30. 8. 76 Official  Journal  of the European  Communities No C 204/13 
experts  on fertilizers,  but also  first  and  foremost  by 
experts  on  dangerous  substances.  In addition,  it 
suggests  that  this  Committee  should  also  include 
experts  from  the  interested  economic  groups,  so as 
to involve  fertilizer  manufacturers,  distributors  and 
users  in the adaption  of the Directive. 2.9. Annex  1 
The Committee  suggests  that  the  text  procedure 
should  be described  in fuller  detail.  The  method  to 
be used  for the required  temperature  cycling  should 
also be specified. 
Done  at Brussels,  30 June  1976. 
The Chairman 
of the Economic  and  Social  Committee 
Henri  CANONGE 
Opinion  on the  proposal  for a Second  Council  Directive  on the  coordination  of the 
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 
The text  referred  to the Committee  has  been  published  in Official  Journal  No  32 of 
12 February  1976,  page  2. 
A. LEGAL  BASIS  FOR  THE  OPINION 
On 22  January  1976  the  Council  referred  the  abovementioned  proposal  to the 
Economic  and  Social  Committee  in accordance  with  Article  198  of the  Treaty 
establishing  the European  Economic  Community. 
B. OPINION  OF  THE  ECONOMIC  AND  SOCIAL  COMMITTEE 
The Economic  and  Social  Committee  prepared  its opinion  on the  above  matter  at its 
140th  plenary  session,  held  in Brussels  on 30 June  and  1 July  1976. 
The full  text  of the opinion  is as follows: 
THE  ECONOMIC  AND  SOCIAL  COMMITTEE, 
Having  regard  to  the  Treaty  establishing  the 
European  Economic  Community,  and  in particular 
Article  198  thereof, Having  regard  to the  decision  taken  by its Bureau 
on 27  January  1976,  instructing  the  Section  for 
Industry,  Commerce,  Crafts  and  Services  to draw 
up an opinion  and  a report  on the matter, 
Having  regard  to the  request  for  an opinion  made 
by the  Council  of the  European  Communities  on 
22 January  1976, Having  regard  to the opinion  issued  by the  Section 
for Industry,  Commerce,  Crafts  and  Services  at its 
meeting  on 2 June  1976, 
No C 204/14 Official  Journal  of the European  Communities 30. 8. 76 
Having  regard  to the  report  submitted  by  the 
rapporteur,  Mr Peyromaure-Debord-Broca, 
Having  regard  to the discussions  at its 140th  plenary 
session  held  on 30 June  and  1 July  1976  (meeting 
of 30 June  1976), 
HAS  ADOPTED  THE  FOLLOWING  OPINION 
by 58 votes  to four,  with  27 abstentions: 
1. Introduction 
1.1. The  contents  of the  draft  Directive  are 
summarized  below  for ease  of reference. 
1.2. The  present  situation  is that  freedom  of 
establishment  has  been  achieved  in the  field  of 
insurance  other  than  life  assurance.  A draft  Directive 
on the latter  is awaiting  a decision  from  the Council. 
1.3. As  regards  the  freedom  to provide  services, 
only one  Directive,  on co-insurance,  has gone  through 
all the  preliminary  procedures  and  is awaiting  a 
Council  decision. 
On 3 December  1974,  in its judgment  in the case  of 
J. H. M. Van  Binsbergen,  the Court  of Justice  rules 
that the  first  paragraph  of Article  59 and  the  third 
paragraph  of Article  60 of the  EEC  Treaty  have 
direct  effect,  in so far as they  seek  to abolish  any 
discrimination  against  a person  providing  a service 
on the  grounds  of his  nationality  or of the  fact 
that he resides  in a Member  State  other  than  that 
in which  the  service  is to be provided.  A Member 
State  cannot  therefore  require  a person  providing 
a service  to reside  on  its  territory,  unless  the 
provision  of such  service  is subject  to special  rules 
under  its own  national  laws. 
The Court's  judgment  has  thus  in fact  liberalized 
the provision  of services.  It now  remains  to specify, 
organize  and  give  legal  form  to this  liberalization, 
taking  into  account  existing  conditions  and  the 
interests  of insurers  and  insured  parties.  This  is what 
the proposed  Directive  does. 1.4. The  proposed  Directive  is meant  to com-
plement  the  first  coordinating  Directive  of 24 July 
1973,  concerning  direct  insurance  other  than  life 
assurance.  It covers  the following  points  in particular: 
A. ADDITIONAL  COORDINATION  MEASURES 
— Technical  reserves:  Article  3 lays  down  the nature 
of such  reserves  and  the calculating  and  account-
ing methods  to be used.  Article  13 lays  down 
that the  laws  of the  Member  State  in which  the 
company  is established  shall  apply  to the techni-
cal reserves  in respect  of services  provided  in 
other  Member  States. 
— The  law  applicable  to contracts:  (Arcide  4). This 
is to be chosen  from  among  the laws  applicable 
in the  Member  States.  In certain  cases,  the law 
of a non-member  country  may  be chosen.  If the 
parties  fail  to make  a choice,  then  the  law  of 
the Member  State  where  the risk  is situated  is to 
apply. 
However,  the rules  of the  Member  State  where  the 
risk is situated  are  to be complied  with  (Article  5) 
in respect  of certain  matters  listed  in Article  5 (1). 
This  does  not  apply  to certain  risks  referred  to in 
Article  6 (see  below). 
Risks  referred  to in Article  6 
1. Total  liberalization  for large-scale  risks  (transport, 
credit  and  suretyship  risks) 
The following  classes  are covered: 
— railway  rolling  stock, 
— aircraft, 
— ships  (sea,  lake  and  river  and  canal  vessels), 
— goods  in transit, 
— aircraft  liability, 
— liability  for  ships  (sea,  lake  and  river  and  canal 
vessels), 
— credit, 
— suretyship. 
Where  the policy-holder  has  the status  of a 'trader' 
and the  risk  to be covered  relates  to his  business 
activity,  the policy  conditions  and  tariffs  in the above 
classes  of insurance  are  no longer  to be subject  to 
Member  State  approval. 
30. 8. 76 Official  Journal  of the European  Communities No C 204/15 
2. Partial  liberalization  for the following  risks: 
(a) fire  and natural  forces, 
(b) other  damage  to property, 
(c) general  liability, 
(d) miscellaneous  financial  loss. 
If the policy-holder  is a 'trader'  and  insures  his own 
goods,  policy  conditions  and  tariffs  are  similarly 
removed  from  Member  State  jurisdiction,  as in 
paragraph  1 above. 
This  rule  applies  where  the risk  insured  under  class 
(a) above  is equal  to or more  than  seven  million 
units  of account. 
It also  applies  where  the aggregate  risk  insured  under 
classes  (a),  (b) and  (d) above  is equal  to or more 
than 10 million  units  of account. 
No quantitative  criterion  is laid  down  for  general 
liability. 
Supervision  (Article  7): Each  Member  State  must 
take the necessary  measures  under  existing  Directives 
to supervise  insurance  companies'  operations  and 
protect  insured  parties. 
B. FREEDOM  TO  PROVIDE  SERVICES 
It is laid  down  that  any  insurance  company  wishing 
to extend  its business  and  provide  services  in a 
Member  State  other  than  that  in which  it is 
established  must  seek  authorization  from  the 
supervisory  authority  in the country  in which  it has 
its head  office.  Authorization  is granted  after  the 
supervisory  authority  in the  country  where  the 
services  are to be provided  has  been  consulted  and 
made  its views  known  (Article  8). 
If the rules  pertaining  to supervision  in the country 
where  the  risk  is situated  are  not  respected,  the 
supervisory  authority  in the  country  where  the 
insurance  company  has  its head  office  may  apply 
sanctions,  and  even  withdraw  authorization 
(Article  9). 
The very  strict  rules  applying  to compulsory 
insurance  to protect  insured  parties  mean  that  more 
coordination  is required.  Pending  such  coordination, 
the rules  of the  Member  State  where  the  risk  is 
situated  are to continue  to apply,  except  in the case 
of transport,  credit,  suretyship  and  certain  industrial 
and commercial  risks  (Articles  9 and 10). The same  applies  to taxes  on insurance  contracts.  In 
view  of the  differences  in the rates  in force,  which 
made  coordination  difficult,  the  tax  laws  of the 
Member  State  where  the  risk  is situated  are  to 
continue  to apply  for the time  being  (Article  14). 
2. General  comments 
2,1. The  Committee's  view  after  examining  the 
draft  Directive  is that,  in the absence  of the necessary 
coordination,  the new  provisions  will  not bring  about 
a situation  allowing  full  exercise  of the  freedom  to 
provide  services  in the field  of direct  insurance  other 
than life assurance. 
2.2. Views  on the proposal  diverge  on many  points 
depending  on whether  members  look  at it from  the 
insurer's  or the  insured's  angle,  whether  the nature 
and size  of risks  is being  considered,  or the question 
of which  law  is to be applicable  (that  of the country 
in which  the risk  is situated  or that  of the country  in 
which  the insurance  undertaking  is established,  etc.). 
2.3. Another  factor  involved  in assessment  of the 
proposal  is the  varying  degree  of liberalization 
already  achieved  in the different  countries. 
2.4. A  further  criterion  is the necessary  amount  of 
coordination,  both  existing  and  that  which  must  be 
carried  out  before  entry  into  force  of the Directive 
or very  soon  thereafter,  in order  to remove  distortions 
which  could  give  rise to unfair  competition. 
2.5. On  the  question  of which  law  should  be 
applicable,  the  Committee  considers  that  once  the 
necessary  coordination  has  been  completed  this 
should  be the  law  of the  country  in which  the 
undertaking  is established. 
2.6. The  main  arguments  on the various  issues  are 
given  in the  report.  The  Committee  therefore  feels 
it is superfluous  giving  them  in the opinion.  There 
is, however,  no consensus  in favour  of rejecting 
the present  Directive,  which  represents  a compromise 
and a provisional  measure,  pending  a new  step 
forward. 
2.7. The  Committee  therefore  thinks  it better  to 
comment  on the individual  Artidles  of the Directive 
before  giving  an overall  judgement. 
No C 204/16 Official  Journal  of the European  Communities 30. 8. 76 
3. Specific  comments 
3.1. Article  1 
3.1.1.  Article  1 does  not  take  account  of the 
existence  in the Community  of forms  of compulsory 
and (in the case  of Germany)  monopoly  insurance 
of buildings,  etc.,  which  the first  Directive  excluded. 
3.1.2.  The  Committee  would  point  out that,  while 
the first  coordinating  Directive  of 24 July  1973 
expressly  excluded  certain  insuring  institutions 
(Article  4), the  second  Directive  fails  to mention 
these  exceptions  under  its Article  1 (b),  although  it 
states  that  its scope  is identical  to that  of the first 
coordinating  Directive. 
3.1.3.  The  Committee  therefore  recommends  that 
the following  be added  to Article  1 (b) of the draft 
Directive: 
The present  Directive  does  not  apply  to the 
insurance  contracts  of the institutions  referred  to 
in Article  4 of the  first  coordinating  Directive, 
or to the risks  covered  by those  institutions.' 
3.2. Article  2 
3.2.1.  The  Committee  devoted  particular  attention 
to Article  2 (d),  which  defines  the very  important 
concept  of 'Member  State  in which  the  risk  is 
situated'. 
3.2.2.  The  Committee  draws  the  Commission's 
attention  to the  fact  that  the  French  version  talks 
about  the  Member  State  of the  'policy-holder', 
whereas  the  Italian  version  speaks  of the  'insured 
person'.  When  the law  governing  insurance  contracts 
is being  aligned,  one or other  of these  concepts  should 
be chosen  for the sake  of uniformity. 
3.2.3.  The  Committee  considers  that  there  should 
be a special  provision  in the Directive  enabling  the 
same  country  to be taken  as the country  in which 
the risk  is situated  for  combined  policies  covering 
both  liability  and  damage  risks  (e.g.  motor  vehicle 
insurance  policies  covering  both  liability  and  damage 
to the vehicle). 3.2.4.  The  word  'souscrit'  in French  should  be 
translated  in  English  by  'underwritten',  not 
'concluded'. 
3.3. Article  3 
On a number  of specific  points: 
— the Committee  notes  that  the  Commission  does 
not see  any  objection  to adding  to the  first 
paragraph  of Article  3 (1)  with  regard  to 
suretyship  insurance:  'However,  in the  case  of 
the risk  classified  under  No  15 of point  A of 
the Annex  to the  first  coordinating  Directive, 
unearned  premiums  may  be calculated  using  a 
flat-rate  method  of calculation.' 
— the Committee  recommends  that  the  end  of 
paragraph  6 (b) in the English  version  be amended 
to read  'future  insurance  claim  payments  will 
probably  exceed  corresponding  net premiums'. 
— the Committee  notes  that  the  Commission  has 
agreed  to substitute  'account  over  a period 
exceeding  one  year,  but  not  exceeding  three 
years'  for 'account  over  a period  not  exceeding 
three  years'  in Article  3 (2). 
— it also  notes  that  the Commission  has  agreed  to 
substitute  'emissions'  ('due')  for  'encaissements' 
('paid  in') in the third  subparagraph  of Article  3 
(3), to take  account  of the  situation  in credit 
insurance. 
3.4. Article  4 
3.4.1.  Although  it thinks  it wouild  have  been 
preferable  to carry  out  the  necessary  coordination 
beforehand,  the Committee  recognizes  the need  for 
progress  towards  liberalization  and  considers  that 
the proposed  provision  should  be accepted.  It would 
stress,  however,  that  the  coordination  should  be 
carried  out sooner  than  is proposed. 
3.4.2.  Secondly,  a person  resident  outside  the 
Community  should  be able  to have  a risk  situated  in 
the Community  insured  either  by an insurer  in the 
Community,  by an insurer  in his own  country  or 
by an insurer  in any  other  non-member  country. 
Accordingly,  he may  choose  to have  his  contract 
governed  by the.  laws  of his  own  country  or the 
laws  of another  non-member  country  in which  the 
insurer  is established. 
30. 8. 76 Official  Journal  of the European  Communities No C 204/17 
3.4.3.  If  the insurer  comes  under  the jurisdiction 
of a Member  State  he would  not be able  to accept 
this choice,  since  he would  have  to observe  the 
Community  rules. 
3.4.4.  The  Committee  therefore  considers  that 
Article  4 (1) should  allow  Community  insurers  to 
accept  a non-Community  insured  party's  choice  of 
the laws  of his country  in this  case.  This  could  be 
done  by amending  the second  sentence  of Article  4 
(1) to read:  'Where  the pollicy-holder  is resident  in 
the Community  and  the  risk  is situated  in the 
Community,  the choice  must  be made  from  among 
the 'laws  in force  in the Member  States.' 
3.5. Article  6 
3.5.1.  According  to one  view,  the  liberalization 
arrangements  provided  for in the Directive  in respect 
of these  industrial  and  commercial  risks  of a certain 
size would  appear  unacceptable  because: 
(a) They  would  create  arbitrary  discrimination 
between  insured  parties,  contrary  to the Treaty 
and incompatible  with  certain  constitutional 
provisions  in the Member  States. 
(b) They  would  jeopardize  the principle  whereby  an 
insurance  company's  solvency  is 'indivisible', 
because  one  company  would  be subject  to two 
sets of supervisory  rules  for the same  category  or 
group  of classes  of insurance. 
(c) They  would  lead  to large  risks  not  being 
effectively  supervised,  which  could  compromise 
the financial  equilibrium  of the company. 
(d) They  could  encourage  rate-cutting  and  thus 
undermine  insurers'  efforts  in the field  of preven-
tion. 
(e) In the transport  sector,  alignment  of clauses  and 
terms  has perhaps  progressed  far enough,  thanks 
to long  experience,  to allow  transparency  of the 
market  and  the free  play  of supply  and  demand. 
But this  is not the case  for other  sectors.  Under 
these  conditions,  the special  rules  for industrial 
and commercial  risks,  instead  of making  the field 
more  competitive,  will  limit  it to a handful  of 
professionals,  in other  words  only  a small  number 
of insurers  and  big  brokers  will  be able  to 
operate. It is not  a question  of capability,  but the  number 
of potential  offers  will be considerably  reduced. 
In view  of this,  supervision  is still necessary,  as there 
is no basis  for comparison. 
3.5.2.  According  to the rival  view,  the liberalization 
of industrial  and  commercial  risks  could  be accepted 
for the following  reasons: 
(a) Article  6 only  affects  certain  big  customers.  In 
the absence  of Community  legislation,  the 
maintenance  of restrictive  practices  by  certain 
Member  States  would  lead  big customers  to look 
for other  means  of cover. 
(b) Although  it is recognized  that  the singling-out  of 
industrial  and  commercial  risks  is arbitrary,  a 
lowering  of the thresholds  provided  for in para-
graph  1 (b) is called  for. 
(c) It is accepted  that  greater  liberalization  is not 
possible  at this  stage,  but this  first  step  must  be 
followed  rapidly  by complete  liberalization,  after 
coordination  has taken  place. 
(d) In Member  States  in which  partial  or complete 
freedom  to provide  services  in the  field  of 
insurance  has  existed  for a very  long  time,  this 
freedom  has  not  been  found  to entail  any 
disadvantages  either  from  the point  of view  of 
protection  of insured  parties  or from  that  of the 
need  for  healthy  competition  between  insurers. 
(e) Finally,  all insurers  must  "be subject  to the same 
rules.  If this  is not the cose,  big companies  will 
be in a better  competitive  position  than  small 
companies  in the face  of the complexity  of the 
language. 
3.5.3.  In  reply,  the Commission  makes  the follow-
ing observations: 
(a) Company  solvency  cannot  be jeopardized  by the 
more  liberalized  rules  planned  for  certain 
industrial  and  commercial  risks,  because  the first 
coordinating  Directive  settles  the  question  of 
'financial'  supervision.  The  supervisory  authority 
in the  country  where  a company  has  its head 
office  is empowered  to check  the  company's 
solvency  margin. 
No C 204/18 Official  Journal  of the European  Communities 30. 8. 76 
(b) As regards  the financial  equilibrium  of a company, 
good  company  management  in fact  consists  in 
striking  a balance  between  different  risks.  What 
is more,  separate  accounting  is beginning  to be 
introduced  in some  companies. 
(c) As regards  the arguments  put forward  by members 
concerning  the protection  of insured  parties  and 
the maintenance  of competition  it is up to the 
supervisory  authorities  to protect  insured  parties. 
The Commission  considers  that  it has  done  all 
that it can  in this  field  because  during  the 
transitional  period  'material'  supervision  is to 
be carried  out by the supervisory  authority  in the 
country  where  the risk  is situated  and  it is the 
legislation  of this country  which  applies. 
The alignment  of clauses  and  terms,  which  has 
already  been  accomplished  in the transport  sector, 
can only  be attained  in other  classes  of insurance 
under  a free  system. 
The freedom  to provide  services  is vital  and  it must 
be introduced  all the more  rapidly  because  without 
such freedom  some  companies  are  now  able  to 
obtain  the  same  effect  through  recourse  to co-
insurance  or re-insurance. 
Finally,  the Commission  considers  that  the Directive 
rules  out any  danger  of competition  being  distorted 
by making  it possible  for the supervisory  authority 
in the country  where  the risk  is situated  to intervene 
and even  halt  the operations  of a company  engaging 
in unfair  practices. 
3.5.4.  Conclusions  on  Article  6 
3.5.4.1.  In  spite  of difficulties  arising  from  the 
complexity  of the proposed  system,  the Committee 
thinks  it can endorse  the provisions  of this  Article  on 
condition  that  a study  is carried  out  at the 'latest 
three  years  after  introduction  of the  provisions  to 
establish  whether  their  effect  on the market,  from  the 
point  of view  of both  insured  parties'  and  insurance 
companies'  interests,  has been  good  or bad. 
3.5.4.2.  It  is noted  that  the  second  indent  in 
subparagraph  (b) of Article  6 (1)  regarding  the 
amount  insured  in respect  of risks  listed  under  No 8 
in point  A of the  Annex  to the first  coordinating 
Directive  is open  to two  interpretations. 
The text  may  be taken  to refer  either  to the amount 
insured  under  a specific  policy  or to the aggregate 
amount  insured  by an undertaking  against  damage 
due to fire and natural  forces. The Committee  proposes  that  it should  be made 
clear  in the text  that  the aggregate  amount  insured 
is meant.  This  is in accordance  with  the intentions  of 
the Commission,  which  in the  second  part  of the 
provision  refers  to the aggregate  amount  insured  by 
an undertaking  and not to a specific  insurance  policy. 
The Committee  therefore  proposes  the  following 
amendment  to the  second  indent  in subparagraph 
(b) of Article  6 (1) : 
':— where  the  aggregate  amount  insured  in 
respect  of risks  listed  under  No 8 in point  A 
of the  Annex  to the  first  coordinating 
Directive  ...' 
(rest unchanged). 
3.5.4.3.  The  Committee  notes  that  insurance  of 
certain  types  of risks  is only  liberalized  where  the 
insured  party  has the status  of a 'trader'  and  where 
the risk  to be covered  relates  to his business  activity. 
It considers  that  the Directive  should  make  it clear 
what  is to be understood  by 'status  of trader'  in 
terms  of the  concepts  and  practices  prevailing  in 
each Member  States. 
3.5.4.4.  For  the  liberalization  of  credit  and 
suretyship  risks,  the  policy-holder  must  have  the 
status  of 'trader'  and  the  risk  must  relate  to his 
business  activity. 
3.5.4.5.  However,  these  conditions  would  exclude 
from  liberalization  'non-traders'  whose  economic 
activities  as regards  these  two  classes  of insurance  are 
comparable  to those  of 'traders'. 
3.5.4.6.  The  Committee  therefore  suggests  that 
subparagraph  (a) of Article  6 (1) be split  into  two 
subparagraphs,  reading: 
'(a) in respect  of risks  listed  under  Nos  14 and 
15 in point  A of the  Annex  to the  first 
coordinating  Directive, 
(b) in respect  of risks  listed  under  Nos  4, 5, 6, 7, 
11 and  12 in point  A of the Annex  to the 
first coordinating  Directive: 
— where  the policy-holder  has  the status  of 
a trader,  and 
— where  the  risk  to be covered  relates  to 
his business  activity.' 
Subparagraph  (b) would  then  of course  become  (c). 
30. 8. 76 Official  Journal  of the European  Communities No C 204/19 
3.6. Article  8 
3.6.1.  Paragraph  1 
The Committee  considers  that  authorization  by the 
supervisory  authority  of the  country  in which  an 
undertaking  is established  should  only  be required 
for provision  of services  in another  Member  State 
during  the first  phase  of liberalization. 
3.6.2.  Paragraph  2 
The Committee  suggests  that  the words  'or notified' 
be added  at the end of paragraph  2 (c). 
3.7. Article  9 
3.7.1.  Paragraph  1 
The Committee  considers  that  Article  9 (1) should 
make  it clear  that  the  mandatory  conditions 
concerning  the insurance  contract  and  the rules  for 
the approval  of general  conditions  and  tariffs  are to 
be coordinated  as soon  as possible. 
3.7.2.  It  suggests  therefore  that  Article  9 (1) read: 
'Subject  to the  provisions  of this  Directive,  the 
undertaking  must  comply  with  the rules  in force  in 
the Member  State  in which  the  risk  is situated 
which  concern: 
— compulsory  insurance, 
— fair  trading, 
and until  coordination,  which  will  be carried  out 
within  three  years  after  the  notification  of the 
present  Directive,  in the  case  of the  classes  of 
insurance  other  than  those  listed  in Article  6: 
— the mandatory  provisions  concerning  the 
insurance  contract  mentioned  in Article  5 (1); 
— the rules  for the approval  of the tariffs  and the 
general  conditions  of insurance  policies.' 
3.7.3.  Paragraph  2 to 4 
The Committee  considers  that  Article  9 (2, 3 and  4) 
does  not  provide  for any  solution  in case  of a 
dispute  between  the  supervisory  authority  of the country  in which  the risk  is situated  and  that  of the 
country  of the  undertaking  exercising  freedom  to 
provide  services. 
3.7.4.  Also,  the  Committee  thinks  an ad hoc 
committee  should  be set up to examine  and  deal 
with  any unfair  competitive  practices. 
3.8. Article  11 
The Committee  considers  that  the  present  wording 
of the  first  sentence  does  not  provide  any  real 
safeguard  for small  insured  parties,  who  cannot  be 
expected  to know  all the  different  countries'  laws 
governing  insurance.  It suggests  therefore  that  the 
words  'and  what  advantages  or disadvantages,  if any, 
arise  for him  from  this  situation'  be added  to the 
end of the first  sentence. 
3.9. Article  12 
3.9.1.  The  Committee  considers  that  it should  be 
examined  whether  technical  simplifications  are 
possible  without  interfering  with  the  object  of this 
Article. 
3.9.2.  The  Committee  has  been  assured  that  the 
supervisory  authorities  will  certainly  meet  between 
now and  the entry  into  force  of the Directive  to try 
to find  ways  of simplifying  the requirements.  It hopes 
that they  will  be successful  in finding  ways  to combine 
the classes. 
3.10.  Article  13 (2) 
In order  to avoid  language  difficulties  and to provide 
a better  link-up  between  the two  parts  of this  para-
graph,  the  Committee  proposes  the  following 
wording:  'These  technical  reserves  may  be located 
without  restriction  within  the  Community.  They 
must...'  (remainder  unchanged). 
3.11.  Article  14 
3.11.1.  In  the absence  of coordination  of the tax 
systems  relating  to insurance,  which  it hopes  will  be 
carried  out  as quickly  as possible,  the  Committee 
No C 204/20 Official  Journal  of the European  Communities 30. 8. 76 
considers  that  the Directive  should  include  provision 
for checking  the application  of the  tax  provisions  of 
the country  where  the  risk  is situated.  This  would 
prevent  distortions  of competition  resulting  from  the 
present  wide  variation  of tax rates,  which  range  from 
Oto 30%. services,  so that  the  nine  national  insurance  markets 
can be replaced  by a single  market  in which  under-
takings  of the  different  Member  States  can  operate 
equally  well  through  exercise  of  the  right  of 
establishment  and  through  exercise  of the freedom  to 
provide  services. 
3.11.2.  The  Committee  also  considers  that  the 
words  'Without  prejudice  to' at the  beginning  of 
the Article  should  be replaced  by 'Pending',  in order 
to make  it clear  that  tax  coordination  is still  the 
objective  to be achieved  as soon  as possible. 
3.12.  Article  IS 4.2. The  Committee  is of course  pleased  to note 
that the  proposal  for  a Directive  constitutes  an 
initial  move  towards  coordination.  It must,  however, 
urge  the Commission  to give  its full  attention  without 
delay  to bringing  about  the  essential  coordination  in 
other  fields.  The  need  for this  coordination  is clearly 
evident  on perusal  of the proposal. 
3.12.1.  The  Committee  notes  that  while  the  draft 
Directive  at present  provides  for  only  partial  and 
therefore  incomplete  alignment,  this  Article  allows 
agencies  and  branches  established  in a single  Member 
State  of undertakings  whose  head  office  is outside 
the Community  to exercise  freedom  to provide 
services  throughout  the  Community.  This  seems 
rather  paradoxical,  since  it means  completing  a 
second  stage  in a single  step. 4.3. The  Committee  therefore  considers  that  this 
draft  Directive  should  be of a purely  provisional 
nature,  as is indicated  incidentally  in the third  recital. 
It thinks  that  this  provisional  character  should  be 
brought  out  more  clearly  in the text  of the  Directive 
and that  a deadline  should  be set for  achieving  the 
coordination  essential  to full  freedom  to provide 
services. 
3.12.2.  The  Committee  therefore  thinks  that: 
— either  the  Directive  should  already  lay down  the 
principle  of liberalization  in two  stages,  the first 
embracing  only  those  insurance  undertakings 
whose  head  office  is located  in the  Community, 
and the second  covering  agencies  and  branches  of 
insurance  undertakings  whose  head  office  is 
located  in a non-Member  State,  subject  to the 
prior  conclusion  of agreements  on  reciprocal 
treatment; 
— or Article  15 should  simply  be deleted  in this 
initial  phase. 
4. Conclusion 4.4. The  Committee  acknowledges  that  in  the 
present  circumstances,  with  coordination  still  largely 
to be carried  out,  the  draft  Directive  must  take 
account  of existing  de facto  situations.  It recognizes 
that in order  to avoid  distortions  of competition 
between  insurance  undertakings  in  the  different 
Member  States  and  to maintain  sufficiently  effective 
protection  of the  interests  of insured  persons  and 
third-party  beneficiaries  in each  Member  State,  the 
Directive  cannot  but  adopt  what  might  be called  a 
hybrid  system.  Under  this  system  operations 
performed  in exercise  of the  freedom  to provide 
services  must,  depending  on  the  circumstances, 
conform  either  to the provisions  of the legislation  of 
the country  of the  insurer  or to the  provisions  of 
the legislation  of the  country  where  the  risk  is 
situated,  and  be subject  to the  supervision  both  of 
the insurer's  supervisory  authorities  and  those  of 
the country  where  the risk  is situated. 
4.1. The  Committee  notes  that  the aim  of the draft 
Directive  is to make  an initial,  limited  step  towards 
establishing  freedom  to provide  services  in direct 
insurance,  other  than  life  assurance.  It cannot  but 
regret  that  the  proposal  provides  for only  a fraction 
of the coordination  of national  legislation  relating  to 
the methods  of  operation  and  supervision  of 
insurance  undertakings  that  is necessary  in order  to 
bring  about  real  and  complete  freedom  to provide 4.5. The  Committee  also  recognizes  that  it was 
only  natural  that  the Commission  should  have  made 
an effort  to provide  for a greater  degree  of liberaliza-
tion for  certain  sectors  of insurance  where  this  was 
possible,  as is reflected  in Articles  5 and  6 of the 
draft  Directive.  It would,  however,  reiterate  its 
specific  comments  on this  subject. 
30. 8. 76 Official  Journal  of the European  Communities No C 204/21 
4.6. Subject  to the  general  and  specific  comments 
set out  above,  the Committee  endorses  the objective 
pursued  by the  Commission.  It calls  for  certain changes  on points  of detail  and  stresses  that  this 
Directive  should  have  more  of  a provisional 
character. 
Done  at Brussels,  30 June  1976. 
The Chairman 
of the Economic  and  Social  Committee 
Henri  CANONGE 
ANNEX 
to the opinion  of the Economic  and Social  Committee 
The original  text  of a passage  in the opinion  of the Section  which  was  amended  in Committee: 
Paragraph  3.9.1. 
'The Section  considers  that  the  requirements  under  this  Article  are particularly  onerous, 
and would  like  to see them  simplified  from  the technical  point  of view,  in particular  by 
combining  several  classes  of insurance  into  groups.' 
Voting 
for: 36, 
against:  29, 
abstentions:  18. 
Opinion  on the  amended  proposal  for  a Council  Directive  on the  approximation  of 
the laws  of the Member  States  concerning  mayonnaise,  sauces  derived  from  mayonnaise 
and the other  emulsified  condiment  sauces 
The text  referred  to the Committee  has  been  published  in Official  Journal  No C 54 of 
8 March  1976,  page  1. 
A. LEGAL  BASIS  FOR  THE  OPINION 
On 27 November  1975  the  Council  referred  the  abovementioned  proposal  to the 
Economic  and  Social  Committee  in accordance  with  Article  100  of the  Treaty 
establishing  the European  Economic  Community.