CELEX: 51975PC0468
Language: en
Date: 1975-09-15
Title: PROPOSAL FOR A DIRECTIVE AMENDING THE COUNCIL DIRECTIVE of 24 July 1973 on coordination of laws, regulations and administrative provisions concerning the taking-up and pursuit of activities in direct insurance other than life assurance (submitted to the Council by the Commission)

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (75) 468
Vol. 1975/0177
 ---pagebreak--- Disclaimer
Conformément au règlement (CEE, Euratom) n° 354/83 du Conseil du 1er février 1983
concernant l'ouverture au public des archives historiques de la Communauté économique
européenne et de la Communauté européenne de l'énergie atomique (JO L 43 du 15.2.1983,
p. 1), tel que modifié par le règlement (CE, Euratom) n° 1700/2003 du 22 septembre 2003
(JO L 243 du 27.9.2003, p. 1), ce dossier est ouvert au public. Le cas échéant, les documents
classifiés présents dans ce dossier ont été déclassifiés conformément à l'article 5 dudit
règlement.
In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983
concerning the opening to the public of the historical archives of the European Economic
Community and the European Atomic Energy Community (OJ L 43, 15.2.1983, p. 1), as
amended by Regulation (EC, Euratom) No 1700/2003 of 22 September 2003 (OJ L 243,
27.9.2003, p. 1), this file is open to the public. Where necessary, classified documents in this
file have been declassified in conformity with Article 5 of the aforementioned regulation.
In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom 1.
Februar 1983 über die Freigabe der historischen Archive der Europäischen
Wirtschaftsgemeinschaft und der Europäischen Atomgemeinschaft (ABI. L 43 vom 15.2.1983,
S. 1), geändert durch die Verordnung (EG, Euratom) Nr. 1700/2003 vom 22. September 2003
(ABI. L 243 vom 27.9.2003, S. 1), ist diese Datei der Öffentlichkeit zugänglich. Soweit
erforderlich, wurden die Verschlusssachen in dieser Datei in Übereinstimmung mit Artikel 5
der genannten Verordnung freigegeben.
 ---pagebreak--- COMMISSION OB THB 1UXOPBAN CQMMUMÏ1ES
                                    COM(75)468 final
                                    Brussels , 15 September 1975
        PROPOSAL FOR A DIRECTIVE AMENDING THE COUNCIL DIRECTIVE
                             of 24 July 1973
                 on coordination of laws , regulations and
                 administrative provisions concerning the
                 taking-up and pursuit of activities in
                 direct insurance other than life assurance
              ( submitted to the Council by the Commission )
   COM(75 ) 468 final
 ---pagebreak---                                                              XV/166/75-E
                                                             Orig» P
      COMMISSION OP THE EUROPEAN COMMUNITIES
      Proposal for an amendment to the Council Directive of 24 July 1973
      on the coordination of laws , regulations and administrative provisions
      relating to the talcing up and pursuit of the business of direct
                    insurance other than life assurance (l )
                 ( forwarded to the Council by the Commission)
                             EXPLANATORY MEMORANDUM
The unit of account ia referred to on several occasions in the Directive of
24 July 1973 : first and foremost , for the determination of the absolute
minimum guarantee fund that undertakings must establish (Article 17(2) ( a))
but also for the determination of the contribution income level which has
to be reached before certain mutual associations can come within the scope
of application of the Directive ( Article 3(l )) and to specify certain
thresholds relating to the calculation of the solvency margin (Article 16(3 )).
_____                                                                     -A
(l ) The Directive of 24 July 1973 was published in OJ No L 228,
     16 August 1973 »
 ---pagebreak--- Article 5(a) of that Directive lays down that " 'unit of account' means that
unit which is defined in Article 4 'of the Statute of the European investment
Bank", that is to say it is related to gold, the unit of account "being
defined as having the value of 0,888 670 88 grammes of fine gold.
The use of the gold parity may give rise to appreciable differences "between
countries , particularly as regards the constitution of the absolute minimum
guarantee fund. With this parity, one u.a, is worth IM 3 . 66 and Lit 625.
If the _ market rate is taken into account vrhen the European .unit of. account ,
which is referred to in this proposal , is used, the effective guarantee
required in Germany would, as a result , be about Lit 978 » as opposed to
Lit 625 in Italy, Conversely, the required guarantee of Lit 625 would be
equivalent to a real guarantee of M 2.34, as, opposed to M 3 - 66 in Germany#
A European unit of. account (EUA) has recently been devised, based on a .
"basket " of the Member States' currencies, whose conversion rates against
the EUA are available and sire published every day in the Official Journal
of ,the European Communities , For instance , compared with the fixed, con- -
version rate for the gold-parity u.a,, these conversion rates, which
automatically follow market rates, were the following on 16 June 1975
(rounded, figures ):
                 I
                          Bfrs/Lfrs  m     pi     Pound St    ! Her  • FF jI Lit
                                                  Irish Pound
                                           .    1
                                                                           I
                                                                            !_
 1 gold-parity u.a, »
                             50     3.66   3.62     0,41        7.5   5.55   625
                                         1
                                         I
 1 EUA (basket ) -         45.45    3.05 [ 3.13     0.57        7.05  5.21   815
 (16,6,1975)
 ---pagebreak---                                    - 3 -                   X17166/75 -E
The EUA is being gradually introduced at Community level ,
 (a) Thus, on 21 April 1975» "the Council decided that it would be used
     to express the amounts of aid referred to in Article 42 of the ACP-
     EEC Lome Convention ( l ),
 (b) A procedure under Article 236 of the EEC Treaty has also been initiated
     to amend Article 4 of the Statute of the EI3, which establishes a gold
     parity for the unit of account ,
     The purpose of the amendment is to replace this definition by a more
     flexible formula conferring on the Bank 's boards the power to define
     the unit of account and the conversion methods .
     Under a decision of 18 March 1975 taken by the Board of Governors of
     the EIB, the EUA is now used by the Bank for its accounting ftporations .
The financial guarantees required of insurance undertakings are expressed
in u,a , in the Community directives concerned but Trust obviously be provided
in the country in question in the national currency of that country. Use
of the EUA for determining the conversion rats for that currency against
the u.a. is the only means of enabling undertakings in the different
Member States to compete on a footing of equality, since this system is
based on the real value of each currency at market rates : for one u.a ,,
an insurance undertaking will have to provide guarantees of DM 3.05
Lit 815 in Germany and Italy respectively, these being figures of equal
value on the same reference date .
The directive on the coordination of indemnity insurance must be amended
accordingly, and this is an urgent matter since the deadline for the
application of this directive by the undertakings concerned is 31 January
1976 ( Article 35 ).
                                                                        ./•
(1 ) OJ No L 104, 24 Aprii 1975, P. 35.
 ---pagebreak---                                 - 4 -ν · -        ΧνΑβ6/75-3
THE COUNCIL OF THE EUROPEAN COMIUNI TIES ,
Having regard to the Treaty establishing the European Economic
Community , and' in particular Article 57(2 ) '"thereof ;
Having regard to the proposal from the Commission ;
Having regard to the Opinion of the European Parliament ;
Having regard to the Opinion of the Economic and Social Committee ;
Whereas Council Directive No 73/239/EEC of 24 July 1973 ( 1 ), aimed
at facilitating the talcing up of the business of direct insurance
other than life assurance,' has eliminated certain divergencies
which exist between national legislations ; whereas in order to
achieve this objective , and at the same time to ensure adequate
protection for insured and third parties in all the Member States ,
it has coordinated the provisions dealing with , the financial
guarantees required of insurance undertakings ;
Whereas , pursuant to - that Directive , the guarantee fund which
each Member State requires of each insurance undertaking with a
head office in its territory may not be less than certain amounts
which are expressed in the Directive in units of account ;
Whereas the unit of account is also referred to therein for
determining the amount of the contribution revenus below which
the Directive does not apply to certain mutual associations ;
Whereas for the purposes - of the said Directive "unit of account "
means that unit which is defined in Article 4 of the Statute of
the European Investment Bank ; whereas the convention of some of
the requirements in the Directive into national currencies on the
basis of this definition would lead to distortions of competition
between undertakings which have head offices in different Member
States .
( 1 ) OJ No L 228 , 16 August 1973 , p. 3 .
 ---pagebreak---                                  - 5 -           XV/166/75-E
Whereas by its Decision of 21 April 1975 ( 1 ) the Council defined
a European unit of account as representing the average of- any
changes in the value of the currencies of the Member States of
the Community ; whereas the conversion rate for each currency
against this unit of account is fixed automatically by reference
to quotations on the exchanges ; whereas the use of this European
unit of account places insurance undertakings on the same
competitive footing ;
Whereas Article 4 of the Protocol on the Statute of the European
Investment Bank is undergoing revision and whereas , in pursuance
of the Decision of 18 March 1975 of the Board of Governors of the
EIB , the Bank uses the unit of account defined by the Council
Decision of 21 April 1975 ;
Whereas the value of the European unit of account in each of the
Member States' currencies is fixed daily and whereas a reference
time must also be fixed for use when applying the Directive ;
HAS ADOPTED THIS DIRECTIVE ;
                               Article 1
Article 5 ( a ) of Directive No 73/239/EEC shall be replaced by the
following ;
" 'Unit of account' means the European unit of account ( EUA ) as
defined by Council Decision No 75/250/EEC of 21 April 1975 .
Whenever reference is made in this Directive to the unit of
account , the exchange value in national currency to be adopted
shall be that of the last working day of the year ".
( 1 ) OJ No L 104 , 24 April 1975 , p. 35
 ---pagebreak---                                  - 6 -                  xv/l 66/7 5-E
          : ■ >                 Article 2                    ;
This Directive is addressed to the Member States .
                      *    ' ■
                •'                *           Done at Brussels,
                                              For the Council
       :o           .                         The President
 ---pagebreak---                                                                XV/1 64/7 5-E
                                                               Orig. F
    Changes in the definition of the iihit~ of 'account" irt the" proposal
    for a Directive on the coordination of life assurance and in the
          Directive on the coordination of indemnity insurance
    •-  -         Use of the European unit , of account
At its meeting on 28 and 29 May 1975» the Council Working Party' on Economic
Questions (Establishment and Services ) asked the Commission to produce
                                                                                S
for it . a memorandum on the Unit of Account used in the proposal for a ,
Directive on the coordination of life assurance ( l ) and in the Directive '
on the coordination of indemnity insurance ( 2 ) and on conversion between
this unit and the national currencies .
In response to this request the Commission is able to' make the follotfing
remarks and proposals ,
!• Definition of the unit of account
1 . Whereas the u.a. was previously defined by reference to gold (0. 888 67O 88
    grammes of fine gold), the European Unit of Account (SUA), is based on
    a "basket " of Member States * currencies, for which the rate of conversion
    into the EUA is available and i3 published daily in the Official Journal
    of the European Communities# As an illustration on 16 Junel975» this
    conversion rate , which automatically follows market prices , worked out
    as follows in relation to the fixed conversion rate of the gold parity
    u.a, (round figures)*'               - ' . ' .
                                                                             -A
(1 ) OJ ITo C 35/9 , 28 ïferch 1974»
( 2) OJ TTo L 228/3 , 16 August 1973 .
 ---pagebreak---                        •-                                -2-                                        xv/l 64/7 5-E ■
                                                                                                                                 η
                                              Bfrs/Lfrs | ffii ; n .                 Pound St         ] Dkr •         ΡΡ   Lit
                                                                                     Irish Pound ' ■ .
      1 sold parity u.a* =                      50   •      3,66 ! 3,62                0,41                  7,5     5, 55 625
                                                          ;         j
                                                                                 p ..     –_ _ - _     |   ,     , ,
      1 EUA (basket ) =
             ν ' - . . ·
         (16 June 1975)
                         · .ν ··.«■· .   '     45,45 · , 3,05 . 3,.13                  0,57 . J 7,05 - 5, 21 ! 815 |
                                       .
                                           1
                                           I11  111  il .
                                                          I
                                                               il « 11 1 1 1 1 1 1
                                                                                                       i                       !
 2 . She EUA is being introduced at Community level . •                                          ..      "
     (a) Thus , on 21 April 1975» the Council decided that the EUA would be used
          to express the amounts of .. aid mentioned in Article 42 of the ACP-EEC
          Lome Convention (l )«
     (b) A procedure has also been initiated to amend the Statute of the European
          Investment Bank, pursuant to Article 236 of the EEC Treaty.
          The present version of Article 4(1 ) of the Statute states that "the
          value of the unit of account shall... be 0.888. 67O 88 grannies of- fin©, gold",
          She purpose of the- amendment is in fact to delete this definition from
          Article 4 of the Protocol of the Statute of the European Investment
          Bank and to replace it by a more flexible formula giving the boards of the Bank
       , itself authority to define the unit of account and the conversion methods . '
          Under a decision of 18 March 1975 taken by the Board of Governors of the
          EI3, thd EUA is alreacly being used by the Bank for its . aocoimting
          operations .
II * Use of the u.a . for incorporating in the Member States * le /dslation the
     provisions of the insurance coordination -directives
 1 . The u.a. is used in several places in these directives, namely*
 –––– '                                                     ■                                                        >/• •
 (1) OJ ITo L 104, 24 April 1975, P. 35.
 ---pagebreak---                                             - 3 -                   XV/l 64/7 5-E
6
       To determine the subscription or contribution inoone limits which, have- to
lif                 ■           ■
f      be reached before certain mutual associations are caught by - the directive
       (.Article 3(l ), third indent , in the indemnity insurance directive and
       Article 3(2), second indent , in the life assurance directive ), to fix the
       limit for the amount of benefits in the event of death which has to be
       reached before certain institutions are caught by the directive (.Article
       3(l ) of the life assurance directive ) to show certain stages in the cal­
       culation of the solvency margin • (Article 16(3 ), first and second "results "
       in the indemnity insurance directive and Article 19 (b) in the life assurance
       directive ) and to determine the absolute minimum guarantee fund which under­
       takings must constitute (Article 17 ( 2) ( a) in the indemnity insurance
       directive and Article 20 ( 2) ( a) in the life assurance directive ),
    2, As an example , the financial guarantees required from insurance undertakings,
       given in u.a, in the Community directives, must be provided, in the country
       concerned, in- the national currency of that country. The use' of the EUA
       for' determining the conversion rate for this currency in terms of the u.a,
       is the only means of ensuring that the undert akings of the various Member
       States, complete on a footing of equality.
       On the basis of the figures given above , the use of the gold parity u,a,
       would result in appreciable differences which one example will be sufficient
       to illustrate . If the conversion of one u.a, into M was fixed at 3*66 and
       the conversion into lire was fixed at 625, the actual guarantee required
       in Germany on the basis of the market rate would in fact be approximately
       Lit 973 (compared, therefore, with Lit 625 in Italy), Conversely, the
       requirement for Lit 625 would be equivalent to an actual guarantee of
       EM 2,34 (compared with M 3 * 66) »
       On the other hand the conversion of the u.a, into national currencies
       using the EUA system does away with this disadvantage since this system,
       by definition, is based on the real value of each currency at the market
       rates : for one u.a,, the insurance undertaking xri.ll have to provide res­
       pectively a guarantee of DM 3»05 in Germany and Lit 815 in Italy, these
       amounts are of equal value on the same reference date .
 ---pagebreak---                                                                    xv/l 64/7 5-E
  The le^al consequences to be drawn from -this must be examined separately,
  depending on whether they concern the life-assurance directive , which is
  nou "being prepared, " or the indemnity insurance directive, which Member .
  States ere now under an obligation to incorporate into their national'
  legislation.
  ( a) As far as the life assurance directive is concerned, it is proposed
 • . that Article 5 (a) be deleted and replaced by the following:
          "Unit of account " raeans the European unit of account (SUA) as defined
        , in Council Decision 75/25Q/EEC of 21 April 1975*
        /Wherever reference is made in this Directive to the unit of account , .
          the corresponding amount in national currency to be referred to shall
          be that of the last working day of the year"*
  (b) As for the indemnity insurance directive, Article . 5 refers expressly
       " to the unit of account defined in Article 4 of the Statute of the
,         European , Investment Bank, This conversion method must not now be used :
          - for the reasons stated under (l ) above,                             '
          - because the application of a different system for the two directives
    . . . ; would not be justified, .
         - since the EIB itself has already ceased using it .
          I?roa the legal point of view the most appropriate method is to amend
          the directive and the Commission is at present preparing a draft
     •    proposal - with this end in view.