WRITTEN QUESTION E-4128/97

by Monica Baldi (PPE) to the Commission

(21 January 1998)

Subject: Gruppo Fondiaria Assicurazioni

The new reorganization and rationalization plan being implemented by the Gruppo Fondiaria Assicurazioni, which will cut the staff by 2 000 over the next five years, make 900 redundant, cut a swathe through management and workers and reduce contract staff by 40 % (with the threat of further cuts) has created widespread chaos in the Italian and European insurance market.

The Gruppo Fondiaria has justified its action on the grounds that production costs are higher in Italy than in the rest of Europe (over 20 % in Italy, as against 10.15 % elsewhere in Europe). In actual fact a recent study by the EIC (European Insurance Committee) comparing the distribution costs in the loss and damage section of the insurance industry in the various countries of Europe has revealed the opposite, namely that Italy's costs are over 25 % lower than the European average, whilst the tariffs applied by the Gruppo Fondiaria are higher than the European average.

The legal status of insurance agents varies from one country to another, as do fiscal and contractual arrangements; only in Italy does the concept of "partial exclusive right" exist.

The Commission:

1. What action does it intend to take in order to prevent distortions of competition between European investors?

2. What does it intend to do to ensure even greater harmonization within the European insurance market?

3. What action can it take to ensure that the legal status of insurance agents within the internal market does not vary so much, in fiscal and contractual terms, from one country to another?

Answer given by Mr Van Miert on behalf of the Commission

(12 March 1998)

1. On the basis of the information currently in its possession, the Commission believes that the restructuring of the Fondiaria group does not constitute a distortion of competition as referred to in Articles 85 to 94 of the EC Treaty.

It is not possible to give an abstract answer to the question about consumer rights. While the general principle pacta sunt servanda obviously applies, specific circumstances may allow for cancellation. Contractual clauses allowing for this might be considered unfair within the meaning of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts(1), but this cannot be established without close scrutiny.

2. Since 1964 the Community has adopted a number of provisions relating to the legislative framework for insurance activities within the single market. The third non-life insurance Directive (Directive 92/49/EEC on the coordination of insurance other than life assurance)(2) and Directive 92/96/EEC on the coordination of life assurance(3) established the current system for the supervision of insurance companies in the Community. This system involves administrative approval by a single authority and financial monitoring of the insurance company concerned by the Member State where its head office is based. Two proposals for directives are currently under discussion in the EU institutions: a proposal for a Directive on the supplementary supervision of insurance undertakings in an insurance group(4) and a proposal for a Directive relating to insurance against civil liability in respect of the use of motor vehicles, which supplements existing directives in such a way as to increase protection for the victims of road accidents which have occurred in a Member State other than their Member State of residence(5).

3. As regards the third question, in accordance with the Commission's undertaking in its Communication on enhancing consumer confidence(6), it is in the process of revising Council Directive 77/92/EEC of 13 December 1976 on measures to facilitate the effective exercise of freedom of establishment and freedom to provide services in respect of the activities of insurance agents and brokers (ex ISIC Group 630) and, in particular, transitional measures in respect of these activities(7), and is also assessing the extent to which Commission Recommendation 92/48/EEC on insurance intermediaries has been implemented.(8) The purpose of these activities is to determine whether further action is necessary, including, possibly, broadening the scope of the Directive to include conditions governing access to the profession and its practice. The Commission has been engaged in consultation with the groups concerned since October 1997.

(1) OJ L 95, 21.4.1993.

(2) OJ L 228, 11.8.1992.

(3) OJ L 360, 9.12.1992.

(4) OJ C 341, 19.12.1995.

(5) COM(97) 510 final.

(6) COM(97) 309 final.

(7) OJ L 26, 31.1.1997.

(8) OJ L 19, 28.1.1992.