COMMISSION OF THE EUROPEAN COMMUNITIES 
C0MC92) 63 final - SYN 291 
Brussels, 24 February 1992 
Proposal for a 
COUNCIL DIRECTIVE 
AMENDED PROPOSAL FOR A THIRD COUNCIL DIRECTIVE 
ON THE COORDINATION OF LAWS, REGULATIONS 
AND ADMINISTRATIVE PROVISIONS RELATING TO DIRECT INSURANCE 
OTHER THAN LIFE ASSURANCE AND AMENDING DIRECTIVES 
73/239/EEC AND 88/357/EEC 
(presented by the Commission) 
MiV 
EXPLANATORY MEMORANDUM 
On the 27th of July 1990 the Commission sent to the Council the Proposal for 
a Third Council Directive on the co-ordination of laws, regulations and 
administrative provisions relating to direct insurance other than life 
assurance and amending Directives 73/239/EEC and 88/357/EEC (proposal for a 
Third Non-Life Insurance Directive)(1^. The aim of this proposal is to 
complete the single market In the area of direct insurance other than life 
assurance. 
The Economic and Social Committee gave its opinion on the 28th of February 
1991(2). The European Parliament gave its opinion on the 12th of February 
1992, on the basis of a report from its Legal Committee, thus completing the 
first reading of this proposal. Both the European Parliament and the 
Economic and Social Committee approved the general approach of the initial 
proposal based on the principle of the single licence and single control. 
The Commission has accepted a large number of the amendments proposed by the 
European Parliament, at least in their intention, if not their exact 
wording. The same goes for several of the comments made by the Economic and 
Social Committee. 
In accordance with Article 149, paragraph 3 of the Treaty, the Commission 
has decided to amend its initial proposal. The changes made take account, 
not only of the amendments proposed by the European Parliament and the 
comments of the Economic and Social Committee which it has accepted, but 
also of the current state of work in the Council. 
Apart from the new provisions which aim to complete the system of control of 
insurance companies (confidentiality of information held by the supervisory 
authorities (Art.16), transfer of portfolios for branches of insurance 
companies whose head office is not situated within the Community (Art.53)), 
the main changes concern the rules for financial supervision, the rôle of 
the concept of the general good, the extension of the legal forms allowed 
for the creation of an insurance company and the transitional periods. 
(1) JO N* C 244 of 28.9.1990, p. 28 
(2) JO N* C 102 of 18.4.1991, p. 7. 
For the prudential rules, the Commission can accept most of Parliament's 
amendments concerning the investment rules, in so far as they are 
compatible with the approach of the initial proposal which is to lay down 
prudential rules allowing mutual recognition of the control systems 
without obstructing the freedom of action of insurance companies more than 
is necessary for consumer protection (Arts 21 and 22). At the same time 
the structure of these articles has been changed in the interests of 
clarity and precision. 
Further, in as far as the elements making up the solvency margin are 
concerned, the amended proposal adds to subordinated loans, subordinated 
securities and cumulative preference shares, with these three categories 
together being able to represent up to 50% of the margin (Art. 24). 
Article 28 has been changed to highlight more clearly the rôle of 
'community filter' which must be played by the concept of the general good 
in order to avoid the free choice of policyholders being restricted by 
national legislation for reasons other than the needs of consumer 
protection. The conditions of application of this concept have been made 
more precise in a new recital (No.19) which takes account of the case law 
of the Court of Justice. Going further, the extent of the general good 
has been defined in two areas - health insurance as a substitute for 
social security and insurance against accidents at work - where the 
protection of the persons insured is particularly important (recitals No. 
23 to 26 and Articles 54 and 55). 
Article 6 has also been reviewed to update the legal forms that can be 
used in France by insurance companies. This amendment results from the 
fact that French provident institutions and mutuals have recently been 
brought under the supervisory rules of the insurance directives. For the 
different forms of European company which may be adopted in future, 
Article 51 as amended will allow the Commission to include them directly 
after taking the opinion of the Insurance Committee. 
- Finally, Article 50 adapts the transitional provisions of the Second 
Directive 88/357/EEC to the conditions laid down by this proposal for 
those Member States who must make a great effort to adapt to the creation 
of a single market. 
On the other hand the Commission has not considered it appropriate to take 
up certain other amendments, particularly in the three following areas, 
which would reduce the impact of the creation of the single market. 
- Amendments 10, 12 and 29 would replace non-systematic a posteriori control 
of policy conditions and tariffs by periodic or systematic communication. 
The Commission considers that the system of a posteriori control, already 
implemented for large risks in the second directive, is the most 
appropriate for the conditions of the single market. 
This is a key element of the proposal for a third directive; not to 
restrict the free provision of innovative and competitive products, whilst 
still allowing Member states to maintain their legal provisions for the 
protection of the general good. 
- In the same way the Commission considers that the amendments which aim to 
maintain the exclusive right of certain bodies referred to in Article 4 of 
the first directive (amendment No. 32), even if only for a transitional 
period (amendment No. 6), go beyond the criteria of necessity and 
proportionality fixed by the Court of Justice to Justify restrictions on 
the freedoms of establishment and of provision of services. 
- Finally, given the guarantees already provided by recitals 23 to 25 and 
the new article 54, the same reasoning leads to the rejection of 
amendments No. 8 and 44 which aim to maintain the principle of 
specialisation or the restriction of separate accounting for health 
insurance which is a substitute for social security. 

v. 
AMENDED PROPOSAL FOR A THIRD COUNCIL DIRECTIVE 
ON THE COORDINATION OF LAWS, REGULATIONS 
AND ADMINISTRATIVE PROVISIONS RELATING TO DIRECT INSURANCE 
OTHER THAN LIFE ASSURANCE AND AMENDING DIRECTIVES 
. 73/239/EEC AND 88/357/EEC 
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 
(2) In co-operation with the European Parliament 
(3) Having regard to the Opinion of the Economic and Social Committee 
(1) OJ No C 244, 28.9.1990, p. 28. 
(2) Opinion delivered on 12 February 1992 (not yet published in the Official 
Journal) and Decision of (not yet published in the Official 
Journal). 
(3) OJ No C 102, 18.4.1991, p. 7. 

(1) Whereas it is necessary to complete the internal market in direct insurance 
other than life assurance from the point of view both of the right of 
establishment and of the freedom to provide services, to make it easier for 
insurance undertakings with head offices in the Community to cover risks 
situated within the Community; 
(2) Whereas the Second Council Directive of 22 June 1988 on the co-ordination of 
laws, regulations and administrative provisions relating to direct insurance 
other than life assurance and laying down provisions to facilitate the 
effective exercise of freedom to provide services and amending 
Directive 73/239/EEC (88/357/EEC) has already contributed substantially to 
the achievement of the internal market in direct insurance other than life 
assurance by granting policy-holders who, by virtue of their status, iheir 
size or the nature of the risks to be insured, do not require special 
protection in the Member State in which a risk is situated complete freedom to 
avail themselves of the widest possible insurance market; 
(3) Whereas Directive 88/357/EEC therefore represents an important stage in the 
merging of national markets into an integrated market and that stage must be 
supplemented by other Community instruments with a view to enabling all 
policy-holders, irrespective of their status, their size or the nature of the 
risks to be insured, to have recourse to any insurer with a head office in the 
Community who carries on business there, under the right of establishment or 
the freedom to provide services, while guaranteeing them adequate protection; 
(1) OJ No L 172. 4.7.1988, p. 1. Directive as 1-isf .-wnt»*-^ Uy 
Direct ivp 90/018/KKC <<».J No !. 330 2° . 1 1 1'-»°0 t 
(4) Whereas this Directive forms part of the body of Community legislation already 
enacted which includes the First Council Directive of 24 July 1973 on the 
co-ordination of laws, regulations and administrative provisions relating to 
the taking up and pursuit of the business of direct insurance other than life 
assurance (73/239/EEC) and the Council Directive of 19 December 1991 on 
the annual accounts and consolidated accounts of insurance undertakings 
(91/674/EEC) (2); 
(5) Whereas the approach adopted consists in bringing about such harmonization as 
is essential, necessary and sufficient to achieve the mutual recognition of 
authorizations and prudential control systems, thereby making it possible to 
grant a single authorization valid throughout the Community and apply the 
principle of supervision by the home Member State; 
(6) Whereas, as a result, the taking up and the pursuit of the business of 
insurance are henceforth to be subject to the grant of a single official 
authorization issued by the competent authorities of the Member State in which 
an insurance undertaking has its head office; whereas such authorization 
enables an undertaking to carry on business throughout the Community, under 
the right of establishment or the freedom to provide services; whereas the 
Member State of the branch or of the provision of services may no longer 
require insurance undertakings which wish to carry on insurance business there 
and which have already been authorized in their home Member State to seek 
fresh authorization; whereas Directives 73/239/EEC and 88/357/EEC should 
therefore be amended along those lines; 
(1) OJ No L 228, 16. 8.1973, p. 3. Directive as last amended by 
Directive 88/357/EEC (OJ No L 172. 4.7.^988. p. 1). 
(2) OJ No L 374, 31.12.1991. p. 7. 
7. 
(7) Whereas the competent authorities of home Member States will henceforth be 
responsible for monitoring the financial health of insurance undertakings, 
including their state of solvency, the establishment of adequate technical 
provisions and the covering of those provisions by matching assets; 
(8) Whereas certain provisions of this Directive define minimum standards; 
whereas a home Member State may lay down stricter rules for insurance 
undertakings authorized by its own competent authorities: 
(9) Whereas the competent authorities of the Member States must have at their 
disposal such means of supervision as are necessary to ensure the orderly 
pursuit of business by insurance undertakings throughout the Community 
whether carried on under the right of establishment or the freedom to provide 
services; whereas, in particular, they must be able to introduce appropriate 
safeguards or impose sanctions aimed at preventing irregularities and 
infringements of the provisions on insurance supervision; 
(10) Whereas the internal market comprises an area without internal frontiers and 
involves access to all insurance business other than life assurance 
throughout the Community and, hence, the possibility for any duly authorized 
insurer to cover any of the risks referred to in the Annex to 
Directive 73/239/EEC; whereas, to that end, the monopoly enjoyed by certain 
bodies in certain Member States in respect of the coverage of certain risks 
must be abolished; 
(11) Whereas the provisions on transfers of portfolios must be adapted to bring 
them into line with the single authorization system introduced by this 
Direct ive: 
(12) Whereas Directive 91/674/EEC has already effected the necessary harmonization 
of the Member States' rules on the technical provisions which insurers are 
required to establish to cover their commitments, and that harmonization 
makes it possible to grant mutual recognition of those provisions; 
(13) Whereas the rules governing the spread, localization and matching of the 
assets used to cover technical provisions must be co-ordinated in order to 
facilitate the mutual recognition of Member States' rules; whereas that 
co-ordination must take account of the measures on the liberalization of 
capital movements provided for in the Council Directive of 24 June 1988 for 
the implementation of Article 67 of the Treaty (88/361/EEC) and the 
progress made by the Community towards economic and monetary union; 
(14) Whereas, however, the home Member State may not require insurance 
undertakings to invest the assets covering their technical provisions in 
particular categories of assets, as such a requirement would be incompatible 
with the measures on the liberalization of capital movements provided for in 
Directive 88/361/EEC; 
(15) Whereas, pending the adoption of a Directive on investment services 
harmonizing inter alia the definition of the concept of regulated market, for 
the purposes of this Directive and without prejudice to such future 
harmonization that concept must be defined provisionally; whereas that 
definition will be replaced by that harmonized at Community level which will 
give the home Member State of the market the responsibilities for these 
matters which this Directive transitionally gives to the insurance 
undertaking's home Member State; 
(1) OJ No L 178, 8.7.1988, p. 5 
â. 
(16) Whereas the list of items of which the solvency margin required by 
Directive 73/239/EEC may be made up must be supplemented to take account of 
new financial instruments and of the facilities granted to other financial 
institutions for the constitution of their own funds; 
(17) Whereas within the framework of an integrated insurance market policy-holders 
who. by virtue of their status, their size or the nature of the risks to be 
insured, do not require special protection in the Member State in which a 
risk is situated should be granted complete freedom to choose the law 
applicable to their insurance contracts; 
(18) Whereas the harmonization of insurance contract law is not a prior rendition 
for the achievement of the internal market in insurance; whereas, therefore, 
the opportunity afforded to the Member States of imposing the application of 
their law to insurance contracts covering risks situated within their 
territories is likely to provide adequate safeguards for policy-holders who 
require special protection; 
(19) Whereas within the framework of an internal market it is in the 
policy-holder's interest that he should have access to the widest possible 
range of insurance products available in the Community so that he can choose 
that which is best suited to his needs; whereas it is for the Member State in 
which the risk is situated to ensure that there is nothing to prevent the 
marketing within its territory of all the insurance products offered for sale 
in the Community as long as they do not conflict with the legal provisions 
protecting the general good in force in the Member State in which the v\n\ is 
situated, and insofar as the general good is not safeguarded by the rules of 
the home Member State, provided that such provisions must be applied without 
discrimination to all undertakings operating in that Member State and be 
objectively necessary and in proportion to the objective pursued; 
A*. 
(20) Whereas the Member States must be able to ensure that the insurance products 
and contract documents used, under the right of establishment or the freedom 
to provide services, to cover risks situated within their territories comply 
with such specific legal provisions protecting the general good as are 
applicable; whereas the systems of supervision to be employed must meet the 
requirements of an integrated market but their employment may not constitute 
a prior condition for carrying on insurance business; whereas from this 
standpoint systems for the prior approval of policy conditions do not appear 
to be justified; whereas it is therefore necessary to provide for other 
systems better suited to the requirements of an internal market which enable 
every Member State to guarantee policy-holders adequate protection; 
(21) Whereas if a policy-holder is a natural person, he should be informed by the 
insurance undertaking of the law which will apply to the contract and of the 
arrangements for handling policy-holders* complaints concerning contracts; 
(22) Whereas Member States may provide that private health cover or health cover 
taken out on a voluntary basis may serve as a partial or complete alternative 
to the health cover provided by the social security systems; 
(23) Whereas the nature and social consequences of health insurance contracts 
justify the competent authorities of the Member State in which a risk is 
situated in requiring systematic notification of the general and special 
policy conditions in order to verify that such contracts are a partial or 
complete alternative to the health cover provided by the social security 
system; whereas such verification must not be a prior condition for the 
marketing of the products; whereas the particular nature of health insurance, 
serving as a partial or complete alternative to the health cover provided 
44 
by the social security system, distinguishes it from other classes of 
indemnity insurance and life assurance insofar as it is necessary to ensure 
that policy-holders have effective access to private health cover or health 
cover taken out on a voluntary basis regardless of their age or risk profile; 
(24) Whereas to this end some Member States have adopted specific legal 
provisions; whereas, to protect the general good, it is possible to adopt or 
maintain such legal provisions insofar as they do not unduly restrict the 
right of establishment or the freedom to provide services, it being 
understood that such provisions must apply in an identical manner whatever 
the home Member State of the undertaking may be; whereas these legal 
provisions may differ in nature according to the conditions in each Member 
State; whereas these measures may provide for open enrolment, rating on a 
uniform basis according to the type of policy and lifetime cover; whereas 
that objective may also be achieved by requiring undertakings offering 
private health cover or health cover taken out on a voluntary basis to offer 
standard policies in line with the cover provided by statutory social 
security schemes at a premium rate at or below a prescribed maximum and to 
participate in loss compensation schemes; whereas, as a further possibility, 
it may be required that the technical basis of private health cover or health 
cover taken out on a voluntary basis be similar to that of life assurance; 
(2b) Whereas, because of the co-ordination effected by Directive 73/239/EEC as 
amended by this Directive, the possibility, afforded to the Federal Republic 
of Germany under Article 7(2)(c) of the same Directive, of prohibiting the 
simultaneous transaction of health insurance and other classes is no longer 
justified and must therefore be abolished; 
It-
(26) Whereas Member States may require any insurance undertakings offering 
compulsory insurance against accidents at work at their own risk within their 
territories to comply with the specific provisions laid down in their 
national law on such insurance; whereas, however, this requirement may not 
apply to the provisions concerning financial supervision, which are the 
exclusive responsibility of the home Member State; 
(27) Whereas exercise of the right of establishment requires an undertaking to 
maintain a permanent presence in the Member State of the branch; whereas 
responsibility for the specific interests of insured persons and victims in 
the case of third-party-liability motor insurance requires adequate 
structures in the Member State of the branch for the collection of all the 
necessary information on compensation claims relating to that risk, with 
sufficient powers to represent the undertaking vis-à-vis injured parties who 
could claim compensation, including powers to pay such compensation, and to 
represent the undertaking or, if necessary, to arrange for it to be 
represented in the courts and before the competent authorities of that Member 
State in connection with claims for compensation; 
(28) Whereas within the framework of the internal market no Member State may 
continue to prohibit the simultaneous carrying on of insurance business 
within its territory under the right of establishment and the freedom to 
provide services; whereas the option granted to Member States in this 
connection by Directive 88/357/EEC should therefore be abolished; 
(29) Whereas provision should be made for a system of penalties to be imposed 
when, in the Member State in which a risk is situated, an insurance 
undertaking does not comply with those provisions protecting the general good 
that are applicable to it; 
/13. 
(30) Whereas some Member States do not subject insurance transactions to any form 
of indirect taxation, while the majority apply special taxes and other forms 
of contribution, including surcharges intended for compensation bodies; 
whereas the structures and rates of such taxes and contributions vary 
considerably between the Member States in which they are applied; whereas it 
is desirable to prevent existing differences* leading to distortions of 
competition in insurance services between Member States; whereas, pending 
subsequent harmonization, application of the tax systems and other forms of 
contribution provided for by the Member States in which risks are situated is 
likely to remedy that problem and it is for the Member States to make 
arrangements to ensure that such taxes and contributions are collected; 
(31) Whereas technical adjustments to the detailed rules laid down in this 
Directive may be necessary from time to time to take account of the future 
development of the insurance industry; whereas the Commission will make such 
adjustments as and when necessary, after consulting the Insurance Committee 
set up by Directive 91/675/EEC , in the exercise of the implementing 
powers conferred on it by the Treaty; 
(32) Whereas it is necessary to adopt specific provisions intended to ensure 
smooth transition from the legal regime in existence when this Directive 
becomes applicable to the regime that it introduces, taking care not to place 
an additional workload on Member States' competent authorities; 
(1) 0J No 1. 174 11.1?. 199 1 n 3? 
/y. 
(33) Whereas under Article 8c of the Treaty account should be taken of the extent 
of the effort which must be made by certain economies at different stages of 
development: whereas, therefore, transitional arrangements should be adopted 
for the gradual application of this Directive by certain Member States, 
HAS ADOPTED THIS DIRECTIVE: 
TITLE I 
DEFINITIONS AND SCOPE 
Article 1 
For the purposes of this Directive: 
(a) "insurance undertaking" shall mean an undertaking which has received official 
authorization in accordance with Article 6 of Directive 73/239/EEC; 
(b) "branch" shall mean an agency or branch of an insurance undertaking, having 
regard to Article 3 of Directive 88/357/EEC; 
(c) "home Member State" shall mean the Member State in which the head office of 
the insurance undertaking covering a risk is situated; 
(d) "Member State of the branch" shall mean the Member State in which the branch 
covering a risk is situated; 
It-
(e) "Member State of the provision of services" shall mean the Member State in 
which a risk is situated, as defined in Article 2(d) of Directive 88/357/EEC, 
if it is covered by an insurance undertaking or a branch situated in another 
Member State; 
(f) "control" shall mean the relationship between a parent undertaking and a 
subsidiary, as defined in Article 1 of Directive 83/349/EEC , or a similar 
relationship between any natural or legal person and an undertaking; 
(g) "qualifying holding" shall mean a direct or indirect holding in an undertaking 
which represents 10% or more of the capital or of the voting rights or which 
makes it possible to exercise a significant influence over the management of 
the undertaking in which a holding subsists. 
For the purposes of this definition, in the context of Articles 8 and 15 and 
of the other levels of holding referred to in Article 15, the voting rights 
(2) referred to in Article 7 of Directive 88/627/EEC shall be taken into 
account ; 
(h) "parent undertaking" shall mean a parent undertaking as defined in Articles 1 
and 2 of Directive 83/349/EEC; 
(i) "subsidiary" shall mean a subsidiary undertaking as defined in Articles 1 
and 2 of Directive 83/349/EEC; any subsidiary of a subsidiary undertaking 
shall also be regarded as a subsidiary of the undertaking which is those 
undertakings' ultimate parent undertaking; 
(I) OJ No L 193. 10. 7.1983. p. 1. 
<'.?.) 0 1 No I, MM. 17.12 1908. p. 02. 
46. 
(j) "regulated market" shall mean a financial market regarded by an undertaking's 
home Member State as a regulated market pending the adoption of a definition 
in a Directive on investment services and characterized by: 
- regular operation, and 
- the fact that regulations issued or approved by the appropriate authorities 
define the conditions for the operation of the market, the conditions for 
access to the market and, where the Council Directive of 5 March 1979 
co-ordinating the conditions for the admission of securities to official 
stock-exchange listing (79/279/EEC) applies, the conditions for 
admission to listing imposed in that Directive or, where that Directive does 
not apply, the conditions to be satisfied by a financial instrument in order 
to be effectively dealt in on the market. 
For the purposes of this Directive, a regulated market may be situated in a 
Member State or in a third country. In the latter event, the market must be 
recognized by the home Member State and meet comparable requirements. Any 
financial instruments dealt in must be of a quality comparable to that of the 
instruments dealt in on the regulated market or markets of the Member State in 
question; 
(k) "competent authorities" shall mean the national authorities which are 
empowered by law or regulation to supervise insurance undertakings. 
(1) OJ No L 66, 13.3.1979. p. 21. Directive as last amended by 
Directive 82/148/EEC (OJ No L 62. 5.3.1982. p. 22). 
4?. 
Article 2 
1. This Directive shall apply to the types of insurance and undertakings referred 
to in Article 1 of Directive 73/239/EEC. 
2. This Directive shall apply neither to classes of insurance or operations, nor 
to undertakings or institutions to which Directive 73/239/EEC does not apply, nor 
to the bodies referred to in Article 4 of that Directive. 
Article 3 
Notwithstanding Article 2(2), Member States shall take every step to ensure that 
monopolies in respect of the taking up of the business of certain classes of 
insurance, granted to bodies established within their territories and referred to 
in Article 4 of Directive 73/239/EEC, are abolished by 1 July 1994. 
TITLE II 
THE TAKING UP OF THE BUSINESS OF INSURANCE 
Article 4 
Article 6 of Directive 73/239/EEC shall be replaced by the following: 
"Article 6 
The taking up of the business of direct insurance shall be subject to prior 
official authorization. 
Such authorization shall be sought from the competent authorities of the home 
Member State by: 
(a) any undertaking which establishes its head office within the territory of 
that State; 
(b) any undertaking which, having received the authorization referred to in the 
first subparagraph, extends its'business to an entire class or to other 
classes". 
Article 5 
Article 7 of Directive 73/239/EEC shall be replaced by the following: 
"Article 7 
1. Authorization shall be valid for the entire Community. It shall permit an 
undertaking to carry on business there, under either the right of establishment 
or the freedom to provide services. 
2. Authorization shall be granted for a particular class of insurance. It shall 
cover the entire class, unless the applicant wishes to cover only some of the 
risks pertaining to that class, as listed in point A of the Annex. 
However: 
(a) Member States may grant authorization for the groups of classes listed in 
point B of the Annex, attaching to them the appropriate denominations 
specified therein; 
(b) authorization granted for one class or a group of classes shall also be valid 
for the purpose of covering ancillary risks included in another class if the 
conditions imposed in point C of the Annex are fulfilled". 
M. 
Article 6 
Article 8 of Directive 73/239/EEC shall be replaced by the following: 
"Article 8 
1. The home Member State shall require every insurance undertaking for which 
authorization is sought to: 
(a) adopt one of the following forms: 
- in the case of the Kingdom of Belgium: "société anonyme/naamloze 
vennootschap", "société en commandite par actions/commanditaire 
vennootschap op aandelen", "association d'assurance mutuelle/onderlinge 
verzekeringmaatschappij". "société coopérâtive/cobperatieve vennootschap"; 
- in the case of the Kingdom of Denmark: "aktieselskaber", "gensidige 
selskaber"; 
- in the case of the Federal Republic of Germany: "Aktiengesellschaft", 
"Versicherungsverein auf Gegenseitigkeit", "Offentlich-rechtlichcs 
Wettbewerbsversicherungsunternehmen"; 
- in the case of the French Republic: "société anonyme", "société d'assurance 
mutuelle", "institution de prévoyance régie par le code de la sécurité 
sociale", "institution de prévoyance régie par le code rural" and 
"mutuelles régies par le code de la mutualité"; 
- in the case of Ireland: incorporated companies limited by shares or by 
guarantee or unlimited; 
ZP. 
- in the case of the Italian Republic: "società per azioni", "società 
cooperativa", "mutua di assicurazione"; 
- in the case of the Grand Duchy of Luxembourg: "société anonyme", "société 
en commandite par actions", "association d'assurances mutuelles", "société 
coopérative"; 
- in the case of the Kingdom of the Netherlands: "naamloze vennootschap", 
"onderlinge waarborgmaatschappij"; 
- in the case of the United Kingdom: incorporated companies limited by shares 
or by guarantee or unlimited, societies registered under the Industrial and 
Provident Societies Acts, societies registered under the Friendly Societies 
Acts, the association of underwriters known as Lloyd's; 
- in the case of the Hellenic Republic: "Avovupn etatpeta". 
"A\kr)kaa<pakLOT Ixoq OUVETOiplopoç" ; 
- in the case of the Kingdom of Spain: "sociedad anônima", "sociedad mutua", 
"sociedad cooperativa"; 
- in the case of the Portuguese Republic: "sociedade anônima", "mûtua de 
seguros". 
An insurance undertaking may also adopt the form of a European Company (SE) 
when that has been established. 
Furthermore, Member States may, where appropriate, set up undertakings in any 
public-law form provided that such bodies have as their objects insurance 
operations under conditions equivalent to those under which private-law 
undertakings operate; 
tA. 
(b) limit its objects to the business of insurance and operations arising 
directly therefrom, to the exclusion of all other commercial business; 
(c) submit a scheme of operations in accordance with Article 9; 
(d) possess the minimum guarantee fund provided for in Article 17(2); 
(e) be effectively run by persons of good repute with appropriate professional 
qualifications or experience. 
2. An undertaking seeking authorization to extend its business to other classes 
or to extend an authorization covering only some of the risks pertaining to one 
class shall be required to submit a scheme of operations in accordance with 
Article 9. 
It shall, furthermore, be required to show proof that it possesses the solvency 
margin provided for in Article 16 and, if with regard to such other classes 
Article 17(2) requires a higher minimum guarantee fund than before, that it 
possesses that minimum. 
3. Nothing in this Directive shall prevent Member States from maintaining in 
force or introducing laws, regulations or administrative provisions requiring 
approval of the memorandum and articles of association and communication of any 
other documents necessary for the normal exercise of supervision. 
Member States shall not, however, adopt provisions requiring the prior approval 
or systematic notification of general and special policy conditions, scales of 
premiums and forms and other printed documents which an undertaking intends to 
use in its dealings with policy-holders. 
Member States may not retain or introduce prior notification or approval of 
proposed increases in premium rates except as part of general price-control 
systems. 
Nothing in this Directive shall prevent Member States from subjecting 
undertakings seeking or having obtained authorization for class 18 in point A of 
the Annex to checks on their direct or indirect resources in staff and equipment, 
including the qualification of their medical teams and the quality of the 
equipment available to such undertakings to meet their commitments arising out of 
this class of insurance. 
4. The abovementioned provisions may not require that any application for 
authorization be considered in the light of the economic requirements of the 
market". 
Article 7 
Article 9 of Directive 73/239/EEC shall be replaced by the following: 
"Article 9 
The scheme of operations referred to in Article 8(1)(c) shall include particulars 
or proof concerning: 
(a) the nature of the risks which the undertaking proposes to cover; 
(b) the guiding principles as to reinsurance; 
(c) the items constituting the minimum guarantee fund; 
Zi. 
(d) estimates of the costs of setting up the administrative services and the 
organization for securing business; the financial resources intended to meet 
those costs and, if the risks to be covered are classified in class 18 in 
point A of the Annex, the resources at the undertaking's disposal for the 
provision of the assistance promised 
and, in addition, for the first three financial years: 
(e) estimates of management expenses other than installation costs, in particular 
current general expenses and commissions; 
(f) estimates of premiums or contributions and claims; 
(g) a forecast balance sheet; 
(h) estimates of the financial resources intended to cover underwriting 
liabilities and the solvency margin". 
Article 8 
_______ f 
The competent authorities of the home Member State shall not grant an undertaking 
authorization to take up the business of insurance before they have been informed 
of the identities of the shareholders or members, direct or indirect, whether 
natural or legal persons, who have qualifying holdings in that undertaking and of 
the amounts of those holdings. 
The same authorities shall refuse authorization if, taking into account the need 
to ensure the sound and prudent management of an insurance undertaking, they are 
not satisfied as to the qualifications of the shareholders or members. 
TITLE III 
HARMONIZATION OF THE CONDITIONS GOVERNING THE BUSINESS OF INSURANCE 
Chapter 1 
Article 9 
Article 13 of Directive 73/239/EEC shall be replaced by the following: 
"Article 13 
1. The financial supervision of an insurance undertaking, including that of the 
business it carries on either through branches or under the freedom to provide 
services, shall be the sole responsibility of the home Member State. 
2. That financial supervision shall include verification, with respect to the 
insurance undertaking's entire business, of its state of solvency, of the 
establishment of technical provisions and of the assets covering them in 
accordance with the rules laid down or practices followed in the home Member 
State under provisions adopted at Community level. 
Where the undertaking in question is authorized to cover the risks classified in 
class 18 in point A of the Annex, supervision shall extend to monitoring of the 
technical resources which the undertaking has at its disposal for the purpose of 
carrying out the assistance operations it has undertaken to perform, where the 
law of the home Member State provides for the monitoring of such resources. 
3. The competent authorities of the home Member State shall require every 
insurance undertaking to have sound administrative and accounting procedures and 
adequate internal control mechanisms". 
t*. 
Article 10 
APticle 14 of Directive 73/239/EEC shall be replaced by the following: 
"Article 14 
The Member State of the branch shall provide that where an insurance undertaking 
authorized in another Member State carries on business through a branch the 
competent authorities of the home Member State may, after having informed the 
competent authorities of the Member State of the branch, carry out themselves or 
through the intermediary of persons they appoint for that purpose on-the-spot 
verification of the information necessary to ensure the financial supervision of 
the undertaking. The authorities of the Member State of the branch may 
participate in that verification". 
Article 11 
Article 19(2) and (3) of Directive 73/239/EEC shall be replaced by the following: 
"2. Member States shall require insurance undertakings with head offices within 
their territories to render periodically the returns, together with statistical 
documents, which are necessary for the purposes of supervision. The competent 
authorities shall provide each other with any documents and information that are 
useful for the purposes of supervision. 
3. Every Member State shall take all steps necessary to ensure that the 
competent authorities have the powers and means necessary for the supervision of 
the business of insurance undertakings with head offices within their 
territories, including business carried on outwith those territories, in 
accordance with the Council Directives governing such business and for the 
purpose of seeing that they are implemented. 
These powers and means must, in particular, enable the competent authorities to: 
(a) make detailed enquiries regarding an undertaking's situation and the whole of 
its business, inter alia by: 
- gathering information or requiring the submission of documents concerning 
its insurance business; 
- carrying out on-the-spot investigations at the undertaking's premises; 
(b) take any measures with regard to an undertaking, its directors or managers or 
the persons who control it. that are appropriate and necessary to ensure that 
that undertaking's business continues to comply with the laws, regulations 
and administrative provisions with which the undertaking must comply in each 
Member State and in particular with the scheme of operations insofar as it 
remains mandatory, and to prevent or remedy any irregularities prejudicial to 
the interests of insured persons; 
(c) ensure that those measures are carried out, if need be by enforcement and 
where appropriate through judicial channels. 
Member States may also make provision for the competent authorities to obtain any 
information regarding contracts which are held by intermediaries". 
Vf. 
Article 12 
1. Article 11(2) to (7) of Directive 88/357/EEC is hereby repealed. 
2. Under the conditions laid down by national law, each Member State shall 
authorize insurance undertakings with head offices within its territory to 
transfer all or part of their portfolios of contracts, concluded either under the 
right of establishment or the freedom to provide services, to an accepting office 
established within the Community, if the competent authorities of the home Member 
State of the accepting office certify that after taking the transfer into account 
the latter possesses the necessary solvency margin. 
3. Where a branch proposes to transfer all or part of its portfolio of contracts, 
concluded either under the right of establishment or the freedom to provide 
services, the Member State of the branch shall be consulted. 
4. In the circumstances referred to in paragraphs 2 and 3, the competent 
authorities of the home Member State of the transferring undertaking shall 
authorize the transfer after obtaining the agreement of the competent authorities 
of the Member States in which the risks are situated. 
V The competent authorities of the Member States consulted shall give their 
opinion or consent to the competent authorities of the home Member State of the 
transferring insurance undertaking within three months of receiving a request; the 
absence of any response within that period from the authorities consulted shall be 
considered equivalent to a favourable opinion or tacit consent. 
f> A transfer authorized in accordance with this Article shall be published as 
laid down by national law in the Member State in which the risk is situated. Such, 
transfers shall automatically be valid against policy-holders, insured persons and 
any other persons having rights or obligations arising out of the contracts 
t r «M»'; for tod . 
ti. 
This provision shall not affect the Member States' rights to give policy-holders 
the option of cancelling contracts within a fixed period after a transfer. 
Article 13 
Article 20 of Directive 73/239/EEC shall be replaced by the following: 
"Article 20 
1. If an undertaking does not comply with Article 15, the competent authority of 
its home Member State may prohibit the free disposal of its assets after having 
communicated its intention to the competent authorities of the Member States in 
which the risks are situated. 
2. For the purposes of restoring the financial situation of an undertaking the 
solvency margin of which has fallen below the minimum required under 
Article 16(3), the competent authority of the home Member State shall require 
that a plan for the restoration of a sound financial situation be submitted for 
its approval. 
In exceptional circumstances, if the competent authority is of the opinion that 
the financial situation of the undertaking will deteriorate further, it may also 
restrict or prohibit the free disposal of the undertaking's assets. It shall 
inform the authorities of other Member States within the territories of which the 
undertaking carries on business of any measures it has taken and the latter 
shall, at the request of the former, take the same measures. 
3. If the solvency margin falls below the guarantee fund as defined in 
Article 17, the competent authority of the home Member State shall require the 
undertaking to submit a short-term finance scheme for its approval. 
«. 
It may also restrict or prohibit the free disposal of the undertaking's assets. 
It shall inform the authorities of other Member States within the territories of 
which the undertaking carries on business accordingly and the latter shall, at 
the request of the former, take the same measures. 
4. The competent authorities may further take all measures necessary to 
safeguard the interests of insured persons in the cases provided for in 
paragraphs 1, 2 and 3. 
5. Each Member State shall take the measures necessary to be able, in accordance 
with its national law, to prohibit the free disposal of assets located within its 
territory at the request, in the cases provided for in paragraphs 1, 2 and 3, of 
the undertaking's home Member State, which shall designate the assets to be 
covered by such measures". 
Article 14 
Article 22 of Directive 73/239/EEC shall be replaced by the following: 
"Article 22 
1. Authorization granted to an insurance undertaking by the competent authority 
of its home Member State may be withdrawn by that authority if that undertaking: 
(a) does not make use of that authorization within twelve months, expressly 
renounces it or ceases to carry on business for more than six months, unless 
the Member State concerned has made provision for authorization to lapse in 
such cases; 
(b) no longer fulfils the conditions for admission; 
(c) has been unable, within the time allowed, to take the measures specified in 
the restoration plan or finance scheme referred to in Article 20; 
(d) fails seriously in its obligations under the regulations to which it is 
subject. 
In the event of the withdrawal or lapse of authorization, the competent authority 
of the home Member State shall notify the competent authorities of the other 
Member States accordingly, and they shall take appropriate measures to prevent 
the undertaking from commencing new operations within their territories, under 
either the right of establishment or the freedom to provide services. The home 
Member State's competent authority shall, in conjunction with those authorities, 
take all measures necessary to safeguard the interests of insured persons and, in 
particular, shall restrict the free disposal of the undertaking's assets in 
accordance with Article 20(1), (2), second subparagraph, or (3), second 
subparagraph. 
2. Any decision to withdraw authorization shall be supported by precise reasons 
and communicated to the undertaking in question". 
Article 15 
1. Member States shall require any natural or legal person who proposes to 
acquire, directly or indirectly, a qualifying holding in an insurance undertaking 
first to inform the competent authorities of the home Member State, indicating the 
size of his intended holding. Such a person must likewise inform the competent 
authorities of the home Member State if he proposes to increase his qualifying 
holding so that the proportion of the voting rights or of the capital he holds 
would reach or exceed 20%. 33% or 50% or so that the insurance undertaking would 
become his subsidiary. 
H 
The competent authorities of the home Member State shall have up to three months 
from the date of the notification provided for in the first subparagraph to oppose 
such a plan if, in view of the need to ensure sound and prudent management of the 
insurance undertaking in question, they are not satisfied as to the qualification 
of the person referred to in the first subparagraph. If they do not oppose the 
plan in question, they may fix a maximum period for its implementation. 
2. Member States shall require any natural or legal person who proposes to 
dispose, directly or indirectly, of a qualifying holding in an insurance 
undertaking first to inform the competent authorities of the home Member State, 
indicating the size of his intended holding. Such a person must likewise inform 
the competent authorities if he proposes to reduce his qualifying holding so that 
the proportion of the voting rights or of the capital he holds would fall below 
20%. 33% or 50% or so that the insurance undertaking would cease to be his 
subsidiary. 
3. On becoming aware of them, insurance undertakings shall inform the competent 
authorities of their home Member States of any acquisitions or disposals of 
holdings in their capital that cause holdings to exceed or fall below any of the 
thresholds referred to in paragraphs 1 and 2. 
They shall also, at least once a year, inform them of the names of shareholders 
and members possessing qualifying holdings and the sizes of such holdings as 
shown, for example, by the information received at annual general meetings of 
shareholders or members or as a result of compliance with the regulations relating 
to companies listed on stock exchanges. 
A. Member States shall require that, where the influence exercised by the persons 
referred to in paragraph 1 is likely to operate against the prudent and sound 
management of an insurance undertaking, the competent authorities of the home 
Member State shall take appropriate measures to put an end to that situation. 
Such measures may consist, for example, in injunctions, sanctions against 
directors and managers, or suspension of the exercise of the voting rights 
attaching to the shares held by the shareholders or members in question. 
Similar measures shall apply to natural or legal persons failing to comply with 
the obligation to provide prior information imposed in paragraph 1. If a holding 
is acquired despite the opposition of the competent authorities, the Member States 
shall, regardless of any other sanctions to be adopted, provide either for 
exercise of the corresponding voting rights to be suspended, or for the nullity of 
votes cast or for the possibility of their annulment. 
Article 16 
1. The Member States shall provide that all persons working or who have worked 
for the competent authorities, as well as auditors and experts acting on behalf of 
the competent authorities, shall be bound by the obligation of professional 
secrecy. This means that no confidential information which they may receive while 
performing their duties may be divulged to any person or authority whatsoever, 
except in summary or aggregate form, such that individual insurance undertakings 
cannot be identified, without prejudice to cases covered by criminal law. 
31. 
Nevertheless, -where an insurance undertaking has been declared bankrupt or is 
being compulsorily wound up. confidential information which does not concern third 
parties involved in attempts to rescue that undertaking may be divulged in civil 
or commercial proceedings. 
2. Paragraph 1 shall not prevent the competent authorities of different Member 
States from exchanging information in accordance with the Directives applicable to 
insurance undertakings. Such information shall be subject to the conditions of 
professional secrecy laid down in paragraph 1. 
3. Member States may conclude co-operation agreements providing for exchanges of 
information with the competent authorities of third countries only if the 
information disclosed is subject to guarantees of professional secrecy at least 
equivalent to those provided for in this Article. 
4. Competent authorities receiving confidential information under paragraph 1 
or 2 may use it only in the course of their duties: 
- to check that the conditions governing the taking up of the business of 
insurance are met and to facilitate monitoring of the conduct of such business, 
especially with regard to the monitoring of technical provisions, solvency 
margins, and administrative and accounting procedures and internal control 
mechanisms, 
- to impose sanctions, 
- in administrative appeals against decisions of the competent authorities, or 
- in court proceedings initiated under Article 55 or under special provisions 
provided for in the Directives adopted in the field of insurance undertakings. 
5. Paragraphs 1 and 4 shall not preclude the exchange of information within a 
Member State, where there are two or more competent authorities in the same Member 
State, or between Member States, between competent authorities and: 
- authorities responsible for the official supervision of credit institutions and 
other financial organizations and the authorities responsible for the 
supervision of financial markets, 
- bodies involved in the liquidation and bankruptcy of insurance undertakings and 
in other similar procedures, and 
- persons responsible for carrying out statutory audits of the accounts of 
insurance undertakings and other financial institutions, 
in the discharge of their supervisory functions, or the disclosure to bodies which 
administer compulsory winding-up proceedings or guarantee funds of information 
necessary to the performance of their duties. The information received by those 
authorities, bodies and persons shall be subject to the conditions of professional 
secrecy laid down in paragraph 1. 
6. In addition, notwithstanding paragraphs 1 and 4, the Member States may, under 
provisions laid down by law, authorize the disclosure of certain information to 
other departments of their central government administrations responsible for 
legislation on the supervision of credit institutions, financial institutions, 
investment services and insurance companies and to inspectors acting on behalf of 
those departments. 
jr. 
However, such disclosures may be made only where necessary for reasons of 
prudential control. 
The Member States shall, however, provide that information received under 
paragraphs 2 and 5 and that obtained by means of the on-the-spot verification 
referred to in Article 14 of Directive 73/239/EEC may never be disclosed in the 
cases referred to in this paragraph except with the express consent of the 
competent authorities which disclosed the information or of the competent 
authorities of the Member State in which the on-the-spot verification was carried 
out. 
Chapter 2 
Article 17 
Article 15 of Directive 73/239/EEC shall be replaced by the following: 
"Article 15 
1. The home Member State shall require every insurance undertaking to establish 
adequate technical provisions in respect of its entire business. 
'The amount of such technical provisions shall be determined in accordance with 
the rules laid down in Directive 91/674/EEC. 
2. The home Member State shall require every insurance undertaking to cover the 
technical provisions in respect of its entire business by matching assets in 
accordance with Article 6 of Directive 88/357/EEC. In respect of risks situated 
within the European Community, those assets must be localized within the 
Community. Member States shall not require insurance undertakings to localize 
their assets in any particular Member State. The home Member State may, however, 
permit relaxations in the rules on the localization of assets. 
3. If the home Member State allows any technical provisions to be covered by 
claims against reinsurers, it shall fix the percentage so allowed. In such 
cases, it may not specify the localization of the assets representing such 
claims". 
Article 18 
Article 15a of Directive 73/239/EEC shall be replaced by the following: 
"Article 15a 
1. Member States shall require every insurance undertaking with a head office 
within their territories which underwrites risks included in class 14 in point A 
of the Annex (hereinafter referred to as "credit insurance") to set up an 
equalization reserve for the purpose of offsetting any technical deficit or 
above-average claims ratio arising in that class in any financial year. 
2. The equalization reserve shall be calculated in accordance with the rules 
laid down by the home Member State in accordance with one of the four methods set 
out in point D of the Annex, which shall be regarded as equivalent. 
3. Up to the amount calculated in accordance with the methods set out in point D 
of the Annex, the equalization reserve shall be disregarded for the purpose of 
calculating the solvency margin. 
3?. 
4. Member States may exempt insurance undertakings with head offices within 
their territories from the obligation to set up equalization reserves for credit, 
insurance business where the premiums or contributions receivable in respect of 
credit insurance are less than 4% of the total premiums or contributions 
receivable by them and less than ECU 2 500 000". 
Article 19 
Article 23 of Directive 88/357/EEC is hereby repealed. 
Article 20 
The assets covering the technical provisions shall take account of the type of 
business carried on by an undertaking in such a way as to secure the safety, yield 
and marketability of its investments, which the undertaking shall ensure are 
diversified and adequately spread. 
Article 21 
1. The home Member State may not authorize insurance undertakings to cover their 
technical provisions with any but the following categories of assets: 
A. Investments 
(a) debt securities, bonds and other money and capital market instruments; 
(b) loans; 
(c) shares and other variable-yield participations; 
n-
(d) units in undertakings for collective investment in transferable securities 
and other investment funds; 
(e) land, buildings and immovable property rights; 
B. Debts and claims 
(f) debts owed by reinsurers, including reinsurers' shares of technical 
provisions; 
(g) deposits with and debts owed by ceding undertakings; 
(h) debts owed by policy-holders and intermediaries arising out of direct and 
reinsurance operations; 
(i) claims arising out of salvage and subrogation; 
(j) tax recoveries; 
(k) claims against guarantee funds; 
C. Others 
(1) tangible fixed assets, other than land and buildings, valued on the basis 
of prudent amortization; 
(m) cash at bank and in hand, deposits with credit institutions and any other 
bodies authorized to receive deposits; 
(n) deferred acquisition costs; 
(o) accrued interest and rent, other accrued income and prepayments. 
#. 
In the case of the association of underwriters known as Lloyd's, asset categories 
shall also include guarantees and letters of credit issued by credit institutions 
within the meaning of Directive 77/780/EEC or by insurance undertakings, 
together with verifiable sums arising out of life assurance policies, to the 
extent that they represent funds belonging to members. 
The inclusion of any asset or category of assets listed in this paragraph shall 
not mean that all categories of assets must automatically be accepted as cover for 
technical provisions. The home Member State shall lay down more detailed rules 
fixing the conditions for the use of acceptable assets; in this connection, it may 
require valuable security or guarantees, particularly in the case of debts owed by 
reinsurers. 
In the determination and the application of the rules which it lays down, the home 
Member State shall, in particular, ensure that the following principles are 
complied with: 
(i) assets covering technical provisions must be valued net of any debts arising 
out of their acquisition; 
(ii) all assets must be valued on a prudent basis, allowing for the risk of any 
amounts' not being realizable. In particular, tangible fixed assets other 
than land and buildings may be accepted as cover for technical provisions 
only if they are valued on the basis of prudent amortization; 
MI o.j No L 322, 17.12.1977, p. 30. Directive as last amended by 
Directive 89/646/EEC (OJ No L 386. 30.12.1989. p. I). 
*0 
(iii) loans, whether to undertakings, to State authorities or international 
organizations, to local or regional authorities or to natural persons, may 
be accepted as cover for technical provisions only if there are sufficient 
guarantees as to their security, whether these are based on the status of 
the borrower, mortgages, bank guarantees or guarantees granted by insurance 
undertakings or other forms of security; 
(iv) derivative instruments such as options, futures and swaps in connection 
with assets covering technical provisions may be used insofar as they 
contribute to a reduction of investment risks or facilitate efficient 
portfolio management. They must be valued on a prudent basis and may be 
taken into account in the valuation of the underlying assets; 
(v) transferable securities which are not dealt in on a regulated market may be 
accepted as cover for technical provisions only if they can be realized in 
the short term; 
(vi) debts owed by and claims against a third party may be accepted as cover for 
technical provisions only after deduction of all amounts owed to the same 
third party; 
(vii) the value of any debts and claims accepted as cover for technical provisions 
must be calculated on a prudent basis, with due allowance for the risk of 
any amounts not being realizable. In particular, debts owed by 
policy-holders and intermediaries arising out of insurance and reinsurance 
operations may be accepted only insofar as they have been outstanding for 
not more than three months; 
f1. 
(vin) where the assets held include an investment in a subsidiary undertaking 
which manages all or part of the insurance undertaking's investments on its 
behalf, the home Member State must, when applying the rules and principles 
laid down in this Article, take into account the underlying assets held by 
the subsidiary undertaking; the home Member State may treat the assets of 
other subsidiaries in the same way; 
dx) deferred acquisition costs may be accepted as cover for technical 
provisions only to the extent that that is consistent with the calculation 
of the technical provision for unearned premiums. 
2. Notwithstanding paragraph 1, in exceptional circumstances and at an insurance 
undertaking's request, the home Member State may. temporarily and under a properly 
reasoned decision, accept other categories of assets as cover for technical 
provisions, subject to Article 20. 
Article 22 
1. As regards the assets covering technical provisions, the home Member State 
shall require every insurance undertaking to invest no more than: 
(a) 10%,of its total gross technical provisions in any one piece of land or 
building, or a number of pieces of land or buildings close enough to each 
other to be effectively considered as one investment; 
ftz. 
(b) 5% of its total gross technical provisions in shares and other negotiable 
securities treated as shares, bonds, debt securities and other money and 
capital market instruments from the same undertaking, or in loans granted to 
the same borrower, taken together, the loans being loans other than those 
granted to a State, regional or local authority or to an international 
organization of which one or more Member States are members. This limit may 
be raised to 10% if an undertaking does not invest more than 40% of its gross 
technical provisions in the loans or securities of issuing bodies and 
borrowers in each of which it invests more than 5% of its assets; 
(c) 5% of its total gross technical provisions in unsecured loans, including 1% 
for any single unsecured loan, other than loans granted to credit 
institutions, insurance undertakings - insofar as Article 8 of Directive 
73/239/EEC allows it - and investment undertakings established in a Member 
State; 
(d) 3% of its total gross technical provisions in the form of cash in hand; 
(e) 10% of its total gross technical provisions in shares, other securities 
treated as shares and debt securities, which are not dealt in on a regulated 
market. 
2. The absence of a limit in paragraph 1 on investment in any particular category 
does not imply that assets in that category should be accepted as cover for 
technical provisions without limit. The home Member State shall lay down more 
n. 
detailed rules fixing the conditions for the use of acceptable assets. In 
particular it shall ensure, in the determination and the application of those 
rules, that the following principles are complied with: 
(i) assets covering technical provisions must be diversified and spread in such 
a way as to ensure that there is no excessive reliance on any particular 
category of asset, investment market or investment; 
(ii) investment in particular types of asset which show high levels of risk, 
whether because of the nature of the asset or the quality of the issuer, 
must be restricted to prudent levels; 
(iii) limitations on particular categories of asset must take account of the 
treatment of reinsurance in the calculation of technical provisions; 
dv) where the assets held include an investment in a subsidiary undertaking 
which manages all or part of the insurance undertaking's investments on its 
behalf, the home Member State must, when applying the rules and principles 
laid down in this Article, take into account the underlying assets held by 
the subsidiary undertaking; the home Member State may treat the assets of 
other subsidiaries in the same way; 
(v) the percentage of assets covering technical provisions which are the 
subject of non-liquid investments must be kept to a prudent level; 
V-Y 
(vi) where the assets held include loans to or debt securities issued by certain 
credit institutions, the home Member State may, when applying the rules and 
principles laid down in this Article, take into account the underlying 
assets held by such credit institutions. This treatment may be applied only 
where the credit institution has its head office in a Member State, is 
entirely owned by that Member State and/or that State's local authorities 
and its business, according to its memorandum and articles of association, 
consists of extending, through its intermediaries, loans to or guaranteed by 
the State or local authorities, or loans to bodies closely linked to the 
State or to local authorities. 
3. In the context of the detailed rules laying down the conditions for the use of 
acceptable assets, the Member State shall give more limitative treatment to: 
- any loan unaccompanied by a bank guarantee, a guarantee issued by an insurance 
undertaking, a mortgage or any other form of security, as compared with loans 
accompanied by such collateral; 
- UCITS not co-ordinated within the meaning of Directive 85/611/EEC and other 
investment funds, as compared with UCITS co-ordinated within the meaning of that 
Directive; 
- securities which are not dealt in on a regulated market, as compared with those 
which are; 
(1) OJ No L 375, 31.12.1985, p. 3. Directive as amended by Directive 88/220/EEC 
(OJ No L 100, 19.4.1988. p. 31). 
V5 
- bonds, oebt securities and other money and capital market instruments not issued 
by States, local or regional authorities or undertakings belonging to Zone A as 
defined in Directive 89/647/EEC , or the issuers of which are international 
organizations not numbering at least one Community Member State among their 
members, as compared with the same financial instruments issued by such bodies. 
4. Member States may raise the limit laid down in paragraph Kb) to 40% in the 
case of certain debt securities when these are issued by a credit institution 
which has its head office in a Member State and is subject by law to special 
official supervision designed to protect the holders of those debt securities. In 
particular, sums deriving from the issue of such debt securities must be invested 
in accordance with the law in assets which, during the whole period of validity of 
the debt securities, are capable of covering claims attaching to the debt 
securities and which would be used on a priority basis for the reimbursement of 
the principal and payment of the accrued interest. 
5. Member States shall not require insurance undertakings to invest in particular 
categories of assets. 
6. Notwithstanding paragraph 1, in exceptional circumstances and at an insurance 
undertaking's request, the home Member State may, temporarily and under a properly 
reasoned decision, allow exceptions to the rules laid down in paragraph 1(a) 
to (e). subject to Article 20. 
(I) OJ No I, 386. 30.12.1989. p. 14. 
fir. 
Article 23 
Points 8 and 9 of Annex 1 to Directive 88/357/EEC shall be replaced by the 
following: 
"8. Insurance undertakings may hold non-matching assets to cover an amount not 
exceeding 20% of their commitments in a particular currency. 
9. A Member State may provide that when under the preceding procedures a 
commitment must be covered by assets expressed in a Member State's currency that 
requirement shall also be considered as satisfied when the assets are expressed 
in ecus". 
Article 24 
Article 16(1) of Directive 73/239/EEC shall be replaced by the following: 
"1. The home Member State shall require every insurance undertaking to establish 
an adequate solvency margin in respect of its entire business. 
The solvency margin shall correspond to the assets of the undertaking free of any 
foreseeable liabilities less any intangible items. In particular the following 
shall be included: 
- the paid-up share capital or, in the case of a mutual insurance undertaking, 
the effective initial fund plus any members' accounts which meet all the 
following criteria: 
(a) the memorandum and articles of association must stipulate that payments may 
be made from these accounts to members only insofar as that does not cause 
the solvency margin to fall below the required level, or, after the 
dissolution of the undertaking, if all of the undertaking's other debts 
have been settled; 
<? 
(b) the memorandum and articles of association must stipulate, with respect to 
any such payments for reasons other than the individual termination of 
membership, that the competent authorities must be notified at least one 
month in advance and can prohibit the payment within that period and 
(c) the relevant provisions of the memorandum and articles of association may 
be amended only after the competent authorities have declared that they 
have no objection to the amendment, without prejudice to the criteria 
stated in (a) and (b); 
- one-half of the unpaid share capital or initial fund, once the paid-up part 
amounts to 25% of that share capital or fund: 
- reserves (statutory reserves and free reserves) not corresponding to 
underwriting liabilities; 
- any profits brought forward; 
- in the case of a mutual or mutual-type association with variable contributions, 
any claim which it has against its members by way of a call for supplementary 
contribution, within the financial year, up to one-half of the difference 
between the maximum contributions and the contributions actually called in, and 
subject to a limit of 50% of the margin; 
- at the request of and on the production of proof by the insurance undertaking, 
any hidden reserves arising out of the undervaluation of assets, insofar ar* 
those hidden reserves are not of an exceptional nature; 
Ht 
cumulative preferential share capital and subordinated loan capital, up to 50% 
of the margin, no more than 25% of which shall consist of subordinated loans 
with a fixed maturity, or fixed-term cumulative preferential share capital, if 
the following minimum criteria are met: 
(a) in the event of the bankruptcy or liquidation of the insurance undertaking, 
binding agreements must exist under which the subordinated loan capital or 
preferential share capital ranks after the claims of all other creditors 
and is not to be repaid until all other debts outstanding at the time have 
been settled. 
Subordinated loan capital must fulfil the following additional conditions: 
(b) only fully paid-up funds may be taken into account; 
(c) for loans with a fixed maturity the original maturity must be at least five 
years. No later than one year before the repayment date the insurance 
undertaking must submit to the competent authorities for their approval a 
plan showing how the solvency margin will be kept at or brought to the 
required level at maturity, unless the extent to which the loan may rank as 
a component of the solvency margin is gradually reduced during at least the 
last five years before the repayment date. The competent authorities may 
authorize the early repayment of such loans provided application is made by 
the issuing insurance undertaking and its solvency margin will not fall 
below the required level; 
H. 
(d) loans the maturity of which is not fixed must be repayable only subject to 
five years' notice unless the loans are no longer considered a component of 
the solvency margin or unless the prior consent of the competent 
authorities is specifically required for early repayment. In the latter 
event the insurance undertaking must notify the competent authorities at 
least six months before the date of the proposed repayment, specifying the 
actual and required solvency margins both before and after that repayment. 
The competent authorities shall authorize repayment only if the insurance 
undertaking's solvency margin will not fall below the required level; 
(e) the loan agreement must not include any clause providing that in specified 
circumstances, other than the winding-up of the insurance undertaking, the 
debt will become repayable before the agreed repayment date; 
(f) the loan agreement may be amended only after the competent authorities have 
declared that they have no objection to the amendment; 
securities with no specified maturity date and other instruments that fulfil 
the following conditions, including cumulative preferential shares other than 
those mentioned in the preceding indent, up to 50% of the margin for the total 
of such securities and the subordinated loan capital referred to in the 
preceding indent : 
(a) they may not be repaid on the initiative of the bearer or without the prior 
consent of the competent authority; 
(b) the contract of issue must enable the insurance undertaking to deter the 
payment of interest on the loan; 
r<> 
(c) the lender's claims on the insurance undertaking must rank entirely after 
those of all non-subordinated creditors; 
(d) the documents governing the issue of the securities must provide for the 
loss-absorption capacity of the debt and unpaid interest, while enabling 
the insurance undertaking to continue its business; 
(e) only fully paid-up amounts may be taken into account". 
Article 25 
No more than three years after the date of application of this Directive the 
Commission shall submit a report to the Insurance Committee on the need for 
further harmonization of the solvency margin. 
Article 26 
Article 18 of Directive 73/239/EEC shall be replaced by the following: 
"Article 18 
1. Member States shall not prescribe any rules as to the choice of assets that 
need not be used as cover for the technical provisions referred to in Article 15. 
2. Subject to Article 15(2), Article 20(1). (2). (3) and (5) and the last 
subparagraph of Article 22(1), Member States shall not restrain the free disposal 
of those assets, whether movable or immovable, that form part of the assets of 
authorized insurance undertakings. 
•ri. 
3. Psraeraohs 1 and 2 shall not preclude any measures which Member States, while 
safeguarding the interests of insured persons, are entitled to take as owners or 
members of or partners in the undertakings in question". 
Chapter 3 
Article 27 
Article 7(1)(f) of Directive 88/357/EEC shall be replaced by the following: 
"(f) in the case of the risks referred to in Article 5(d) of Directive 73/239/EEC, 
the parties to the contract may choose any law". 
Article 28 
The Member State in which a risk is situated shall not prevent a policy-holder 
from concluding a contract with an insurance undertaking authorized under the 
conditions of Article 6 of Directive 73/239/EEC, as long as that does not conflict 
with legal provisions protecting the general good in the Member State in which the 
risk is situated. 
Article 29 
Member States shall not adopt provisions requiring the prior approval or 
systematic notification of general and special policy conditions, scales of 
premiums, or forms and other printed documents which an insurance undertaking 
intends to use in its dealings with policy-holders. They may only require 
non-systematic notification of those policy conditions and other documents for the 
J%. 
purpose of verifying compliance with national provisions concerning insurance 
contracts, and that requirement may not constitute a prior condition for an 
undertaking's carrying on its business. 
Member States may not retain or introduce prior notification or approval of 
proposed increases in premium rates except as part of general price-control 
systems. 
Article 30 
1. Article 8(4)(b) of Directive 88/357/EEC shall be deleted. Article 8(4)(a)of 
that Directive shall therefore be amended to read as follows: 
"(a) Subject to subparagraph (c), the third subparagraph of Article 7(2) shall 
apply where the insurance contract provides cover in two or more Member 
States, at least one of which makes insurance compulsory". 
2. Notwithstanding any provision to the contrary, a Member State which makes 
insurance compulsory may require that the general and special conditions of the 
compulsory insurance be communicated to its competent authority before being 
circulated. 
Article 31 
1. Before an insurance contract is concluded the insurance undertaking shall 
inform the policy-holder of: 
- the law applicable to the contract where the parties do not have a free choice 
or the fact that the parties are free to choose the law applicable and, in the 
latter case, the law the insurer proposes to choose; 
*3. 
- the arrangements for handling policy-holders* complaints concerning contracts 
including, where appropriate, the existence of a complaints body, -without 
prejudice to the policy-holder's right to take legal proceedings. 
2. The obligation referred to in paragraph 1 shall apply only where the 
policy-holder is a natural person. 
3. The rules for implementing this Article shall be determined in accordance with 
the law of the Member State in which the risk is situated. 
TITLE IV 
PROVISIONS RELATING TO THE RIGHT OF ESTABLISHMENT 
AND THE FREEDOM TO PROVIDE SERVICES 
Article 32 
Article 10 of Directive 73/239/EEC shall be replaced by the following: 
"Article 10 
1. An insurance undertaking that proposes to establish a branch within the 
territory of another Member State shall notify the competent authorities of its 
home Member State. 
2. The Member States shall require every insurance undertaking that propose:- to 
establish a branch within the territory of another Member State to provide the 
following information when effecting the notification provided for in 
paragraph 1 : 
(n) the Member State within the territory of which it proposes to establish n 
branch; 
*¥• 
(b) a scheme of operations setting out inter alia the types of business envisaged 
and the structural organization of the branch; 
(c) the address in the Member State of the branch from which documents may be 
obtained and to which they may be delivered, it being understood that that 
address shall be the one to which communications to the authorized agent are 
sent; 
(d) the name of the branch's authorized agent, who must possess sufficient powers 
to bind the undertaking in relation to third parties and to represent it in 
relations with the authorities and courts of the Member State of the branch. 
With regard to Lloyd's, in the event of any litigation in the Member State of 
the branch arising out of underwritten commitments, insured persons must not 
be treated less favourably than if the litigation had been brought against 
businesses of a conventional type. The authorized agent must, therefore, 
possess sufficient powers for proceedings to be taken against him and must in 
that capacity be able to bind the Lloyd's underwriters concerned. 
Where the undertaking intends its branch to cover risks in class 10 of point A of 
the Annex to Directive 73/239/EEC, not including carrier's liability, it must 
produce a declaration that it has become a member of the national bureau and the 
national guarantee fund of the Member State of the branch. 
ff. 
3. unless tne competent authorities of the home Member State have reason to 
doubt tne aoequacy 01 the administrative structure or the financial situation of 
the insurance undertaking or the good repute and professional qualifications or 
experience of the directors or managers or the authorized agent, taking into 
account the business planned, they shall within three months of receiving all the 
information referred to in paragraph 2 communicate that information to the 
competent authorities of the Member State of the branch and shall inform the 
undertaking concerned accordingly. 
The competent authorities of the home Member State shall also attest that the 
insurance undertaking has the minimum solvency margin calculated in accordance 
with Articles 16 and 17. 
Where the competent authorities of the home Member State refuse to communicate 
the information referred to in paragraph 2 to the competent authorities of the 
Member State of the branch they shall give the reasons for their refusal to the 
undertaking concerned within three months of receiving all the information in 
question. That refusal or failure to act may be subject to a right to apply to 
the courts in the home Member State. 
4. Before the branch of an insurance undertaking starts business, the competent 
authorities of the Member State of the branch shall, within two months of 
receiving the information referred to in paragraph 3. inform the competent 
authority of the home Member State, if appropriate, of the conditions under 
winch, in the interest oi the general good, that business must be carried on in 
the Member State of the branch. 
ft 
5. On receiving a communication from the competent authorities of the Member 
State of the branch or, if no communication is received from them, on expiry of 
the period provided for in paragraph 4, the branch may be established and start 
business. 
6. In the event of a change in any of the particulars communicated under 
paragraph 2(b), (c) or (d), an insurance undertaking shall give written notice of 
the change to the competent authorities of the home Member State and of the 
Member State of the branch at least one month before making the change so that 
the competent authorities of the home Member State and the competent authorities 
of the Member State of the branch may fulfil their respective roles under 
paragraphs 3 and 4". 
Article 33 
- Article 11 of Directive 73/239/EEC is hereby repealed. 
Article 34 
Article 14 of Directive 88/357/EEC shall be replaced by the following: 
"Article 14 
Any undertaking that intends to carry on business for the first time in one or 
more Member States under the freedom to provide services shall first inform the 
competent authorities of the home Member State, indicating the nature of the 
risks it proposes to cover". 
*?• 
Article 35 
Article 16 of Directive 88/357/EEC shall be replaced by the following: 
"Article 16 
1. Within one month of the notification provided for in Article 14, the 
competent authorities of the home Member State shall communicate to the Member 
State or Member States within the territories of which an undertaking intends to 
carry on business under the freedom to provide services: 
(a) a certificate attesting that the undertaking has the minimum solvency margin 
calculated in accordance with Articles 16 and 17 of Directive 73/239/EEC; 
(b) the classes of insurance which the undertaking has been authorized to offer; 
(c) the nature of the risks which the undertaking proposes to cover in the 
Member State of the provision of services. 
At the same time, they shall inform the undertaking concerned accordingly. 
fcach Member State within the territory of which an undertaking intends, under 
the freedom to provide services, to cover risks in class 10 of point A of the 
Annex to Directive 73/239/EEC other than carrier's liability may require that 
the undertaking: 
- communicate the name and address of the representative referred to in 
Article 12a(4) of this Directive. 
- produce a declaration that the undertaking has become a member of the national 
bureau and national guarantee fund of the Member State of the provision of 
servi ces. 
Si. 
2. Where the competent authorities of the home Member State do not communicate 
the information referred to in paragraph 1 within the period laid down, they shall 
give the reasons for their refusal to the undertaking within that same period. 
That refusal shall be subject to a right to apply to the courts in the home Member 
State. 
3. The undertaking may start business on the certified date on which it is 
informed of the communication provided for in the first subparagraph of 
paragraph 1". 
Article 36 
Article 17 of Directive 88/357/EEC shall be replaced by the following: 
"Article 17 
Any change which an undertaking intends to make in the information referred to 
in Article 14 shall be subject to the procedure provided for in Articles 14 
and 16". 
Article 37 
Article 12(2), second and third subparagraphs. Article 12(3) and Articles 13 
and 15 of Directive 88/357/EEC are hereby repealed. 
Article 38 
The competent authorities of the Member State of the branch or the Member State of 
the provision of services may require that the information which they are 
authorized under this Directive to request with regard to the business of 
insurance undertakings operating within the territory of that State shall be 
supplied to them in the official language or languages of that State. 
a 
Article 39 
1. Article 18 of Directive 88/357/EEC is hereby repealed. 
2. The Member State of the branch or of the provision of services shall not adopt 
provisions requiring the prior approval or systematic notification of general and 
special policy conditions, scales of premiums, or forms and other printed 
documents which an undertaking intends to use in its dealings with policy-holders. 
It may only require an undertaking that proposes to carry on insurance business 
within its territory, under the right of establishment or the freedom to provide 
services, to effect non-systematic notification of those policy conditions and 
other documents for the purpose of verifying compliance with its national 
provisions concerning insurance contracts, and that requirement may not constitute 
a prior condition for an undertaking's carrying on its business. 
3. The Member State of the branch or of the provision of services may not retain 
or introduce prior notification or approval of proposed increases in premium rates 
except as part of general price-control systems. 
Article 40 
1 Article 19 of Directive 88/357/EEC is hereby repealed. 
2. Any undertaking carrying on business under the right of establishment or the 
freedom to provide services shall submit to the competent authorities of the 
Member State of the branch and/or the Member State of the provision of service 
all documents requested of it for the purposes of this Article insofar as 
undertakings with head offices in those Member States are also obliged to do so 
to 
3. If the competent authorities of a Member State establish that an undertaking 
with a branch or carrying on business under the freedom to provide services within 
its territory is not complying with the legal provisions applicable to it in that 
State, they shall require the undertaking concerned to remedy that irregular 
situation. 
4. If the undertaking in question fails to take the necessary action, the 
competent authorities of the Member State concerned shall inform the competent 
authorities of the home Member State accordingly. The latter authorities shall, 
at the earliest opportunity, take all appropriate measures to ensure that the 
undertaking concerned remedies that irregular situation. The nature of those 
measures shall be communicated to the competent authorities of the Member State 
concerned. 
5. If, despite the measures taken by the home Member State or because those 
measures prove inadequate or are lacking in that State, the undertaking persists 
in infringing the legal provisions in force in the Member State concerned, the 
latter may, after informing the competent authorities of the home Member State, 
take appropriate measures to prevent or penalize further infringements, including, 
insofar as is strictly necessary, preventing that undertaking from continuing to 
conclude new insurance contracts within its territory. Member States shall ensure 
that within their territories it is possible to serve the legal documents 
necessary for such measures on insurance undertakings. 
6. Paragraphs 3, 4 and 5 shall not affect the emergency powers of the Member 
States concerned to take appropriate measures to prevent irregularities within 
their territories. This shall include the possibility of preventing insurance 
undertakings from continuing to conclude new insurance contracts within their 
territories. 
£4 
7. p^r^ar-aphR ? 4 and 5 shall not affect the powers of the Member States to 
penal i?.*1 inf ring<*tnents within their territories. 
8. If an undertaking which has committed an infringement has an establishment or 
possesses property in the Member State concerned, the competent authorities of the 
latter may, in accordance with national law, apply the administrative penalties 
prescribed for that infringement by way of enforcement against that establishment 
or property. 
9. Any measure adopted under paragraphs 4 to 8 involving penalties or 
restrictions on the conduct of insurance business must be properly reasoned and 
«•ommunicated to the undertaking concerned. 
10. Every two years the Commission shall submit to the Insurance Committee set up 
by Directive 91/675/EEC a report summarizing the number and types of cases in 
which, in each Member State, authorization has been refused under Article 10 of 
Directive 73/239/EEC or Article 16 of Directive 88/357/EEC as amended by this 
Directive or measures have been taken under paragraph 5. Member States shall 
co-operate with the Commission by providing it with the information required for 
that report. 
Article 41 
Nothing in this Directive shall prevent insurance undertakings with head offices 
in Member States from advertising their services, through all available means of 
eomrniinioat ion. in the Member State of the branch or the Member State of the 
provision of services, subject to any rules governing the form and content of such 
advertising adopted in the interest of the general good. 
u. 
Article 42 
1. Article 20 of Directive 88/357/EEC is hereby repealed. 
2. In the event of an insurance undertaking's being wound up, commitments arising 
out of contracts underwritten through a branch or under the freedom to provide 
services shall be met in the same way as those arising out of that undertaking's 
other insurance contracts, without distinction as to nationality as far as the 
persons insured and the beneficiaries are concerned. 
Article 43 
1. Article 21 of Directive 88/357/EEC is hereby repealed. 
2. Where insurance is offered under the right of establishment or the freedom to 
provide services, the policy-holder shall, before any commitment is entered into, 
be informed of the Member State in which the head office or, where appropriate, 
the branch with which the contract is to be concluded is situated. 
Any documents issued to the policy-holder must convey the information referred to 
in the first subparagraph. 
The obligations imposed in the first two subparagraphs shall not apply to the 
risks referred to in Article 5(d) of Directive 73/239/EEC. 
3. The contract or any other document granting cover, together with the insurance 
proposal where it is binding upon the policy-holder, must state the address of the 
head office, or, where appropriate, of the branch of the insurance undertaking 
which grants the cover. 
Bi 
Each Member State may require that the name and address of the representative of 
the insurance undertaking referred to in Article 12a(4) of Directive 88/357/EEC 
also appear in the documents referred to in the first subparagraph. 
Article 44 
1. Article 22 of Directive 88/357/EEC is hereby repealed. 
2. Every insurance undertaking shall inform the competent authority of its home 
Member State, separately in respect of transactions carried out under the right oi 
establishment and those carried out under the freedom to provide services, of the 
amount of the premiums, claims and commissions, without deduction of reinsurance, 
by Member State and by group of classes, and also as regards class 10 of point A 
of the Annex to Directive 73/239/EEC, not including carrier's liability, the 
frequency and average cost of claims. 
The groups of classes are hereby defined as follows: 
- accident and sickness (classes 1 and 2); 
- motor (classes 3. 7 and 10, the figures for class 10. excluding carriers' 
liability, being given separately); 
- fire and other damage to property (classes 8 and 9); 
- aviation, marine and transport (classes 4, 5. 6. 7, 11 and 12); 
- general liability (class 13); 
- credit and suretyship (classes 14 and 15); 
- other classes (classes 16, 17 and 18). 
The competent authority of the home Member State shall forward that information 
within a reasonable time and in aggregate form to the competent authorities of 
each of the Member States concerned which so request. 
Article 45 
1. Article 24 of Directive 88/357/EEC is hereby repealed. 
2. Nothing in this Directive shall affect the Member States' right to require 
undertakings carrying on business within their territories under the right of 
establishment or the freedom to provide services to join and participate, on the 
same terms as undertakings authorized there, in any scheme designed to guarantee 
the payment of insurance claims to insured persons and injured third parties. 
Article 46 
1. Article 25 of Directive 88/357/EEC is hereby repealed. 
2. Without prejudice to any subsequent harmonization, every insurance contract 
shall be subject exclusively to the indirect taxes and parafiscal charges on 
insurance premiums in the Member State in which the risk is situated as defined in 
Article 2(d) of Directive 88/357/EEC. and also, in the case of Spain, to the 
surcharges legally established in favour of the Spanish "Consorcio de Compensaciôn 
de Seguros" for the performance of its functions relating to the compensation of 
losses arising from extraordinary events occurring in that Member State. 
& 
In derogation from the first indent of Article 2(d) of Directive B8/357/EEC, and 
for the Durposes of this paragraph, moveable property contained i-n a building 
situated within the territory of a Member State, except for goods in commercial 
transit, shall be a risk situated in that Member State, even if the building and 
its contents are not covered by the same insurance policy. 
The law applicable to the contract under Article 7 of Directive 88/357/EEC shall 
not affect the fiscal arrangements applicable. 
Fending future harmonization, each Member State shall apply to those undertakings 
which cover risks situated within its territory its own national provisions to 
ensure the collection of indirect taxes and parafiscal charges due under the first 
subparagraph. 
TITLE V 
TRANSITIONAL PROVISIONS 
Article 47 
The Federal Republic of Germany may postpone until 1 January 1996 the application 
of the first sentence of the second subparagraph of Article 53(2). During that 
period, the provisions of the following subparagraph shall apply in the situation 
referred to in Article 53(2). 
When the technical basis for the calculation of premiums has been communicated *«o 
the competent authorities of the home Member State in accordance with the third 
sentence of the second subparagraph of Article 53(2), those authorities shall 
without delay forward that information to the competent authorities oi the Member 
State in which the risk i «; situated so that they may comment If the competent 
.'Mil \\')r i t i es of the home Member State take no account of those comments th*»v 
66. 
shall inform the competent authorities of the Member State in which the risk is 
situated accordingly in detail and state their reasons. 
Article 48 
Member States may allow insurance undertakings with head offices within their 
territories, the buildings and land of which that cover their technical provisions 
exceed, at the time of the notification of this Directive, the percentage laid 
down in Article 22(1)(a) a period expiring no later than 31 December 1998 within 
which to comply with that provision. 
Article 49 
The Kingdom of Denmark may postpone until 1 January 1999 the application of this 
Directive to compulsory insurance against accidents at work. During that period 
the exclusion provided for in Article 12(2) of Directive 88/357/EEC for accidents 
at work shall continue to apply in the Kingdom of Denmark. 
Article 50 
Spain, until 31 December 1996, and Greece and Portugal, until 31 December 1998, 
may operate the following transitional arrangements for contracts covering risks 
situated exclusively in one of those Member States other than those defined in 
Article 5(d) of Directive 73/239/EEC: 
(a) in derogation from Article 8(3) of Directive 73/239/EEC and from Articles 29 
and 39 of this Directive, the competent authorities of the Member States in 
question may require the communication, before use. of general and special 
insurance policy conditions; 
6? 
(b) the amount of the technical provisions relating to the contracts referred to 
in this Article shall oe determined under the supervision of the Merr.oer State 
concerned in accordance with its own rules or, failing that, in accordance 
with the procedures established within its territory in accordance with this 
Directive. Cover of those technical provisions by equivalent and matching 
assets and the localization of those assets shall be effected under the 
supervision of that Member State in accordance with its rules and practices 
adopted in accordance with this Directive. 
TITLE VI 
FINAL PROVISIONS 
Article 51 
The following technical adjustments to be made to Directives 73/239/EEC and 
88/357/EEC and to this Directive shall be adopted in accordance with the procedure 
laid down in Directive 91/675/EEC: 
- extension of the legal forms provided for in Article 8(l)(a) of Directive 
73/239/EEC; 
- amendments to the list set out in the Annex to Directive 73/239/EEC, < 
adaptation of the terminology used in that list to take account of the 
development of insurance markets; 
- clarification of the items constituting the solvency margin listed in 
Article 16(1) of Directive 73/239/EEC to take account of the créait oi new 
financial instruments; 
- «.* I t.ci ation of the minimum guarantee fund provided for in Article 1V < <"• î )\ 
Directive 73/239/EEC to take account of economic and financial development:;; 
6t. 
- amendments, to take account of the creation of new financial instruments, to the 
list of assets acceptable as cover for technical provisions set out in 
Article 21 and to the rules on the spreading of investments laid down in 
Article 22; 
- changes in the relaxations in the matching rules laid down in Annex 1 to 
Directive 88/357/EEC, to take account of the development of new currency-hedging 
instruments or progress made towards economic and monetary union; 
- clarification of the definitions in order to ensure uniform application of 
Directives 73/239/EEC and 88/357/EEC and of this Directive throughout the 
Community. 
Article 52 
1. Branches which have started business, in accordance with the provisions in 
force in their Member States of establishment, before the entry into force of the 
provisions adopted in implementation of this Directive shall be presumed to have 
been subject to the procedure laid down in Article 10(1) to (5) of Directive 
73/239/EEC. They shall be governed, from the date of that entry into force, by 
Articles 15. 19, 20 and 22 of Directive 73/239/EEC and by Article 40 of this 
Directive. 
2. Articles 34 and 35 shall not affect rights acquired by insurance undertakings 
carrying on business under the freedom to provide services before the entry into 
force of the provisions adopted in implementation of this Directive. 
a. 
Article 53 
The following Article shall be inserted in Directive 73/239/EEC: 
"Article 28a 
1. Under the conditions laid down by national law, each Member State shall 
authorize agencies and branches set up within its territory and covered by this 
Title to transfer all or part of their portfolios of contracts to an accepting 
office established in the same Member State if the competent authorities of that 
Member State or, if appropriate, of the Member State referred to in Article 26 
certify that after taking the transfer into account the accepting office 
.possesses the necessary solvency margin. 
2. Under the conditions laid down by national law, each Member State shall 
authorize agencies and branches set up within its territory and covered by this 
Title to transfer all or part of their portfolios of contracts to an insurance 
•undertaking with a head office in another Member State if the competent 
authorities of that Member State certify that after taking the transfer into 
account the accepting office possesses the necessary solvency margin. 
3. If under the conditions laid down by national law a Member State authorizes 
•agencies and branches set up within its territory and covered by this Title to 
transfer all or part of their portfolios of contracts to an agency or branch 
covered by this Title and set up within the territory of another Member State it 
shall ensure that the competent authorities of the Member State of the accept *ng 
office or, if appropriate, of the Member State referred to in Article 26 certify 
that after taking the transfer into account the accepting office possesses t lie 
necessary solvency margin, that the law of the Member State of the accepting 
office permits such a transfer and that that State has agreed to the transfer 
?.. 
4. In the circumstances referred to in paragraphs 1, 2 and 3 the Member State in 
which the transferring agency or branch is situated shall authorize the transfer 
after obtaining the agreement of the competent authorities of the Member State in 
which the risks are situated, where different from the Member State in which the 
transferring agency or branch is situated. 
5. The competent authorities of the Member States consulted shall give their 
opinion or consent to the competent authorities of the home Member State of the 
transferring insurance undertaking within three months of receiving a request; the 
absence of any response from the authorities consulted within that period shall be 
considered equivalent to a favourable opinion or tacit consent. 
6. A transfer authorized in accordance with this Article shall be published as 
laid down by national law in the Member State in which the risk is situated. Such 
transfers shall automatically be valid against policy-holders, insured persons and 
any other persons having rights or obligations arising out of the contracts 
transferred. 
This provision shall not affect the Member States' rights to give policy-holders 
the option of cancelling contracts within a fixed period after a transfer. 
Article 54 
1. Notwithstanding any provision to the contrary, a Member State in which 
contracts covering the risks in class 2 of point A of the Annex to 
Directive 73/239/EEC may serve as a partial or complete alternative to health 
cover provided by the statutory social security system may require that those 
contracts comply with the specific legal provisions adopted by that Member State 
to protect the general good in that class of insurance, and that the general and 
special conditions of that insurance be communicated to the competent authorities 
of that Member State before use. 
7< 
2. Member States may require that the health insurance system referred to in 
paragraph 1 De operated on a technical basis similar to that of life assurance 
where : 
- the premiums paid are calculated on the basis of sickness tables and other 
statistical data relevant to the Member State in which the risk is situated in 
accordance with the mathematical methods used in insurance; 
- a reserve is set up for increasing age; 
- the insurer may cancel the contract only within a fixed period determined by the 
Member State in which the risk is situated; 
- the contract provides that premiums may be increased or payments reduced, even 
for current contracts; 
- the contract provides that the policy-holder may change his existing contract 
into a new contract complying with paragraph 1, offered by the same insurance 
undertaking or the same branch and taking account of his acquired rights. In 
particular, account must be taken of the reserve for increasing age and a new 
medical examination may be required only for increased cover. 
In that event, the competent authorities of the Member State concerned shall 
publish the sickness tables and other relevant statistical data referred to in the 
first, subparagraph and transmit them to the competent authorities of the home 
Member State. The premiums must be sufficient, on reasonable actuarial 
assumptions, for undertakings to be able to meet all their commitments having 
regard to all aspects of their financial situation. The home Member State shall 
require that the technical basis for the calculation of premiums be communicafe.il 
to its competent authorities before the product is circulated. This paragraph 
shall also apply where existing contracts are modified. 
n. 
Article 55 
Member States may require that any insurance undertaking offering, at its own 
risk, compulsory insurance against accidents at work within their territories 
comply with the specific provisions of their national law concerning such 
insurance, except for the provisions concerning financial supervision, which shall 
be the exclusive responsibility of the home Member State. 
Article 56 
Member States shall ensure that decisions taken in respect of an insurance 
undertaking under laws, regulations and administrative provisions adopted in 
accordance with this Directive may be subject to the right to apply to the courts. 
Article 57 
1. The Member States shall adopt the laws, regulations and administrative 
provisions necessary for their compliance with this Directive no later than 
31 December 1993 and bring them into force no later than 1 July 1994. They shall 
forthwith inform the Commission thereof. 
When they adopt such measures the Member States shall include references to this 
Directive or shall make such references when they effect official publication. 
The manner in which such references are to be made shall be laid down by the 
Member States. 
2. The Member States shall communicate to the Commission the texts of the main 
provisions of national law which they adopt in the field covered by this 
Directive. 
73. 
Article 58 
This Directive is addressed to the Member States 
Done at Brussels, 
For the Counci1 
The President 


ISSN 0254-1475 
COM (92) 63 final 
DOCUMENTS 
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ISBN 92-77-41463-4 
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