WRITTEN QUESTION E-2189/99

by Antonios Trakatellis (PPE-DE) to the Commission

(29 November 1999)

Subject: Infringement of Community insurance legislation and distortion of competition in Greece

As I did not receive a satisfactory answer to my previous question (P-1686/99)(1) concerning infringements in Greece in the implementation of Community insurance legislation, which have resulted in distortion of competition and a possible risk of collapse of the insurance market under enormous deficits, will the Commission say:

1. whether it is aware that the Greek supervisory authorities are in breach of their obligation under Community rules to verify compliance with the requirement that the necessary reserves are covered by matching and equivalent assets up to the end of each business year, and that the same supervisory authorities are illegally allowing the required reserves for the previous year to be covered by assets acquired the following year, using for that purpose insurance premiums collected in that year and thereby creating a further reserve deficit at the end of the next accounting period,

2. what measures it will take to enforce Community directives concerning financial supervision and ensure that the Greek supervisory authorities comply with their obligations under Community legislation,

3. with particular regard to the listing on the Greek stock exchange of insurance companies with excessive reserve deficits, how it intends to enforce respect for and compliance with Community provisions concerning verification of the solvency and composition of the technical reserves of the companies concerned by the competent Greek supervisory authority, and

4. what progress has been made in transposing and implementing Community rules on roadside assistance in Greece? Is it permissible to link the provision of insurance policies with roadside assistance contracts offered at knock-down prices, thereby undermining competition?

(1) OJ C 27 E, 29.1.2000, p. 161.

Answer given by Mr Bolkestein on behalf of the Commission

(24 January 2000)

As the Commission indicated in its reply to the Honourable Member's Written Question P-1686/99(1), analysis of Greek legislation implementing the third insurance directives Council Directive 92/49/EEC of 18 June 1992 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 (third non-life insurance Directive);(2) Council Directive 92/96/EEC of 10 November 1992 on the coordination of laws, regulations and administrative provisions relating to direct life assurance and amending Directive 79/267/EEC and 90/619/EEC (third life assurance Directive);(3) and Council Directive 91/674/EEC of 19 December 1991 on the annual accounts and consolidated accounts of insurance undertakings(4) has not shown improper implementation, in particular as regards provisions concerning the financial soundness and supervision of the insurance undertaking (solvency margin and rules on technical provisions). Community insurance legislation requires that insurance undertakings have to establish adequate technical provisions in respect of their entire business. The amount of such technical provisions must at all times be sufficient for the insurance undertaking to meet any liabilities arising out of its insurance contracts. Moreover, the technical provisions must also be represented at all times by matching, sufficient and equivalent assets. The comparison between the amount of the technical provisions to be established and the assets representing them must be carried out on the same date, for example, the closing date of the insurer's accounts or any other further date on which a control is carried out. In other words, it is not correct to use different dates for analysing the calculation of technical provisions, on the one hand, and the insurer's investments representing these technical provisions, on the other.

As for the practical methods of supervision applied by national supervisory authorities to monitor the financial situation of insurance undertakings, insurance supervisors of Member States may indeed follow different methods in verifying compliance by insurance undertakings with national provisions regarding the correct calculation of technical provisions. However, the objective of their task is to ensure that the insurance undertaking has, at the time when the supervisor carries out this control, sufficient technical provisions and that they are represented simultaneously by adequate, equivalent and matching assets. In some cases insurance supervisors verify compliance of all insurance undertakings at the end of the financial (or accounting) year. They normally take as a tool of reference to carry out their supervisory task the returns and accounting documents required by national legislation. On the basis of the outcome of that control, supervisors may then pursue their tasks in order to evaluate the financial situation of the insurer at a later date, namely, the date when the control is carried out. They will so determine the actual financial situation of the insurer. Should supervisors be of the opinion that the assets representing technical provisions are insufficient to meet the undertaking's liabilities, they can require the undertaking to take necessary measures to redress its financial situation, for example, by prohibiting the free disposal of the undertaking's assets or requiring a restoration plan.

The Commission has examined the compatibility with Community law of the practical methods applied by Greek supervisory authorities to monitor the financial soundness of Greek insurance undertakings, in particular the requirement of covering their technical provisions of the previous year by assets acquired the year following the financial year. As it indicated in the reply to

Written Question P 1686/99, the Commission has discussed this issue with the Greek authorities, and did not find elements showing the existence of an established and continual administrative practice by Greek insurance supervisory authorities which would be contrary to national insurance legislation or to Community legislation on insurance.

With regard to the official listing of insurance companies to which the Honourable Member refers, Council Directive 79/279/EC of 5 March 1979 coordinating the conditions for the admission of securities to official stock exchange listing did not specifically provide for a situation of this kind. However, point I.1 of Schedule A of the Annex to the Directive, which lays down conditions for the admission of shares to official listing on a stock exchange(5), imposes a general obligation, in so far as the legal position of the company must be in conformity with the laws and regulations to which it is subject, as regards both its formation and its operation under its statutes.

Council Directive 84/641/EEC of 10 December 1984 amending, particularly as regards tourist assistance, the First Directive (73/239/EEC) on the coordination of laws, regulations and administrative provisions relating to the taking-up and pursuit of the business of direct insurance other than life assurance(6), was transposed into Greek law by Presidential Decree DP 103/1990 of 22 March 1990, amended by DP 225/1196. However, the Commission is examining whether provisions other than those under Greek insurance law could prevent or hinder the provision of roadside assistance insurance in Greece by insurance undertakings duly authorised in other Member States in accordance with the insurance directives. The Commission has already made representations to the Greek authorities and, if necessary, will initiate the procedure under Article 226 (formerly 169) of the EC Treaty.

(1) OJ C 27 E, 29.1.2000, p. 161.

(2) OJ L 228, 11.8.1992.

(3) OJ L 360, 9.12.1992.

(4) OJ L 374, 31.12.1991.

(5) OJ L 66, 16.3.1979.

(6) OJ L 339, 27.12.1984.