15. 2. 89 Official Journal of the European Communities No C 38/7 
II 
(Preparatory Acts) 
COMMISSION 
Proposal for a Second Council Directive on the coordination of laws, regulations and adminis­
trative provisions relating to direct life assurance, laying down provisions to facilitate the 
effective exercise of freedom to provide services and amending Directive 79/267/EEC 
COM(88) 729 final — SYN 177 
(Submitted by the Commission on 23 December 1988) 
(89/C 38/08) 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European 
Economic Community, and in particular Articles 57 (2) 
and 66 thereof, 
Having regard to the proposal from the Commission, 
In cooperation with the European Parliament, 
Having regard to the opinion of the Economic and 
Social Committee, 
Whereas it is necessary to develop the internal market in 
life assurance and in the operations referred to in the 
first Council Directive 79/267/EEC of 5 March 1979 on 
the coordination of laws, regulations and administrative 
provisions relating to the taking-up and pursuit of the 
business of direct life assurance ('), hereinafter called 'the 
First Directive'; whereas, in ot^ler to achieve that 
objective, it is desirable to make it easier for assurance 
undertakings having their head office in the Community 
to provide services in the Member States, thus making it 
possible for policy-holders to have recourse not only to 
assurers established in their own country, but also to 
assurers which have their head office in the Community 
and are established in other Member States; 
Whereas, under the Treaty, any discrimination with 
regard to freedom to provide services based on the fact 
that an undertaking is not established in the Member 
State in which the services are provided has been 
prohibited since the end of the transitional period; 
whereas that prohibition applies to services provided 
from any establishment in the Community, whether it be 
the head office of an undertaking or an agency or 
branch; 
(') OJ NO L 63, 13. 3. 1979, p. 1. Whereas, for practical reasons, it is desirable to define 
provision of services taking into account both the 
assurer's establishment and the place where the 
commitment is to be covered; whereas, therefore, 
commitment should also be defined; whereas, moreover, 
it is desirable to distinguish between activities pursued by 
way of establishment and activities pursued by way of 
freedom to provide services; 
Whereas it is desirable to supplement the First Council 
Directive of 5 March 1979 in order, in particular, to 
clarify the powers and means of supervision vested in the 
supervisory authorities; whereas it is also desirable to lay 
down specific provisions regarding the taking-up, pursuit 
and supervision of activity by way of freedom to provide 
services; 
Whereas policy-holders who, by virtue of the fact that 
they take the initiative in entering into a commitment in 
another State and thus place themselves under the 
protection of the legal system of that other State, do not 
require special protection in the State of the commitment 
should be granted complete freedom to avail themselves 
of the widest possible market in life assurance and in the 
operations referred to in the First Directive; whereas, 
other policy-holders should also be afforded adequate 
protection; 
Whereas, in the case of group assurances and certain 
individual pensions assurances, the multiplicity and 
complexity of the various schemes and their close 
connection with social security schemes call for careful 
study; whereas they should therefore be excluded from 
the scope of the provisions specific to freedom to provide 
services contained in this Directive; wheres they will 
form the subject matter for another proposal for a 
Directive; 
Whereas the provisions in force in the Member States 
regarding contract law applicable to the activities 
referred to in the First Directive continue to differ; 
whereas the freedom to choose, as the law applicable to 
the contract, a law other than that of the State of the 
commitment may be granted in certain cases, in 
accordance with rules which take into account specific 
circumstances; 
No C 38/8 Official Journal of the European Communities 15. 2. 89 
Whereas the First Directive's provisions on transfer of 
portfolio should be reinforced and supplemented by 
provisions specifically concerning the transfer to another 
undertaking of the portfolio of contracts concluded by 
way of freedom to provide services; 
Whereas, in the interests of protecting policy-holders, 
Member States should, at the present stage of the coor­
dination process, be given the option of limiting the 
simultaneous pursuit of activity by way of freedom to 
provide services and activity by way of establishment; 
whereas no such limitation can be provided for where 
policy-holders do not require such protection; 
Whereas the taking-up and pursuit of activity by way of 
freedom to provide services should be subject to 
procedures guaranteeing the assurance undertaking's 
compliance with provisions regarding financial guaran­
tees, conditions of assurance and premium rates; whereas 
those procedures may be relaxed where the activity 
pursued by way of freedom to provide services covers 
policy-holders who, by virtue of the characteristics of the 
commitment they propose to enter into, do not require 
special protection in the State of the commitment; 
Whereas, however, in the case of this second category of 
policy-holder and where the contract is one of life 
assurance, the policy-holder should be given the oppor­
tunity of cancelling the contract within a period of 30 
days; 
Whereas the First Directive adopted the principle of 
prohibiting the simultaneous pursuit of the activities 
covered by the First Directive on the coordination of 
non-life insurance and those covered by the First 
Directive; wheras, while it authorized the continued 
existence of existing composite undertakings, it stated 
that they may not set up agencies or branches for life 
assurance; whereas such undertakings should likewise be 
prohibited from covering by way of freedom to provide 
services commitments referred to in the First Directive; 
Whereas it is necessary to make provision for special 
cooperation in the sphere of freedom to provide services 
between the competent supervisory authorities of the 
Member States and between those authorities and the 
Commission; whereas provision should also be made for 
a system of penalties to apply where the undertaking 
providing the service fails to comply with the provisions 
of the Member State in which the service is provided; 
Whereas the technical reserves, including mathematical 
reserves, should be subject to the rules of and supervision 
by the Member State in which the service is provided 
where the provision of services involves commitments in 
respect of which the State in which the service is received 
wishes to provide special protection for policy-holders; 
whereas, however, if such concern to protect policy­holders is unjustified, the technical reserves, including 
mathematical reserves, should remain subject to the rules 
of and supervision by the Member State in which the 
undertaking is established; 
Whereas some Member States do not subject life 
assurance contracts and the other operations covered by 
the First Directive to any form of indirect taxation, while 
others apply special taxes; whereas the structure and rate 
of those taxes vary considerably between the Member 
States in which they are applied; whereas it is desirable 
to avoid a situation where those differences lead to 
distortions of competition between undertakings in the 
various Member States; whereas the application of the 
tax arrangements provided for by the Member State in 
which the commitment is entered into is a means of 
remedying such mischief; whereas it is for the Member 
States to establish a method of ensuring that such taxes 
are collected; 
Whereas the First Council Directive of 5 March 1979 
makes express provision for specific rules concerning the 
authorization of agencies and branches belonging to 
undertakings whose head offices are outside the 
Community; whereas it is also desirable to provide for a 
specific procedure for all requests for the authorization 
of a subsidiary of an undertaking governed by the laws 
of a third country or the acquisition of a participation by 
such an undertaking with a view to ensuring that 
Community undertakings benefit from reciprocity in the 
third countries in question; whereas this Directive lays 
down such a procedure, 
HAS ADOPTED THIS DIRECTIVE: 
TITLE I 
General provisions 
Article 1 
The object of this Directive is: 
(a) to supplement First Directive 79/267/EEC; 
(b) to lay down specific provisions relating to freedom 
to provide services in respect of the activities referred 
to in the first Directive, such provisions being set 
forth in Title III of this Directive. 
Article 2 
For the purposes of this Directive: 
(a) 'First Directive''means Directive 79/267/EEC; 
(b) 'undertaking': 
— for the purposes of Titles I and II, means any 
undertaking which has received official auth­
orization under Article 6 or Article 27 of the 
First Directive, 
15. 2. 89 Official Journal of the European Communities No C 38/9 
— for the purposes of Titeles III and IV, means any 
undertaking which has received official auth­
orization under Article 6 of the First Directive; 
(c) 'establishment' means the head office, an agency or a 
branch of an undertaking, having regard to Article 3; 
(d) 'commitment' means a commitment represented by 
one of the kinds of insurance or operation referred 
to in Article 1 of the First Directive; 
(e) 'Member State of the commitment' means the Member 
State where the policy-holder has his habitual 
residence or, if the policy-holder is a legal person, 
the Member State where the latter's establishment, to 
which the contract relates, is situated; 
(f) 'Member State of establishment' means the Member 
State in which the establishment covering the 
commitment is situated; 
(g) 'Member State of provision of services' means the 
Member State of the commitment where the 
commitment is covered by an establishment situated 
in another Member State; 
(h) 'parent undertaking' means a parent undertaking 
within the meaning of Article 1 of Seventh Council 
Directive 83/349/EEC of 13 June 1983 based on 
Article 54 (3) (g) of the Treaty, on consolidated 
accounts ('); 
(i) 'subsidiary' means a subsidiary undertaking in 
accordance with Article 1 of Directive 83/349/EEC. 
Article 3 
For the purposes of the First Directive and of this 
Directive, any permanent presence of an undertaking in 
the territory of a Member State shall be treated in the 
same way as an agency or branch, even if that presence 
does not take the form of a branch or agency, but 
consists merely of an office managed by the under­
taking's own staff or by a person who is independent but 
has permanent authority to act for the undertaking as an 
agency would. 
TITLE II 
Provisions supplementary to the First Directive 
Article 4 
1. The law applicable to contracts relating to the ac­
tivities referred to in the First Directive shall be the law 
of the Member State of the commitment. However, where the law of that State so allows, the parties may 
choose the law of another country. 
2. Where, in one of the cases referred to in Article 13, 
the policy-holder has his habitual residence in a Member 
State other than that of which be is a national, the 
parties may choose the law of the Member State of 
which he is a national. 
3. The Member State whose law governs the contract 
may not, in a case falling within Article 13, seek to 
prevent the policy-holder from entering into any contract 
relating to a commitment which may be lawfully 
undertaken in the Member State of establishment. 
4. Where a State includes several territorial units, each 
of which has its own rules of law concerning contractual 
obligations, each unit shall be considered a country for 
the purposes of identifying the law applicable under this 
Directive. 
A Member State in which various territorial units have 
their own rules of law concerning contractual obligations 
shall not be bound to apply the provisions of this 
Directive to conflicts which arise between the laws of 
those units. 
5. Nothing in this Article shall restrict the application 
of the rules of the law of the forum in a situation where 
they are mandatory, irrespective of the law otherwise 
applicable to the contract. 
If the law of a Member State so stipulates the mandatory 
rules of the law of the Member State of the commitment 
may be applied if and in so far as, under the law of that 
Member State, those rules must be applied whatever the 
law applicable to the contract. 
6. Subject to the preceding paragraphs, the Member 
States shall apply to the assurance contracts referred to 
in this Directive their general rules of private inter­
national law concerning contractual obligations. 
Article 5 
The following paragraph is added to Article 23 of the 
First Directive: 
'3. Each Member State shall take all steps 
necessary to ensure that the authorities responsible 
for supervising assurance undertakings have the 
powers and means necessary for supervision of the 
activities of assurance undertakings established within 
their territory, including activities engaged in outside 
that territory, in accordance with the the Council 
Directives governing those activities and for the 
purpose of ensuring that they are implemented. 
(') OJ No L 193, 18. 7. 1983. Those powers and means must, in particular, enable 
the supervisory authorities to: 
No C 38/10 Official Journal of the European Communities 15. 2. 89 
— make detailed inquiries about the undertaking's 
situation and the whole of its business inter alia 
by: 
— gathering information or requiring the 
submission of documents concerning 
assurance business, 
— carrying out on-the-spot investigations at the 
undertaking's premises, 
— take any measures with regard to the undertaking 
which are appropriate and necessary to ensure 
that the activities of the undertaking remain in 
conformity with the laws, regulations and admin­
istrative provisions with which the undertaking 
has to comply in each Member State and in 
particular with the scheme of operations in so far 
as it remains mandatory, and to prevent or 
remove any irregularities prejudicial to the 
interests of policy-holders, 
— ensure that measures required by the supervisory 
authorities are carried out, if need be by 
enforcement, where appropriate through judicial 
channels. 
Member States may also make provision for the 
supervisory authorities to obtain any information 
regarding contracts which are held by intermediaries.' 
Article 6 
1. Article 25 of the First Directive is hereby deleted. 
2. Each Member State shall, under the conditions laid 
down by national law, authorize undertakings which are 
established within its territory to transfer all or part of 
their portfolios of contracts for which that State is the 
State of the commitment to an accepting office estab­
lished in that same Member State if the supervisory auth­
orities of the Member State in which the head office of 
the accepting office is situated certify that the latter 
possesses the necessary margin of solvency after taking 
the transfer into account. 
3. Each Member State shall, under the conditions laid 
down by national law, authorize undertakings estab­
lished within its territory to transfer all or part of their 
portfolios of contracts concluded in the circumstances 
referred to in Article 10 (1) to an accepting office estab­
lished in the Member State of provision of services if the 
supervisory authorities of the Member State in which the 
head office of the accepting office is situated certify that 
the latter possesses the necessary margin of solvency 
after taking the transfer into account. 
4. Each Member State shall, under the conditions laid 
down by national law, authorize undertakings estab­
lished within its territory to transfer all or part of their 
portfolios of contracts concluded in the circumstances 
referred to in Article 10 (1) to an accepting office estab­
lished in the same Member State if the supervisory auth­
orities of the Member State in which the head office of the accepting office is situated certify that the accepting 
office possesses the necessary margin of solvency after 
taking the transfer into account and if it fulfils the 
conditions set out in Articles 11, 12, 14 and 16 in the 
Member State of provision of services. 
5. In the cases referred to in paragraphs 3 and 4, the 
supervisory authorities of the Member State in which the 
transferring undertaking is established shall authorize the 
transfer after obtaining the agreement of the supervisory 
authorities of the Member State of provision of services. 
6. If a Member State, under the conditions laid down 
by national law, authorizes undertakings established 
within its territory to transfer all or part of their port­
folios of contracts to an accepting office established in 
another Member State which is not the Member State of 
provision of services, it shall ensure that the following 
conditions are fulfilled: 
— the supervisory authorities of the Member State in 
which the head office of the accepting office is 
situated certify that the latter possesses the necessary 
margin of solvency after taking the transfer into 
account, 
— the Member State in which the accepting office is 
established agrees, 
— the accepting office fulfils the conditions set out in 
Articles 11, 12, 14 and 16 in the Member State of 
provision of services, the law of that Member State 
provides for the possibility of such a transfer and th. t 
Member State agrees to the transfer. 
7. A transfer authorized in accordance with this 
Article shall be published, under the conditions laid 
down by national law, in the Member State of the 
commitment. Such transfer shall be automatically valid 
against policy-holders, assured persons and any other 
person having rights or obligations arising out of the 
contracts transferred. 
This provision shall not affect the right of Member 
States to provide that policy-holders may cancel the 
contract within a given period after the transfer. 
Article 7 
Article 22 (2) of the first Directive is replaced by the 
following: 
'The Italian Republic shall take all steps to ensure 
that the requirement that undertakings established 
within its territory cede part of their underwriting to 
the Istituto Nazionale di Assicurazioni is abolished 
within two years of the date of implementation of 
this Directive.' 
15. 2. 89 Official Journal of the European Communities No C 38/11 
Article 8 
1. The heading of Title III of the First Directive is 
replaced by the following: 
'TITLE III A 
Rules applicable to agencies or branches established 
within the Community and belonging to under­
takings whose head offices are outside the 
Community'. 
2. The following heading is placed after Article 32 of 
the First Directive: 
'TITLE III B 
Rules applicable to subsidiaries of parent under­
takings governed by the laws of a third country and 
to acquisitions of participations by such parent 
undertakings'. 
Article 9 
Title III B shall comprise an Article 32A, the text of 
which is as follows: 
'1. Requests for authorization of a subsidiary 
whose parent undertaking is governed by the laws of 
a third country or the acquisition of a participation 
therein as provided for in paragraph 3 shall be 
subject to the procedure laid down in this Article. 
2. The competent authorities of the relevant 
Member State shall inform the competent authorities 
of the other Member States and the Commission of 
the request for authorization. 
3. Member States shall provide that where an 
undertaking governed by the laws of a third country 
is considering the acquisition of a participation in an 
insurance undertaking established in the Community 
such that the latter undertaking will become its 
subsidiary, it shall inform the competent authorities 
of the Member State concerned. These authorities 
shall inform the competent authorities of the other 
Member States and the Commission. 
4. The competent authorities of the Member State 
concerned must suspend their decision regarding 
requests as referred to in paragraphs 2 and 3 until the 
procedure provided for in paragraphs 5 and 6 is 
completed. 
5. The Commission shall, within three months of 
receiving the information provided for in paragraphs 
2 and 3, examine whether all undertakings of the 
Community enjoy reciprocal treatment, in particular 
regarding the establishment of subsidiaries or the 
acquisition of participations in insurance under­
takings in the third country in question. 6. If the Commission finds that reciprocity is not 
ensured, it may extend suspension of the decision 
referred to in paragraph 4, after having consulted the 
competent authorities of the Member States under 
the collaboration procedure provided for in Article 
38. 
7. The Commission shall present suitable proposals 
to the Council with a view to achieving reciprocity 
with the third country in question.' 
TITLE III 
Provisions relating specifically to freedom to provide 
services 
Article 10 
1. This Title shall apply where an undertaking, 
through an establishment situated in a Member State, 
covers a commitment in another Member State. 
2. This Title shall not apply to operations, under­
takings and institutions to which the First Directive does 
not apply. 
3. This Title shall likewise not apply to commitments; 
— entered into with persons other than natural persons 
acting on their own account, 
— entered into with persons having a commercial, 
business or employment-based relationship with the 
person or persons in respect of whose life or lives the 
assurance is taken out, whether such relationship be 
past, present or future, where the commitment is 
entered into by virtue of such relationship, 
— entered into with a person in respect of whose life 
the assurance is taken out, if it is taken out by virtue 
of the employment or business activities of that 
person, 
— relating to the operations referred to in Article 1 (2) 
(a), (c), (d), and (e) and Article 1 (3) of the First 
Directive. 
4. An undertaking shall not cover a commitment in 
another Member State unless it is authorized under 
Article 6 of the First Directive to cover such a 
commitment in its Member State of establishment. 
Article 11 
Any undertaking which intends to provide services shall 
first inform the competent authorities of the head office 
Member State, and, where appropriate, of the Member 
State of the establishment concerned, indicating the 
Member State or Member States within whose territory 
No C 38/12 Official Journal of the European Communities 15. 2. 89 
it intends to provide services and the nature of the 
commitments it proposes to cover. 
Article 12 
1. Each Member State within whose territory an 
undertaking intends, under conditions of freedom to 
provide services, to cover commitments within the 
meaning of Article 10 of this Directive may make the 
taking-up of such activity conditional on official auth­
orization in so far as the commitments are not 
commitments within the meaning of Article 13; to that 
end, it may require that the undertaking: 
(a) produce a certificate issued by competent authorities 
of the head office Member State certifying that it 
possesses for its activities as a whole the minimum 
solvency margin calculated in accordance with 
Article 19 of the First Directive and that, in 
accordance with Article 6 (1) of the said Directive, 
the autorization enables the undertaking to operate 
outside the Member State of establishment; 
(b) produce a certificate issued by the competent auth­
orities of the Member State of establishment indi­
cating the classes in respect of which the undertaking 
is authorized to transact business and certifying that 
those authorities do not object to the undertaking's 
transacting business by way of freedom to provide 
services; 
(c) submit a scheme of operations containing the 
following particulars: 
— the nature of the commitments which the under­
taking proposes to cover in the Member State of 
provision of services, 
— the general and special conditions of the 
assurance policies which it proposes to use there, 
— the premium rates which the undertaking 
envisages applying and the technical bases which 
it proposes to use for each class of business, 
— the forms and other printed documents which it 
intends to use in its dealings with policy-holders, 
in so far as these are also required of established under­
takings. 
2. The competent authorities of the Member State of 
provision of services may require that the particulars 
referred to in paragraph 1 (c) be supplied to them in the 
official language of that State. 
3. The competent authorities of the Member State of 
provision of services shall have a period of six months 
from receipt of the documents referred to in paragraph 1 
in which to grant or refuse authorization on the basis of 
the compliance or non-compliance of the particulars in 
the scheme of operations submitted by the undertaking 
with the laws, regulations and administrative provisions 
applicable in that State. 4. If the competent authorities of the Member State of 
provision of services have not taken a decision by the 
end of the period referred to in paragraph 3, auth­
orization shall be deemed to be refused. 
5. Any decision to refuse authorization or to refuse a 
certificate as referred to in paragraph 1 (a) or (b) shall 
be accompanied by the precise grounds therefore and 
communicated to the undertaking in question. 
6. Each Member State shall make provision for the 
right to apply to the courts in respect of a refusal of 
authorization or refusal to issue the certificate referred 
to in paragraph 1 (a) or (b). 
Article 13 
1. Commitments covered by way of freedom to 
provide services shall be subject, not to Article 12, but to 
Article 14 where the policy-holder takes the initiative in 
seeking a commitment from the undertaking. 
The policy-holder shall be deemed to have taken the 
initiative: 
— where the initial contact between the policy-holder 
and the undertaking, regardless of the means used, is 
made by the policy-holder, 
or 
— where the contract is concluded in the Member State 
in which the undertaking is established without there 
having been any prior contact between the policy­
holder and the undertaking in the Member State in 
which the policy-holder has his habitual residence. 
2. An undertaking which proposes to cover 
commitments in a Member State under the arrangements 
provided for in this Article shall not solicit business or 
engage in any advertising there relating to such activity 
apart from publishing notices indicating its address and 
the classes in respect of which it is authorized to transact 
business in the Member State of establishment from 
which it proposes to cover commitments. 
3. Where the policy-holder takes the initiative in 
seeking the commitment from the undertaking through a 
broker, he shall sign, before the contact with the under­
taking takes place, a statement to the effect that he 
wishes the broker to make enquiries as to the assurance 
arrangements available in one or more Member States 
other than that in which he has his habitual residence; 
such broker shall be the person referred to in Article 2 
(1) (a) of Directive 77/92/EEC. The broker shall not 
engage in any advertising concerning the possibility of 
seeking commitments under the arrangements provided 
for in this Article. 
4. Before entering into a commitment under the 
arrangements provided for in this Article, the policy­
holder shall sign a statement to the effect that he takes 
15. 2. 89 Official Journal of the European Communities No C 38/13 
note of the fact that the commitment is subject to the 
rules of supervision of the country of the undertaking 
which is to cover the commitment. 
Article 14 
1. Each Member State within whose territory an 
undertaking intends, under conditions of freedom to 
provide services, to cover commitments within the 
meaning of Article 13 of this Directive shall require that 
the undertaking: 
(a) produce a certificate issued by the competent auth­
orities of the head office Member State certifying 
that it possesses for its activities as a whole the 
minimum solvency margin calculated in accordance 
with Article 19 of the First Directive and that, in 
accordance with Article 6 (1) of the said Directive, 
the authorization enables the undertaking to operate 
outside the Member State of establishment; 
(b) produce a certificate issued by the competent auth­
orities of the Member State of establishment indi­
cating the classes in respect of which the undertaking 
is authorized to transact business and certifying that 
those authorities do not object to the undertaking's 
transacting business by way of freedom to provide 
services; 
(c) state the nature of the commitments which it 
proposes to cover in the Member State of provision 
of services. 
2. Each Member State shall make provision of a right 
to apply to the courts in respect of a refusal to issue the 
certificate referred to in paragraph 1 (a) or (b). 
3. The undertaking may commence activities as from 
the certified date on which the authorities of the 
Member State of provision of services are in possession 
of the documents referred to in paragraph 1. 
4. This Article shall also apply where the Member 
State in whose territory an undertaking intends, by way 
of freedom to provide services, to cover commitments 
other than those referred to in Article 13 of this 
Directive does not make the taking-up of such activity 
conditional on official authorization. 
Article 15 
A policy-holder who concludes an individual life 
assurance contract under conditions of freedom to 
provide services as set out in Article 13 shall have a 
period of at least 30 days from the time when the parties 
entered into the contract within which to cancel the 
contract. 
The giving of notice of cancellation by the policy-holder 
shall have the effect of releasing him from any obligation 
arising from the contract. 
These provisions shall not apply to contracts of two 
months' duration or less. 
The legal effects of cancellation shall be determined by 
the law applicable to the contract as defined in Article 4, notably as regards establishing the time when the parties 
entered into the contract. 
Article 16 
Member States' legislation shall provide that an under­
taking established in a Member State may cover within 
that State by way of freedom to provide services from an 
establishment in another Member State at least: 
— commitments within the meaning of Article 13 of this 
Directive, 
— commitments within the meaning of Article 10 but 
not of Article 13 coming within classes in respect of 
which the undertaking established in the first 
Member State lacks authorization there in 
accordance with Article 6 of the First Directive. 
If, however, in the latter case that undertaking has such 
authorization, the first Member State may prevent such 
provision of services, 
Article 17 
1. Where an undertaking referred to in Article 11 
intends to amend the information referred to in Article 
12 (1) (c) or 14 (1) (c), it shall submit the amendments to 
the competent authorities of the Member State of 
provision of services. Those amendments shall be subject 
to the provisions of Articles 12 (3) and 14 (1), as the case 
may be. 
2. Where the undertaking intends to extend its acti­
vities to commitments within the meaning of Article 10 
but not of Article 13 of this Directive, it shall follow the 
procedure laid down in Articles 11 and 12. 
3. Where the undertaking intends to extend its acti­
vities to commitments within the meaning of Article 13 
or Article 14 (4) of this Directive, it shall follow the 
procedure laid down in Articles 11 and 14. 
Article 18 
Undertakings which, by virtue of Article 13 (3) of th« 
First Directive, carry on simultaneously the activities 
referred to in the Annex to the First Coordination 
Directive (non-life insurance) and those listed in Article 
1 of the First Directive shall not, by way of freedom to 
provide services, cover any commitments in any of the 
classes referred to in the First Directive. 
Article 19 
1. Member States of provision of services may 
maintain or introduce laws, regulations or administrative 
provisions justified on policy-holder protection grounds, 
concerning, in particular, approval of general and special 
No C 38/14 Official Journal of the European Communities 15. 2. 89 
policy conditions, of forms and other printed documents 
for use in dealings with policy-holders, of scales of 
premiums and of any other document necessary for the 
normal exercise of supervision on condition that the 
rules of the Member State of establishment are insuf­
ficient to achieve the necessary level of protection and 
the requirements of the Member State of provision of 
services do not go beyond what is necessary in that 
respect. 
2. However, with regard to commitments within the 
meaning of Article 11 of this Directive, Member States 
of provision of services shall not lay down provisions 
requiring approval or notification of general and special 
policy conditions, scales of premiums, forms and other 
printed documents which the undertaking intends to use 
in its dealings with policy-holders. 
Article 20 
1. Any undertaking providing services shall submit to 
the competent authorities of the Member State of 
provision of services all documents requested of it for the 
purposes of implementing this Article, in so far as under­
takings established there are also obliged to do so. 
2. If the competent authorities of a Member State 
establish that an undertaking providing services within its 
territory does not comply with the legal provisions 
applicable to it in that State, such authorities shall 
request the undertaking concerned to put an end to the 
irregular situation. 
3. If the undertaking in question fails to comply with 
the request referred to in paragraph 2, the competent 
authorities of the Member State of provision of services 
shall inform the competent authorities of the Member 
State of establishment accordingly. The latter authorities 
shall take all appropriate steps to ensure that the under­
taking concerned puts an end to the irregular situation. 
The nature of those measures shall be communicated to 
the authorities of the Member State of provision of 
services. 
The competent authorities of the Member State of 
provision of services may also apply to the competent 
authorities responsible for the head office of the 
assurance undertaking if the services are being provided 
by agencies or branches. 
4. If, despite the steps thus taken by the Member State 
of establishment, or because such steps prove inadequate 
or are lacking in the Member State in question, the 
undertaking persists in violating the legal provisions in 
force in the Member State of provision of services, the 
latter Member State may, after informing the supervisory 
authorities of the Member State of establishment, take 
appropriate steps to prevent further irregularities, 
including, in so far as it is strictly necessary, the prevention of the further covering of commitments by 
the undertaking by way of freedom to provide services 
within its territory. In the case of commitments covered 
by way of freedom to provide services other than those 
within the meaning of Article 13 of this Directive, such 
steps shall include withdrawal of the authorization 
referred to in Article 12. Member States shall ensure that 
within their territory it is possible to effect the notifi­
cations necessary for such steps. 
5. The foregoing provisions shall not affect the right 
of Member States to punish irregularities committed 
within their territory. 
6. If the undertaking which has committed the irregu­
larity has an establishment or owns property in the 
Member State of provision of services, the supervisory 
authorities of the latter may, in accordance with national 
law, apply the administrative penalties prescribed for 
such irregularity by way of enforcement against such 
.establishment or property. 
7. Any step taken under paragraphs 2 to 6 involving 
penalties or restrictions on the provision of services must 
be properly justified and communicated to the under­
taking concerned. Even such measure shall be subject to 
the right to apply to the courts in the Member State in 
which the authorities adopted it. 
8. Where steps are taken under Article 24 of the First 
Directive, the competent authorities of the Member State 
of provision of services shall be informed accordingly by 
the authority which takes them and, where the steps are 
taken under paragraphs 1 and 3 of the said Article, take 
whatever action is necessary to safeguard the interests of 
assured persons. 
In the event of withdrawal of authorization under Article 
26 of the First Directive, the competent authorities of the 
Member State of provision of services shall be informed 
accordingly and shall take appropriate steps to prevent 
the establishment concerned from continuing to conclude 
assurance contracts by way of freedom to provide 
services within the territory of that Member State. 
9. Every two years the Commission shall submit to the 
Council a report summarizing the number and type of 
cases in which, in each Member State, decisions refusing 
authorization have been communicated under Article 12 
or measures have been taken under paragraph 4. 
Member States shall cooperate with the Commission by 
providing it with the information required for the report. 
Article 21 
In the event of an assurance undertaking being wound 
up, commitments arising from contracts underwritten by 
way of freedom to provide services shall be met in the 
15. 2. 89 Official Journal of the European Communities No C 38/15 
same way as those arising from that undertaking's other 
assurante contracts, no distinction being made on 
grounds of the nationality of assured persons or bene­
ficiaries. 
Article 22 
1. Where an operation is offered by way of freedom 
to provide of services, the policy-holder shall, before any 
commitment is entered into, be informed of the Member 
State in which the head office, agency or branch with 
which the contract is to be concluded is established. 
Any document issued to the policy-holder shall contain 
the information referred to in the preceding 
subparagraph. 
2. The contract or other document granting cover, 
together with the assurance proposal where it is binding 
upon the proposer, shall specify the address of the estab­
lishment which grants the cover and that of the head 
office. 
Article 23 
1. Where the provision of services is conditional upon 
authorization by the Member State of provision of 
services, the amount of the technical reserves, including 
mathematical reserves, and the rules on profit sharing 
and on the surrender and paid-up values for the 
contracts concerned shall be determined under the super­
vision of that Member State in accordance with the rules 
it has laid down or, failing such rules, in accordance 
with established practice in that Member State. The 
covering of those reserves by equivalent and matching 
assets, the location of those assets and the application of 
the rules on profit sharing and on surrender and paid-up 
values shall be under the supervision of that Member 
State in accordance with its rules or practice. 
2. In all other cases, those various operations shall be 
under the supervision of the Member State of estab­
lishment, in accordance with its rules or practice. 
3. The Member State of establishment shall ensure 
that the reserves relating to all the contracts which the 
undertaking concludes through the establishment 
concerned are sufficient and covered by equivalent and 
matching assets. 
4. In the circumstances referred to in paragraph 1, the 
Member State of establishment and the Member State of 
provision of services shall exchance any information 
necessary for carrying out their respective duties under 
paragraphs 1 and 3. Article 24 
Every assurance contract concluded by way of freedom 
to provide services shall be subject only to the indirect 
taxes and parafiscal charges on assurance premiums of 
the Member State of commitment within the meaning of 
Article 2 (e). 
The law applicable to the contract pursuant to Article 4 
shall not affect the tax arrangements applicable. 
Each Member State shall, subject to subsequent harmon­
ization, apply to undertakings which provide services in 
its territory its own national provisions concerning 
measures to ensure the collection of indirect taxes and 
parafiscal charges due under the first subparagraph. 
TITLE IV 
Final provisions 
Article 25 
The Commission and the competent authorities of the 
Member States shall collaborate closely with a view to 
facilitating the supervision of the kinds of insurance and 
the operations referred to in the First Directive within 
the Community. 
Each Member State shall inform the Commission of any 
major difficulties to which application of this Directive 
gives rise inter alia to a Member State becoming aware 
of an abnormal transfer of business referred to in the 
First Directive to the detriment of undertakings estab­
lished in its territory and to the advantage of agencies 
and branches located just beyond its borders. 
The Commission and the competent authorities of the 
Member States concerned shall examine such difficulties 
as quickly as possible in order to find an appropriate 
solution. 
Where necessary, the Commission shall submit appro­
priate proposals to the Council. 
Article 26 
The Commission shall forward to the Council and the 
European Parliament regular reports, the first on . . ., on 
the development of the market in assurance and oper­
ations transacted under conditions of freedom to provide 
services. 
No C 38/16 Official Journal of the European Communities 15. 2. 89 
Article 27 Article 28 
Member States shall amend their national provisions to 
comply with this Directive within 18 months of the date 
of its notification and shall forthwith inform the 
Commission thereof. 
The provisions amended in accordance with this Article 
shall be applied within 24 months of the date of notifi­
cation of this Directive. Upon notification of this Directive, Member States shall 
ensure that the texts of the main laws, regulations or 
administrative provisions which they adopt in the field 
covered by this Directive are communicated to the 
Commission. 
Article 29 
This Directive is addressed to the Member States.