No C 32/2 Official  Journal  of the European  Communities 12. 2. 76 
II 
(Preparatory  Acts) 
COMMISSION 
Proposal  for a second  Council  Directive  on the coordination  of laws,  regulations  and 
administrative  provisions  relating  to direct  insurance  other  than  life  assurance  and 
laying  down  provisions  to facilitate  the effective  exercise  of freedom  to provide  services 
(Submitted  by the Commission  to the Council  on 30 December  1975) 
THE  COUNCIL  OF  THE  EUROPEAN  COMMUNITIES, 
Having  regard  to  the  Treaty  establishing  the 
European  Economic  Community,  and  in particular 
Articles  57 (2), 59 (2) and  66 thereof, 
Having  regard  to the proposal  from  the Commission, 
Having  regard  to the  opinion  of the  European 
Parliament, 
Having  regard  to the  opinion  of the  Economic  and 
Social  Committee, 
Whereas  it is necessary  to develop  a European 
insurance  market  due  in particular  to the  steady 
increase  in the size  of risks  to be covered;  whereas  to 
achieve  this  objective,  it is desirable  to allow  policy 
holders  to avail  themselves  of insurers  established  not 
only in their  country  but  also  in other  Member 
States; 
Whereas  pursuant  to the  Treaty  any  discrimination 
with  regard  to freedom  to provide  services  based  on 
the fact  that  an undertaking  is not established  in the 
Member  State  in which  the services  are provided  has 
been  prohibited  since  the  end  of the  transitional 
period;  whereas  this  prohibition  applies  to services 
provided  from  any  establishment  in the Community, 
whether  it is the head  office  of an undertaking  or an 
agency  or branch; 
Whereas,  however,  the effective  exercise  of freedom 
to provide  services  will  not  be fully  accomplished until  certain  aspects  have  been  harmonized;  whereas 
such work,  because  of its complex  nature,  can  be 
accomplished  only  after  a certain  time;  whereas  it is 
possible  meanwhile  to adopt  arrangements  whereby 
the present  situation  can  be considerably  improved; 
Whereas  with  this  in view,  it is advisable  to 
supplement  the first  coordination  Directive  on direct 
insurance  other  than  life  assurance  adopted  by the 
Council  on 24 July  1973  in particular  with  regard  to 
the method  of calculating  technical  reserves  and  the 
powers  granted  to the "supervisory  authorities  of the 
various  Member  States; 
Whereas  the provisions  in force  in the Member  States 
concerning  the  law  governing  insurance  contracts 
remain  divergent;  whereas  the disadvantages  resulting 
from  these  differences,  can,  in the interest  of a real 
common  market  for  insurance,  be eliminated  by 
allowing  the parties  a freedom  of choice  of the  law 
which  should  apply;  whereas  however  too  wide  an 
interpretation  of this  freedom  might  result,  in the 
absence  of coordination,  in serious  weakness  either  in 
the protection  of the  insured  or in the  conditions 
under  which  many  insurance  undertakings  conduct 
their  business; 
Whereas  the first  step  in coordination  can  be taken 
straight  away  by determining  on a Community  basis 
those  essential  dispositions  which  the Member  States 
may continue  to apply  in respect  of risks  situated  on 
their  territory;  whereas,  with  this  end  in view,  only 
certain  of these  dispositions  should  retain  their 
12. 2. 76 Official  Journal  of the European  Communities No C 32/3 
'essential'  character,  all  others  becoming  open  to 
coordination; 
Whereas  more  complete  coordination  shall  occur  in 
the shortest  possible  time;  whereas  however  the 
choice  of the law  applicable  to contracts  can  be freed 
immediately  without  restriction  by  the  complete 
elimination  of the  'essential'  character  of the  said 
dispositions,  on the  one  hand  in the  case  of risks 
classified  as transport,  credit  and  caution  primarily 
on account  of their  frequently  international  nature, 
and on the  other  hand  in the  case  of certain  large 
risks,  defined  by  precise  quantitative  criteria,  in 
which  there  is less  evident  need  of protection  for the 
insured. 
Whereas  the fact  that  certain  Member  States  require 
authorization  for  the  general  and  special  conditions 
of insurance  policies  as well  as tariffs  constitutes  an 
obstacle  to freedom  to provide  services;  whereas 
although  it appears  possible  at this  stage  to abolish 
such  authorization  for the classes  of transport,  credit 
and fidelity  insurance  and  for large  risks,  the removal 
of this  obstacle  will  be achieved  by harmonizing  the 
laws  in force;  whereas  meanwhile  the applicable  law 
in this  respect  must  remain  that  of the Member  State 
in which  the risk  is situated; 
Whereas  the provision  of services  by an undertaking 
must  be considered  as a territorial  extension  of the 
business  of that  undertaking;  whereas  such  an 
extension,  in accordance  with  the  principles  already 
adopted  in the first  coordinating  Directive  of 24 July 
1973,  should  be the subject  of an authorization; 
Whereas  such  authorization  must  be given  by the 
competent  authority  of the  Member  State  in which 
the undertaking  is already  established;  whereas  the 
various  authorities  concerned  must  be in a position, 
through  close  cooperation,  to put  an end  to any 
infringement  of the  rules  remaining  applicable  in the 
Member  State  where  the risk  is situated; 
Whereas  the  first  coordinating  Directive  adopted  by 
the Council  on 24 July  1973  laid  down  that  the law 
of the  authorizing  Member  State  applies  to technical 
reserves;  whereas  this  principle  is equally  valid  for 
operations  carried  out  by way  of freedom  to provide 
services;  whereas  for such  operations  it is desirable  to 
lay down  that  technical  reserves  may  be located 
throughout  the Community,  although  the principle  of 
matching  and  equivalent  assets  must  be consolidated; 
Whereas  considerable  differences  are apparent  from 
one Member  State  to another  with  regard  to the 
number  and  size  of risks  subject  to compulsory 
cover;  whereas  under  these  conditions  it is impossible 
to exclude  these  classes  of insurance  from  the scope of the  Directive  without  creating,  through  the 
resulting  situation,  serious  distortions  of 
competition;  whereas  it is nevertheless  desirable  to 
apply  to contracts  covering  such  risks  all the laws  of 
the Member  State  where  these  risks  are situated; 
Whereas  some  Member  States  do  not  subject 
insurance  transactions  to  any  form  of  indirect 
taxation  while  the  majority  apply  a special  tax; 
whereas  the  structure  and  rate  of this  tax  vary 
considerably  between  the  Member  States  in which  it 
is applied;  whereas  pending  future  harmonization,  it 
is desirable  to avoid  a situation  where  existing 
differences  lead  to  serious  disturbances  of 
competition  in  insurance  services  between  the 
Member  States;  whereas  the  application  of the  tax 
system  of the  Member  State  in which  the  risk  is 
situated  will  remedy  such  a situation; 
Whereas  agencies  or branches  established  within  the 
Community  and  belonging  to undertakings  whose 
head  offices  are  outside  the  Community  are  the 
subject  of the  provisions  of title  III  of the  first 
coordinating  Directive;  whereas  in this  respect  they 
are subject  to harmonized  conditions  with  regard  to 
entitlement  to and  exercise  of freedom  to provide 
services;  whereas  in these  conditions  it appears 
normal  to enable  these  agencies  and  branches  to 
benefit  from  the provisions  of this  Directive; 
Whereas  it is necessary  to initiate  special  cooperation 
with  regard  to freedom  to provide  services  between 
the competent  supervisory  authorities  of the Member 
States  and  between  these  authorities  and  the 
Commission, 
HAS  ADOPTED  THIS  DIRECTIVE: 
Title  I 
General  provisions 
Article  1 
The object  of this  Directive  is: 
(a) to supplement  the  first  Council  Directive  of 24 
July 1973  on  the  coordination  of  laws, 
regulations  and  administrative  provisions  relating 
to the  taking-up  and  pursuit  of the  business  of 
direct  insurance  other  than  life  assurance; 
(b) to lay  down  provisions  to facilitate  the effective 
exercise  of freedom  to provide  services  by the 
undertakings  and  in respect  of the  classes  of 
insurance  covered  by that  coordinating  Directive. 
No C 32/4 Official  Journal  of the European  Communities 12. 2. 76 
Article  2 
For the purposes  of this  Directive: 
(a) 'first  coordinating  Directive' 
means  the first  Council  Directive  referred  to in 
Article  1 (a); 
(b) 'undertaking' 
means  any  undertaking  which  has  received 
official  authorization  under  Article  6 (2) (a) or (b) 
of that  Directive; 
(c) 'freedom  to provide  services' 
means  the covering  by an undertaking  of a risk 
situated  in another  Member  State; 
(d) 'Member  State  in which  the risk  is situated' 
means: 
— the  Member  State  in which  the  insured 
property  is situated,  where  the  insurance 
covers  immovable  property  or  movable 
property  which,  because  of its situation,  is 
connected  with  the immovable  property  and 
used  for the same  purpose,  together  with  any 
objects  contained  therein, 
— the  Member  States  in which  insured  movable 
property  other  than  that  specified  in the 
preceding  indent  is situated,  where  because  of 
the purpose  for  which  the  property  is 
intended  or used  the  location  thereof  is 
neither  provisional  nor temporary, 
— the  Member  State  in which  the contract  was 
concluded,  where  the  insurance  covers 
persons,  or objects  other  than  those  referred 
to in the  preceding  indents,  and  was  taken 
out for a short  period  or from  an automatic 
machine, 
— the  Member  State  of registration,  where  the 
insurance  covers  land  vehicles, 
— the  Member  State  in which  the policy-holder 
habitually  resides  in so far as he is the owner 
of the  vehicle  in question,  has  a financial 
interest  therein  or operates  the said  vehicle,  or, 
failing  this,  the  Member  State  in which  the 
vehicle  is registered,  where  the  insurance 
covers  railway  rolling  stock,  aircraft  or sea, 
lake,  river  and  canal  vessels, 
— the  Member  State  in which  the policy-holder 
habitually  resides  where  any  other  form  of 
insurance  is involved,  including  insurance  in 
respect  of 'goods  in transit'; 
(e) fsupervisory  authority' 
means: 
— in the  case  of the  head  office,  the authority 
responsible  for  granting  the  authorization referred  to in Article  6 (2) (a) of the  first 
coordinating  Directive  or  for  supervising 
private  insurance  business, 
— in the  case  of agencies  and  branches,  the 
authority  responsible  for  granting  the 
authorization  referred  to in Article  6 (2) (b) of 
that Directive  or for  supervising  private 
insurance  business. 
These  authorities  are  hereafter  called  the 
supervisory  authorities  of the  authorizing 
State; 
(f) 'unit  of account' 
means  the  European  unit  of account  (EUA)  as 
defined  by Council  Decision  75/250/EEC  of 21 
April  1975. 
Wherever  reference  is made  in this  Directive  to 
the unit  of account,  the corresponding  amount  in 
national  currency  to be applied  shall  be that  of 
the last working  day  of the preceding  year. 
Title  II 
Provisions  supplementing  the first  coordinating 
Directive 
Article  3 
1. Member  States  shall  take  all steps  necessary  to 
ensure  that  at least  the  following  principles  are 
observed  in calculating  the technical  reserves: 
(a) Unearned  premiums  are  to be  calculated,  in 
principal,  on a time  basis.  The  calculation  may, 
however,  be made  by methods  of approximation 
if these  lead  to practically  the  same  results  as 
individual  calculations. 
The gross  premiums  shall  be taken  as the basis 
for the  calculation.  The  resulting  unearned 
premiums  should  then  in principle  be reduced  by 
the pro  rata  commissions  and  other 
representatives'  charges  (agency  costs).  Member 
States  will  determine  what  is meant  by deductible 
agency  costs; 
(b) A reserve  for  potential  losses  from  current 
contracts  is to be formed  if, on the basis  of the 
trend  of claims,  having  regard  to their  frequency 
and average  amount  in the financial  year,  future 
12. 2. 76 Official  Journal  of the  European  Communities No C 32/5 
insurance  payment  will  probably  exceed  the 
corresponding  net premiums; 
(c) For  the purposes  of calculating  the loss  reserves, 
the future  gross  expenditure  on claims  is to be 
estimated  individually  on the  basis  of known 
ontstanding  claims. 
Member  States  may  permit  flat-rate  methods  of 
calculation,  instead  of individual  calculation  if: 
— the  number  of similar  outstanding  claims  is so 
great  that  the  flat-rate  method  leads  to a 
result  which  is not significantly  different  from 
that obtained  by individual  calculation,  or 
— the  nature  of the risks  listed  under  numbers  3, 
4, 5, 6, 7, 11 and  12 of point  A of the Annex 
to the  first  coordinating  Directive  does  not 
permit  individual  calculation. 
Reserves  for  late  claims  are  to be formed  for 
claims  which  have  occurred  but  which  have  not 
yet been  notified  to the  insurer;  these  shall  be 
calculated  on the basis  of values  gained  from  past 
experience,  having  regard  to the  probable  trend 
of claims; 
(d) As regards  the risks  listed  under  numbers  4, 5, 6, 
7, 11 and  12 in point  A of the Annex  to the first 
coordinating  Directive,  amounts  representing 
premiums  and  loss  reserves  may  be consolidated 
in one  amount. 
2. Systems  based  on an 'account  over  a period  not 
exceeding  three  years'  shall  be  considered  as 
equivalent  to the  system  described  in the  preceding 
paragraph  for  unearned  premiums  and  outstanding 
claims. 
3. Undertakings  shall  set up an equalization  reserve 
for the credit,  hail  and  frost  classes  and  for the risks 
of storm  and  natural  forces  other  than  storm,  where 
such  risks  are included  in the hail  and  frost  classes. 
The equalization  reserve  shall  each  year  receive  75 % 
of any  technical  surplus  remaining  for that  financial 
year.  However,  in the  case  of credit  insurance,  the 
amount  involved  may  not  exceed  12 % of the  net 
premiums  for the same  financial  year. 
This  transfer  shall  no longer  be obligatory  when  the 
reserves  have  reached: 
— in the  case  of credit  insurance,  150  % of the 
highest  annual  amount  of net  premiums  paid  in 
during  the last  five  financial  years,  and 
— in the case  of all other  classes  of insurance,  200  % 
of the amount  of net premiums  paid  in during  the 
last financial  year. Any technical  deficit  which  may  occur  in the course 
of a given  financial  year  in these  classes  of insurance 
shall  be charged  to the reserve. 
4. The  reserves  referred  to in this  Article  shall  be 
disregarded  for  purposes  of calculating  the  solvency 
margin  and  shall  be under  exemption  from  any 
liability  to tax. 
Article  4 
1. Insurance  contracts  concluded  in the  classes 
covered  by the  first  coordinating  Directive  shall  be 
governed  by the law  of the parties'  choice.  Where  the 
risk is situated  within  the  Community  the  choice 
must  be made  from  among  the  laws  in force  in the 
Member  States. 
The parties  shall  be free  to choose  the law  of a third 
country  if the  risk  in question  is one  of those  listed 
under  numbers  4, 5, 6, 7, 11, 12, 14 and  15 in point  A 
of the  Annex  to the  first  coordinating  Directive, 
where  there  is a definite  connection  between  the laws 
of that  country  and  the  risk  insured  or the  insured 
person. 
2. In  the absence  of a choice  of law  to be applied 
or where  the  choice  made  is contrary  to the 
provisions  of paragraph  1, the  contract  shall  be 
governed  by the internal  law  of the Member  States  in 
which  the risk  is situated. 
Article  5 
1. Pending  their  further  coordination,  which  shall 
occur  within  a maximum  period  of three  years  from 
the date  of notification  of the  present  Directive,  and 
in cases  where  the law  chosen  by the parties  is other 
than  that  of the  Member  State  where  the  risk  is 
situated,  only  those  'essential'  dispositions  of the law 
applicable  in that  State  may  be  applied;  those 
essential  dispositions  can  cover: 
— the  declaration  of the  risk  by the  policy-holder, 
either  when  the  policy  is taken  out  or during  the 
period  of the contract,  and  penalties, 
— the  payment  of the premium  and  the consequences 
of non-payment, 
— the  obligations  of the  policy-holder  on  the 
occurrence  of a claimable  event,  and  penalties, 
— the  circumstances  in which  the  contract  may  be 
annulled, 
— the  rights  of third  parties, 
No C 32/6 Official  Journal  of the European  Communities 12. 2. 76 
shall,  pending  their  subsequent  coordination,  remain 
applicable. 
2. The  restrictions  imposed  by  the  preceding 
paragraph  on  the  freedom  to choose  the  law 
governing  the  contract  shall  not  apply  to contracts 
covering  risks  referred  to in Article  6 provided  that 
the conditions  laid  down  in that  Article  are met. 
3. Member  States  under  whose  legislation  or case 
law the  provisions  referred  to in paragraph  1 are 
mandatory  shall  forward  the list of those  provisions 
to the  Commission  within  18  months  of the 
notification  of the  Directive.  The  Commission  shall 
forward  that  list to the other  Member  States. 
Article  6 
1. The  following  is added  to Articles  8 (3) and  10 
(3) of the first  coordinating  Directive: 
'However,  Member  States  may  not  apply  provisions 
which  require  general  and  special  policy  conditions 
and tariffs  to be approved: 
(a) in respect  of risks  listed  under  numbers  4, 5, 6, 7, 
11, 12, 14 and  15 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; 
(b) in respect  of risks  listed  under  numbers  8, 9, 13 
and 16 in point  A of the  Annex  to the  first 
coordinating  Directive: 
— where  these  risks  are the subject  of a contract 
concluded  for  his  own  account  and/or  for 
account  of a third  party  by a legal  or natural 
person  who  owns  all or part  of the  interest 
insured  and  who,  under  the law  applying  to 
him,  has the status  of a trader;  and 
— where  the amount  insured  in respect  of risks 
listed  under  number  8 in point  A of the 
Annex  to the  first  coordinating  Directive  is 
not less  than  7 million  units  of account  or 
where  the  aggregate  amount  insured  in 
respect  of risks  listed  under  numbers  8, 9 and 
16 is not  less  than  10  million  units  of 
account.'. 
2. The  figures  given  in point  (b) second  sentence, 
shall  be reviewed  and  if necessary  adapted,  at the 
latest  within  three  years  from  the date  of notification 
of the  present  Directive,  in the  light  of progress 
achieved  in the coordination  of legislation  provided 
for in Article  5(1). Article  7 
Every  Member  State  shall  take  all steps  necessary  to 
ensure  that  the authorities  responsible  for supervising 
insurance  undertakings  are able: 
(a) to supervise  all  the  activities  of  insurance 
undertakings  and  to ensure  that: 
— the  laws,  regulations  and  administrative 
provisions  concerning  insurance  are complied 
with, 
— the  schemes  of operations  referred  to in 
Articles  8 (1) (c) and  10 (1) (c) of the  first 
coordinating  Directive  are properly  executed, 
and 
— insured  persons  are protected  against  abuses; 
(b) to carry  out the checks  and  to take  the measures 
necessary  for this  purpose,  and  in particular: 
— to require  undertakings  to  transmit  all 
relevant  documents, 
to examine  the  administration  of 
undertakings  in situ, 
— to be  vested  with  sufficient  powers  of 
constraint  to  ensure  that  Decisions  are 
properly  enforced. 
Title  III 
Provisions  to facilitate  the effective  exercise  of 
freedom  to provide  services 
Article  8 
1. Any  undertaking  wishing  to extend  its business, 
by way  of the exercise  of freedom  to provide  services, 
to the territory  of another  Member  State  shall  seek 
authorization  for that  purpose  from  the supervisory 
authority  of the authorizing  Member  State. 
2. The  undertaking  shall  supply  the  following 
information: 
(a) the  Member  State  on whose  territory  it intends 
to provide  services; 
(b) the  nature  of the risks  which  it intends  to insure 
on the territory  of that  State; 
(c) the  general  and  special  conditions  of the policies 
which  it intends  to use  and  the  tariffs  which  it 
intends  to apply  provided  the  legislation  of the 
Member  State  referred  to in (a) requires  those 
conditions  and  tariffs  to be approved. 
12. 2. 76 Official  Journal  of the European  Communities No C 32/7 
3. The  authorization  referred  to in paragraph  1 
shall  be  granted  after  consultation  with  the 
supervisory  authority  of the State  on whose  territory 
the undertaking  intends  to provide  services. 
The supervisory  authority  of the authorizing  Member 
State  shall  send  a copy  of the  application  of the 
undertaking  concerned,  together  with  the information 
specified  in paragraph  2, to the supervisory  authority 
of the  State  on whose  territory  the  undertaking  is 
intending  to provide  services. 
The latter's  comments  must  be forwarded  to the 
supervisory  authority  of the authorizing  State  within 
six weeks  of the  forwarding  of the  application  for 
authorization. 
Article  9 
1. 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, 
— the  mandatory  provisions  concerning  the 
insurance  contract  mentioned  in Article  5(1), 
— tariffs  and  the  general  and  special  conditions  of 
insurance  policies, 
— fair  trading. 
2. If  the supervisory  authority  of the Member  State 
in which  the  risk  is situated  is aware  that  these 
provisions  are  being  violated  by  an undertaking 
exercising  freedom  to provide  services  on its territory, 
it shall  submit  its complaint  to the  supervisory 
authority  of the  authorizing  State  and  shall  propose 
suitable  measures  for putting  an end  to the situation. 
3. The  supervisory  authority  of the  authorizing 
State  shall  take  all appropriate  measures,  which  may 
extend  to withdrawal  of the authorization  referred  to 
in Article  8, to put  an end  to the  infringements  of 
which  it has  thus  been  notified.  It shall  inform  the 
supervisory  authority  of the Member  State  in which 
the risk  is situated  thereof. 
4. If,  in spite  of the  measures  thus  taken  by the 
authorizing  State,  the  undertaking  persists  in 
seriously  violating  the  provisions  referred  to in 
paragraph  1, the Member  State  in which  the risk  is 
situated  may,  after  having  informed  the supervisory 
authority  of the  authorizing  State  thereof,  take  any 
appropriate  measures  which  are strictly  necessary  to 
put an end  to the situation. Article  10 
1. Subject  to Article  13  and  notwithstanding 
Articles  4 and  5, contracts  concluded  by way  of the 
exercise  of freedom  to provide  services  and  covering 
risks  insurance  of which  is compulsory  in the 
Member  State  in which  the  risk  is situated  must 
comply  with  the legislation  in force  in that  Member 
State. 
This  provisions  shall  not  apply  to the risks  referred 
to in Article  6. 
2. Where  the  Member  State  in which  the  risk  is 
situated  requires  proof  that  the obligation  to take  out 
insurance  has been  complied  with,  it shall  accept  for 
this purpose  the  certificate  issued  by the  insurance 
undertaking  availing  itself  of freedom  to provide 
services. 
3. Where,  in the Member  State  in which  the risk  is 
situated,  the insurer  has  to notify  certain  competent 
authorities  when  cover  ceases  to be provided,  the 
termination  of cover  can  be invoked  against  injured 
third  parties  only  one  month  after  the date  on which 
the competent  authorities  receive  such  notification 
from  the insurance  undertaking. 
Article  11 
Where  contracts  are concluded  by way  of the exercise 
of freedom  to provide  services,  the  policy-holder 
must  be informed  before  the contract  is signed  that 
the insurer  is not established  in the country  in which 
the risk  is situated.  Furthermore,  the  policy  must 
specify  the  address  of the  competent  supervisory 
authority  and  the address  of the office  of the insurer 
to whom  the policy-holder  may  submit  his claims. 
Article  12 
1, The  supervisory  authority  of the Member  State 
in which  the head  office  is situated  shall  require  that 
office  to keep  for each  class  of insurance  and  for each 
Member  State,  a special  trading  account  in respect  of 
all business  transacted  by way  of the  exercise  of 
freedom  to provide  services,  including  that  transacted 
by its agencies  and  branches.  This  account,  the form 
of which  is set  out  in the  Annex,  must  show 
premiums,  claims  and  technical  reserves. 
2. The  supervisory  authority  of the Member  State 
in which  the  head  office  is situated  shall,  if the 
supervisory  authority  of the  Member  State  in which 
the risk  is situated  so requests,  forward  to the latter  a 
copy  of the special  trading  account. 
No C 32/8 Official  Journal  of the European  Communities 12. 2. 76 
3. For  undertakings  keeping  their  accounts  in 
accordance  with  the  system  provided  for  in Article 
3 (2), the trading  account  may  be restricted  to the net 
premiums  received,  less  commission,  and  the  claims 
paid during  the  calendar  year,  set out  according  to 
classes  of insurance  and  countries  of origin. 
Article  13 
1. The  technical  reserves  relating  to contracts 
concluded  by way  of the  exercise  of freedom  to 
provide  services  shall  be subject  to the  rules  laid 
down  by the authorizing  State  or, failing  such  rules, 
shall  be in accordance  with  established  practice  in 
that State. 
2. These  reserves  may  be  located  in  the 
Community  without  territorial  restriction.  They  must 
in all cases  be covered  by equivalent  and  matching 
assets. 
Article  14 
Without  prejudice  to subsequent  harmonization  of 
indirect  taxes  on  insurance,  all  insurance 
contracts  concluded  by  way  of the  exercice  of 
freedom  to provide  services  shall  be subject  solely 
to the relevant  taxation  in force  in the Member  State 
in which  the risk  is situated. 
Article  15 
The provisions  of this  Directive  shall  apply  to 
agencies  and  branches  established  within  the 
Community  and  belonging  to undertakings  whose 
head  office  is outside  the  Community  which  are 
subject  to and  which  satisfy  the provisions  of Title  III 
of the first  coordinating  Directive. Title  IV 
Final  provisions 
Article  16 
The Commission  and  the  competent  authorities  of 
the Member  States  shall  collaborate  closely  for the 
purpose  of facilitating  the  supervision  of direct 
insurance  within  the  Community  and  of examining 
any difficulties  which  might  arise  in the application  of 
this Directive,  and  in particular  of Article  9. 
Article  17 
The Commission  shall  forward  to the Council  within 
five years  of notification  of this  Directive  a report  on 
the developments  on  the  market  in insurances 
transacted  by way  of the  exercise  of freedom  to 
provide  services. 
Article  18 
Member  States  shall  amend  their  national  provisions 
to comply  with  this  Directive  within  18 months  of 
this notification  and  shall  forthwith  inform  the 
Commission  thereof. 
The provisions  thus  amended  shall  be applied  within 
24 months  of notification. 
Article  19 
Upon  notification  of this  Directive,  Member  States 
shall  ensure  that  the  texts  of the  main  laws, 
regulations  of administrative  provisions  which  they 
adopt  in the  field  covered  by this  Directive  are 
communicated  to the Commission. 
Article  20 
This  Directive  is addressed  to the Member  States. 
12. 2. 76 Official  Journal  of the  European  Communities No C 32/9 
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