shall set up
an equalization reserve to which shall be charged any technical deficit
arising in that class for a financial year.
2. Such reserve shall in each financial year receive 75 % of any technical
surplus arising on credit insurance business, subject to a limit of 12 %
of the net premiumsor contributionsuntil the res erve hasreached 150 %
of the highest annual amount of net premiums or contributions received
during the previousfive financial years .
Method No 2
1. In respect of the risks included in the class of insurance listed in point A
No 14 (hereinafter referred to as ‘credit insurance’) the undertaking shall
set up an equalization reserve to which shall be charged any technical
deficit arising in that class for a financial year.
2. The minimum amount of the equilization reserve shall be 134 % of the
average of the premiumsor contributionsreceived annually during the
previous five financial years after subtraction of the cessions and addition
of the reinsurance acceptances.
3. Such reserve shall in each of the successive financial years receive 75 %
of any technical surplus arising in that class until the reserve is at least
equal to the minimum calculated in accordance with paragraph 2.
4. Member Statesmay lay down s pecial rulesfor the calculation of the
amount of the reserve and/or the amount of the annual levy in excess of
the minimum amountslaid down in thisDirective.
Method No 31. An equalization reserve shall be formed for class 14 in point A (herein-
after referred to as ‘credit insurance’) for the purpose of offsetting any
above-average claims ratio for a financial year in that class of insurance.
2. The equalization reserve shall be calculated on the basis of the method
set out below.
All calculations shall relate to income and expenditure for the insurer's
own account.
An amount in respect of any claims shortfall for each financial year shall
be placed to the equalization reserve until it has reached, or is restored to,
the required amount.
There shall be deemed to be a claims shortfall if the claims ratio for a
financial year islower than the average claimsratio for the reference
period. The amount in respect of the claims shortfall shall be arrived at
by multiplying the difference between the two ratiosby the earned
premiumsfor the financial year.1973L0239 — EN — 07.08.1995 — 010.001 — 28
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The required amount shall be equal to six times the standard devition of
the claimsratiosin the reference period from the average claimsratio,
multiplied by the earned premiumsfor the financial year.
Where claims for any financial year are in excess, an amount in respect
thereof shall be taken from the equalization reserve. Claims shall be
deemed to be in excess if the claims ratio for the financial year is higher
than the average claims ratio. The amount in respect of the excess claims
shall be arrived at by multiplying the difference between the two ratios
by the earned premiumsfor the financial year.
Irrespective of claims experience, 3,5 % of the required amount of the
equalization reserve shall be first placed to that reserve each financial
year until itsrequired amount hasbeen reached or res tored.
The lenght of the reference period shall be not less than 15 years and not
more than 30 years. No equalization reserve need be formed if no under-
writing loss has been noted during the reference period.
The required amount of the equalization reserve and the amount to be
taken from it may be reduced if the average claimsratio for the reference
period in conjunction with the expenses ratio show that the premiums
include a safety margin.
Method No 41. An equalization reserve shall be formed for class 14 in point A (herein-
after referred to as ‘credit insurance’) for the purpose of offsetting any
above-average claims ratio for a financial year in that class of insurance.
2. The equalization reserve shall be calculated on the basis of the method
set out below.
All calculations shall relate to income and expenditure for the insurer's
own account.
An amount in respect of any claims shortfall for each financial year shall
be placed to the equalization reserve until it has reached the maximum
required amount.
There shall be deemed to be a claims shortfall if the claims ratio for a
financial year islower than the average claimsratio for the reference
period. The amount in respect of the claims shortfall shall be arrived at
by multiplying the difference betwen the two ratiosby the earned
premiumsfor the financial year.
The maximum required amount shall be equal to six times the standard
deviation of the claimsratio in the reference period from the average
claimsratio, multiplied by the earned premiumsfor the financial year.
Where claims for any financial year are in excess, an amount in respect
thereof shall be taken from the equalization reserve until it has reached
the minimum required amount. Claims shall be deemed to be in excess
if the claimsratio for the financial year ishigher than the average claims
ratio. The amount in respect of the excess claims shall be arrived at by
multiplying the difference between the two ratiosby the earned premiums
for the financial year.
The minimum required amount shall be equal to three times the standard
deviation of the claimsratio in the reference from the average claims
ratio multiplied by the earned premiumsfor the financial year.
The length of the reference period shall be not less than 15 years and not
more than 30 years. No equalization reserve need be formed if no under-
writing loss has been noted during the reference period.
Both required amountsof the equalization res erve and the amount to be
placed to it or the amount to be taken from it may be reduced if the
average claimsratio for the reference period in conjunction with the
expenses ratio show that the premiums include a safety margin and that
safety margin is more than one-and-a-half times the standard deviation of
the claims ratio in the reference period. In such a case the amounts in
question shall be multiplied by the quotient or one-and-a-half times the
standard deviation and the safety margin.1973L0239 — EN — 07.08.1995 — 010.001 — 29