Opinion of the European Central Bank of 18 July 2008 at the request of the Austrian Federal Ministry of Finance on the provisions introducing investment-oriented life assurance (CON/2008/30)
Date: 2008-07-18
Institutions: European Central Bank
Subjects: Austria, financial stability, investment, life assurance, national law

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 18 July 2008 

at the request of the Austrian Federal Ministry of Finance on the provisions introducing  

investment-oriented life assurance  

(CON/2008/30) 

Introduction and legal basis 

On 9 June 2008 the European Central Bank (ECB) received a request from the Austrian Federal Ministry 
of  Finance  for  an  opinion  on  a  draft  law  implementing  Directive  2007/44/EC1  amending  the  Law  on 

banking, the Law on securities supervision, the Law on the stock exchange, the Law on savings banks, the 

Law on federal finance, the Law on insurance supervision, the Law on company pensions and the Law on 

financial conglomerates (hereinafter the ‘draft law’), and at the same time introducing a new investment 

instrument, namely investment-oriented life assurance. 

The  ECB’s  competence  to  deliver  an  opinion  is  based  on  the  sixth  indent  of  Article 2(1)  of  Council 

Decision  98/415/EC  of  29 June 1998  on  the  consultation  of  the  European  Central  Bank  by  national 
authorities regarding draft legislative provisions2, as the draft law relates to rules applicable to financial 

institutions  insofar  as  they  materially  influence  the  stability  of  financial  institutions  and  markets.  In 

accordance  with  the  first  sentence  of  Article 17.5  of  the  Rules  of  Procedure  of  the  European  Central 

Bank, the Governing Council has adopted this opinion. 

1. 

Purpose of the draft law and scope of the opinion 

1.1  According to the explanatory memorandum to the draft law, the proposed investment-oriented life 

assurance  would  allow  proceeds  from  the  premiums  paid  out  under  a  specific  life  assurance 

contract  to  be  invested  in  line  with  the  pre-defined  investment  strategy  specified  in  the  contract. 

Proceeds  gained  from  such  specified  investments  will  be  attributed  to  the  individual  contract, 

whereas in unit-linked life assurance or index-linked life assurance, the investment is attached to an 

external  fund  or  index.  This  differs  also  from  classic  life  assurance,  where  all  interest  yields  are 

equally  distributed  to  the  respective  contracts.  According  to  the  explanatory  memorandum,  the 

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2  

Directive 2007/44/EC of the European Parliament and of the Council of 5 September 2007 amending Council Directive 
92/49/EEC  and  Directives  2002/83/EC,  2004/39/EC,  2005/68/EC  and  2006/48/EC  as  regards  procedural  rules  and 
evaluation criteria for the prudential assessment of acquisitions and increase of holdings in the financial sector (OJ L 247, 
21.9.2007, p. 1). 
OJ L 189, 3.7.1998, p. 42.  

 
 
 
 
                                                 
insurance company will hence be in a position to provide insurance products tailored to the client’s 
individual risk preferences with a guaranteed interest rate3.  

1.2  Under the draft law, insurance companies will also have to comply with conduct of business rules 

for  transactions  in  unit-linked  life  assurance,  and  in  investment-oriented  life  assurance  without 

guarantee.  It  also  empowers  the  Financial  Market  Authority,  which  supervises  insurance 

companies, to exercise regulatory powers in that respect. 

1.3  This opinion does not consider the measures intended to transpose Directive 2007/44/EC and only 

focuses  on  the  above  summarised  provisions  introducing  investment-oriented  life  assurance  and 

conduct of business rules for insurance companies.  

2. 

The central bank’s financial stability role and exchange of information  

2.1 

In  previous  opinions,  the  ECB  has  recognised  that  the  nature  and  scope  of  risk  in  the  financial 

sector is widening, due to closer links between credit institutions, insurance companies, investment 

firms  and  pension  funds,  as  demonstrated  by  the  emergence  of  hybrid  financial  products,  the 
increased use of risk transfer instruments and the growing role of financial conglomerates4.  

2.2  Further,  in  keeping  with  the  position  taken  by  the  ECB  in  previous  opinions  on  draft  national 

legislation,  including  its  opinions  on  the  2001  reform  of  the  Austrian  financial  supervision 
framework5 and the reform of the banking supervision framework in Austria6, the ECB considers 

that central banks are in general best placed to take on responsibility for financial stability, given 

their  insight  into  money  and  financial  market  developments  and  their  involvement  in  payment 

systems and monetary policy operations. This applies both to the normal conduct of business and in 

crisis situations. 

2.3  Given  the  hybrid  nature  of  the  proposed  investment-oriented  life  assurance,  the  Oesterreichische 

National  Bank  (OeNB)  must  have  adequate  access  to  information  and  data  in  relation  to  this 
product. The ECB understands that Article 44b(1) of the Law on the OeNB7 provides an adequate 
legal basis in this respect8. 

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5   

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The product may be linked, at a higher premium, to the guaranteed minimum rate of return. 
See, e.g. paragraph 2.1 of ECB Opinion CON/2008/16 of 4 April 2008 at the request of the Finnish Ministry of Finance 
on a draft government proposal for a law on the Financial and Insurance Supervisory Authority and certain related draft 
laws. 
See  ECB  Opinion  CON/2001/10  of  25  of  May  2001  at  the  request  of  the  Austrian  Ministry  of  Finance  on  the  Law 
establishing and organising the financial market supervisory authority and amending several laws. 
See  ECB  Opinion  CON/2007/33  of  5  November  2007  at  the  request  of  the  Austrian  Federal  Ministry  of  Finance  on  a 
draft  law  amending  the  Law  on  banking,  the  Law  on  savings  banks,  the  Law  on  the  Financial  Market  Supervisory 
Authority and the Law on the Oesterreichische Nationalbank. 
The Law on the Oesterreichische Nationalbank.  
See paragraph 2.4 of ECB Opinion CON/2007/33.  

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3. 

Specific issues  

3.1  The ECB welcomes the introduction of conduct of business rules in relation to the abovementioned 

assurance products as they will enhance consumer protection. 

This opinion will be published on the ECB’s website.  

Done at Frankfurt am Main, 18 July 2008. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

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