CELEX: 51988PC0729
Language: en
Date: 1989-01-02
Title: PROPOSAL FOR A SECOND COUNCIL DIRECTIVE ON THE COORDINATION OF LAWS, REGULATIONS AND ADMINISTRATIVE PROVISIONS RELATING TO DIRECT LIFE ASSURANCE, LAYING DOWN PROVISIONS TO FACILITATE THE EFFECTIVE EXERCISE OF FREEDOM TO PROVIDE SERVICES AND AMENDING DIRECTIVE 79/267/EEC

15. 2. 89                               Official Journal of the European Communities                                  No C 38/7
                                                                II
                                                        (Preparatory Acts)
                                                  COMMISSION
              Proposal for a Second Council Directive on the coordination of laws, regulations and adminis-
              trative provisions relating to direct life assurance, laying down provisions to facilitate the
                   effective exercise of freedom to provide services and amending Directive 79/267/EEC
                                                COM(88)     729 final — SYN 177
                                     (Submitted by the Commission on 23 December 1988)
                                                          (89/C 38/08)
THE COUNCIL OF THE EUROPEAN COMMUNITIES,                             Whereas, for practical reasons, it is desirable to define
                                                                     provision of services taking into account both the
                                                                     assurer's establishment and the place where the
Having regard to the Treaty establishing the European                commitment is to be covered; whereas, therefore,
Economic Community, and in particular Articles 57 (2)                commitment should also be defined; whereas, moreover,
and 66 thereof,                                                      it is desirable to distinguish between activities pursued by
                                                                     way of establishment and activities pursued by way of
Having regard to the proposal from the Commission,                   freedom to provide services;
                                                                     Whereas it is desirable to supplement the First Council
In cooperation with the European Parliament,                         Directive of 5 March 1979 in order, in particular, to
                                                                     clarify the powers and means of supervision vested in the
                                                                     supervisory authorities; whereas it is also desirable to lay
Having regard to the opinion of the Economic and                     down specific provisions regarding the taking-up, pursuit
Social Committee,                                                    and supervision of activity by way of freedom to provide
                                                                     services;
Whereas it is necessary to develop the internal market in            Whereas policy-holders who, by virtue of the fact that
life assurance and in the operations referred to in the              they take the initiative in entering into a commitment in
first Council Directive 79/267/EEC of 5 March 1979 on                another State and thus place themselves under the
the coordination of laws, regulations and administrative             protection of the legal system of that other State, do not
provisions relating to the taking-up and pursuit of the              require special protection in the State of the commitment
business of direct life assurance ('), hereinafter called 'the       should be granted complete freedom to avail themselves
First Directive'; whereas, in ot^ler to achieve that                 of the widest possible market in life assurance and in the
objective, it is desirable to make it easier for assurance           operations referred to in the First Directive; whereas,
undertakings having their head office in the Community               other policy-holders should also be afforded adequate
to provide services in the Member States, thus making it             protection;
possible for policy-holders to have recourse not only to
assurers established in their own country, but also to               Whereas, in the case of group assurances and certain
assurers which have their head office in the Community               individual pensions assurances, the multiplicity and
and are established in other Member States;                          complexity of the various schemes and their close
                                                                     connection with social security schemes call for careful
                                                                     study; whereas they should therefore be excluded from
Whereas, under the Treaty, any discrimination with                   the scope of the provisions specific to freedom to provide
regard to freedom to provide services based on the fact              services contained in this Directive; wheres they will
that an undertaking is not established in the Member                 form the subject matter for another proposal for a
State in which the services are provided has been                    Directive;
prohibited since the end of the transitional period;
whereas that prohibition applies to services provided                Whereas the provisions in force in the Member States
from any establishment in the Community, whether it be               regarding contract law applicable to the activities
the head office of an undertaking or an agency or                    referred to in the First Directive continue to differ;
branch;                                                              whereas the freedom to choose, as the law applicable to
                                                                     the contract, a law other than that of the State of the
                                                                     commitment may be granted in certain cases, in
                                                                     accordance with rules which take into account specific
(') OJ NO L 63, 13. 3. 1979, p. 1.                                   circumstances;
 ---pagebreak--- No C 38/8                             Official Journal of the European Communities                                   15. 2. 89
Whereas the First Directive's provisions on transfer of         holders is unjustified, the technical reserves, including
portfolio should be reinforced and supplemented by              mathematical reserves, should remain subject to the rules
provisions specifically concerning the transfer to another      of and supervision by the Member State in which the
undertaking of the portfolio of contracts concluded by          undertaking is established;
way of freedom to provide services;
                                                                Whereas some Member States do not subject life
                                                                assurance contracts and the other operations covered by
Whereas, in the interests of protecting policy-holders,         the First Directive to any form of indirect taxation, while
Member States should, at the present stage of the coor-         others apply special taxes; whereas the structure and rate
dination process, be given the option of limiting the           of those taxes vary considerably between the Member
simultaneous pursuit of activity by way of freedom to           States in which they are applied; whereas it is desirable
provide services and activity by way of establishment;          to avoid a situation where those differences lead to
whereas no such limitation can be provided for where            distortions of competition between undertakings in the
policy-holders do not require such protection;                  various Member States; whereas the application of the
                                                                tax arrangements provided for by the Member State in
                                                                which the commitment is entered into is a means of
Whereas the taking-up and pursuit of activity by way of         remedying such mischief; whereas it is for the Member
freedom to provide services should be subject to                States to establish a method of ensuring that such taxes
procedures guaranteeing the assurance undertaking's             are collected;
compliance with provisions regarding financial guaran-
tees, conditions of assurance and premium rates; whereas
those procedures may be relaxed where the activity              Whereas the First Council Directive of 5 March 1979
pursued by way of freedom to provide services covers            makes express provision for specific rules concerning the
policy-holders who, by virtue of the characteristics of the     authorization of agencies and branches belonging to
commitment they propose to enter into, do not require           undertakings whose head offices are outside the
special protection in the State of the commitment;              Community; whereas it is also desirable to provide for a
                                                                specific procedure for all requests for the authorization
                                                                of a subsidiary of an undertaking governed by the laws
                                                                of a third country or the acquisition of a participation by
Whereas, however, in the case of this second category of
                                                                such an undertaking with a view to ensuring that
policy-holder and where the contract is one of life
                                                                Community undertakings benefit from reciprocity in the
assurance, the policy-holder should be given the oppor-
                                                                third countries in question; whereas this Directive lays
tunity of cancelling the contract within a period of 30
                                                                down such a procedure,
days;
                                                                HAS ADOPTED THIS DIRECTIVE:
Whereas the First Directive adopted the principle of
prohibiting the simultaneous pursuit of the activities
covered by the First Directive on the coordination of                                       TITLE I
non-life insurance and those covered by the First
Directive; wheras, while it authorized the continued                                  General provisions
existence of existing composite undertakings, it stated
                                                                                            Article 1
that they may not set up agencies or branches for life
assurance; whereas such undertakings should likewise be         The object of this Directive is:
prohibited from covering by way of freedom to provide
services commitments referred to in the First Directive;        (a) to supplement First Directive 79/267/EEC;
                                                                (b) to lay down specific provisions relating to freedom
Whereas it is necessary to make provision for special                to provide services in respect of the activities referred
cooperation in the sphere of freedom to provide services             to in the first Directive, such provisions being set
between the competent supervisory authorities of the                 forth in Title III of this Directive.
Member States and between those authorities and the
Commission; whereas provision should also be made for
a system of penalties to apply where the undertaking                                        Article 2
providing the service fails to comply with the provisions       For the purposes of this Directive:
of the Member State in which the service is provided;
                                                                (a) 'First Directive''means Directive 79/267/EEC;
Whereas the technical reserves, including mathematical
reserves, should be subject to the rules of and supervision     (b)   'undertaking':
by the Member State in which the service is provided
where the provision of services involves commitments in              — for the purposes of Titles I and II, means any
respect of which the State in which the service is received              undertaking which has received official auth-
wishes to provide special protection for policy-holders;                 orization under Article 6 or Article 27 of the
whereas, however, if such concern to protect policy-                     First Directive,
 ---pagebreak--- 15. 2. 89                               Official Journal of the European Communities                                N o C 38/9
     — for the purposes of Titeles III and IV, means any          where the law of that State so allows, the parties may
         undertaking which has received official auth-            choose the law of another country.
         orization under Article 6 of the First Directive;
                                                                   2.    Where, in one of the cases referred to in Article 13,
(c) 'establishment' means the head office, an agency or a         the policy-holder has his habitual residence in a Member
     branch of an undertaking, having regard to Article 3;         State other than that of which be is a national, the
                                                                  parties may choose the law of the Member State of
                                                                  which he is a national.
(d) 'commitment' means a commitment represented by
     one of the kinds of insurance or operation referred           3.    The Member State whose law governs the contract
     to in Article 1 of the First Directive;                       may not, in a case falling within Article 13, seek to
                                                                  prevent the policy-holder from entering into any contract
(e) 'Member State of the commitment' means the Member             relating to a commitment which may be lawfully
     State where the policy-holder has his habitual                undertaken in the Member State of establishment.
     residence or, if the policy-holder is a legal person,
     the Member State where the latter's establishment, to         4.    Where a State includes several territorial units, each
     which the contract relates, is situated;                      of which has its own rules of law concerning contractual
                                                                   obligations, each unit shall be considered a country for
                                                                  the purposes of identifying the law applicable under this
(f)   'Member State of establishment' means the Member
                                                                   Directive.
     State in which the establishment covering the
     commitment is situated;
                                                                  A Member State in which various territorial units have
                                                                   their own rules of law concerning contractual obligations
(g) 'Member State of provision of services' means the              shall not be bound to apply the provisions of this
     Member State of the commitment where the                      Directive to conflicts which arise between the laws of
     commitment is covered by an establishment situated            those units.
     in another Member State;
                                                                   5.    Nothing in this Article shall restrict the application
(h) 'parent undertaking' means a parent undertaking                of the rules of the law of the forum in a situation where
     within the meaning of Article 1 of Seventh Council            they are mandatory, irrespective of the law otherwise
      Directive 83/349/EEC of 13 June 1983 based on                applicable to the contract.
     Article 54 (3) (g) of the Treaty, on consolidated
      accounts (');                                                If the law of a Member State so stipulates the mandatory
                                                                   rules of the law of the Member State of the commitment
(i)   'subsidiary' means a subsidiary undertaking in               may be applied if and in so far as, under the law of that
      accordance with Article 1 of Directive 83/349/EEC.           Member State, those rules must be applied whatever the
                                                                   law applicable to the contract.
                           Article 3                               6.    Subject to the preceding paragraphs, the Member
                                                                   States shall apply to the assurance contracts referred to
For the purposes of the First Directive and of this
                                                                   in this Directive their general rules of private inter-
Directive, any permanent presence of an undertaking in
                                                                   national law concerning contractual obligations.
the territory of a Member State shall be treated in the
same way as an agency or branch, even if that presence
does not take the form of a branch or agency, but                                             Article 5
consists merely of an office managed by the under-
taking's own staff or by a person who is independent but          The following paragraph is added to Article 23 of the
has permanent authority to act for the undertaking as an           First Directive:
agency would.
                                                                       '3.    Each Member State shall take all steps
                                                                       necessary to ensure that the authorities responsible
                           TITLE II                                    for supervising assurance undertakings have the
                                                                       powers and means necessary for supervision of the
       Provisions supplementary to the First Directive                 activities of assurance undertakings established within
                           Article 4                                   their territory, including activities engaged in outside
                                                                       that territory, in accordance with the the Council
1.     The law applicable to contracts relating to the ac-             Directives governing those activities and for the
tivities referred to in the First Directive shall be the law           purpose of ensuring that they are implemented.
of the Member State of the commitment. However,
                                                                       Those powers and means must, in particular, enable
(') OJ No L 193, 18. 7. 1983.                                          the supervisory authorities to:
 ---pagebreak--- No C 38/10                             Official Journal of the European Communities                                   15. 2. 89
    — make detailed inquiries about the undertaking's            the accepting office is situated certify that the accepting
        situation and the whole of its business inter alia       office possesses the necessary margin of solvency after
        by:                                                      taking the transfer into account and if it fulfils the
        — gathering information or requiring the                 conditions set out in Articles 11, 12, 14 and 16 in the
             submission     of     documents     concerning      Member State of provision of services.
             assurance business,
        — carrying out on-the-spot investigations at the         5.     In the cases referred to in paragraphs 3 and 4, the
             undertaking's premises,                             supervisory authorities of the Member State in which the
                                                                 transferring undertaking is established shall authorize the
    — take any measures with regard to the undertaking           transfer after obtaining the agreement of the supervisory
        which are appropriate and necessary to ensure            authorities of the Member State of provision of services.
        that the activities of the undertaking remain in
        conformity with the laws, regulations and admin-
        istrative provisions with which the undertaking          6.     If a Member State, under the conditions laid down
        has to comply in each Member State and in                by national law, authorizes undertakings established
        particular with the scheme of operations in so far       within its territory to transfer all or part of their port-
        as it remains mandatory, and to prevent or               folios of contracts to an accepting office established in
        remove any irregularities prejudicial to the             another Member State which is not the Member State of
        interests of policy-holders,                             provision of services, it shall ensure that the following
                                                                 conditions are fulfilled:
    — ensure that measures required by the supervisory
        authorities are carried out, if need be by
        enforcement, where appropriate through judicial          — the supervisory authorities of the Member State in
        channels.                                                     which the head office of the accepting office is
                                                                      situated certify that the latter possesses the necessary
                                                                      margin of solvency after taking the transfer into
    Member States may also make provision for the                     account,
    supervisory authorities to obtain any information
    regarding contracts which are held by intermediaries.'
                                                                 — the Member State in which the accepting office is
                                                                      established agrees,
                           Article 6
1.    Article 25 of the First Directive is hereby deleted.       — the accepting office fulfils the conditions set out in
                                                                      Articles 11, 12, 14 and 16 in the Member State of
2.    Each Member State shall, under the conditions laid              provision of services, the law of that Member State
down by national law, authorize undertakings which are                provides for the possibility of such a transfer and th. t
established within its territory to transfer all or part of           Member State agrees to the transfer.
their portfolios of contracts for which that State is the
State of the commitment to an accepting office estab-
lished in that same Member State if the supervisory auth-         7.    A transfer authorized in accordance with this
orities of the Member State in which the head office of          Article shall be published, under the conditions laid
the accepting office is situated certify that the latter          down by national law, in the Member State of the
possesses the necessary margin of solvency after taking           commitment. Such transfer shall be automatically valid
the transfer into account.                                        against policy-holders, assured persons and any other
                                                                  person having rights or obligations arising out of the
                                                                  contracts transferred.
3.     Each Member State shall, under the conditions laid
down by national law, authorize undertakings estab-
lished within its territory to transfer all or part of their     This provision shall not affect the right of Member
portfolios of contracts concluded in the circumstances            States to provide that policy-holders may cancel the
referred to in Article 10 (1) to an accepting office estab-       contract within a given period after the transfer.
lished in the Member State of provision of services if the
supervisory authorities of the Member State in which the
head office of the accepting office is situated certify that                                 Article 7
the latter possesses the necessary margin of solvency
after taking the transfer into account.                          Article 22 (2) of the first Directive is replaced by the
                                                                  following:
4.     Each Member State shall, under the conditions laid
down by national law, authorize undertakings estab-                   'The Italian Republic shall take all steps to ensure
lished within its territory to transfer all or part of their          that the requirement that undertakings established
portfolios of contracts concluded in the circumstances                within its territory cede part of their underwriting to
referred to in Article 10 (1) to an accepting office estab-           the Istituto Nazionale di Assicurazioni is abolished
lished in the same Member State if the supervisory auth-              within two years of the date of implementation of
orities of the Member State in which the head office of               this Directive.'
 ---pagebreak--- 15. 2. 89                              Official Journal of the European Communities                               No C 38/11
                           Article 8                                  6.    If the Commission finds that reciprocity is not
                                                                      ensured, it may extend suspension of the decision
1.     The heading of Title III of the First Directive is             referred to in paragraph 4, after having consulted the
replaced by the following:                                            competent authorities of the Member States under
                                                                      the collaboration procedure provided for in Article
    'TITLE III A                                                      38.
    Rules applicable to agencies or branches established              7.    The Commission shall present suitable proposals
    within the Community and belonging to under-                      to the Council with a view to achieving reciprocity
    takings whose head offices are outside the                        with the third country in question.'
    Community'.
2.      The following heading is placed after Article 32 of                                  TITLE III
the First Directive:
                                                                  Provisions relating specifically to freedom to provide
                                                                                              services
    'TITLE III B
                                                                                             Article 10
    Rules applicable to subsidiaries of parent under-             1.     This Title shall apply where an undertaking,
    takings governed by the laws of a third country and           through an establishment situated in a Member State,
    to acquisitions of participations by such parent              covers a commitment in another Member State.
    undertakings'.
                                                                  2.     This Title shall not apply to operations, under-
                            Article 9                             takings and institutions to which the First Directive does
Title III B shall comprise an Article 32A, the text of            not apply.
which is as follows:
                                                                  3.     This Title shall likewise not apply to commitments;
     '1.    Requests for authorization of a subsidiary
    whose parent undertaking is governed by the laws of           — entered into with persons other than natural persons
     a third country or the acquisition of a participation             acting on their own account,
    therein as provided for in paragraph 3 shall be
     subject to the procedure laid down in this Article.
                                                                  — entered into with persons having a commercial,
                                                                       business or employment-based relationship with the
     2.    The competent authorities of the relevant
                                                                       person or persons in respect of whose life or lives the
     Member State shall inform the competent authorities
                                                                       assurance is taken out, whether such relationship be
     of the other Member States and the Commission of
                                                                       past, present or future, where the commitment is
     the request for authorization.
                                                                       entered into by virtue of such relationship,
     3.     Member States shall provide that where an
     undertaking governed by the laws of a third country          — entered into with a person in respect of whose life
     is considering the acquisition of a participation in an           the assurance is taken out, if it is taken out by virtue
     insurance undertaking established in the Community                of the employment or business activities of that
     such that the latter undertaking will become its                  person,
     subsidiary, it shall inform the competent authorities
     of the Member State concerned. These authorities             — relating to the operations referred to in Article 1 (2)
     shall inform the competent authorities of the other               (a), (c), (d), and (e) and Article 1 (3) of the First
     Member States and the Commission.                                 Directive.
     4.     The competent authorities of the Member State
     concerned must suspend their decision regarding              4.     An undertaking shall not cover a commitment in
     requests as referred to in paragraphs 2 and 3 until the      another Member State unless it is authorized under
     procedure provided for in paragraphs 5 and 6 is              Article 6 of the First Directive to cover such a
     completed.                                                   commitment in its Member State of establishment.
      5.    The Commission shall, within three months of                                     Article 11
      receiving the information provided for in paragraphs
     2 and 3, examine whether all undertakings of the             Any undertaking which intends to provide services shall
     Community enjoy reciprocal treatment, in particular          first inform the competent authorities of the head office
      regarding the establishment of subsidiaries or the           Member State, and, where appropriate, of the Member
      acquisition of participations in insurance under-            State of the establishment concerned, indicating the
      takings in the third country in question.                    Member State or Member States within whose territory
 ---pagebreak--- No C 38/12                               Official Journal of the European Communities                                 15. 2. 89
it intends to provide services and the nature of the               4.     If the competent authorities of the Member State of
commitments it proposes to cover.                                  provision of services have not taken a decision by the
                                                                   end of the period referred to in paragraph 3, auth-
                                                                   orization shall be deemed to be refused.
                           Article 12
 1.    Each Member State within whose territory an                 5.     Any decision to refuse authorization or to refuse a
undertaking intends, under conditions of freedom to                certificate as referred to in paragraph 1 (a) or (b) shall
provide services, to cover commitments within the                  be accompanied by the precise grounds therefore and
meaning of Article 10 of this Directive may make the               communicated to the undertaking in question.
taking-up of such activity conditional on official auth-
orization in so far as the commitments are not
                                                                   6.     Each Member State shall make provision for the
commitments within the meaning of Article 13; to that
                                                                   right to apply to the courts in respect of a refusal of
end, it may require that the undertaking:
                                                                   authorization or refusal to issue the certificate referred
                                                                   to in paragraph 1 (a) or (b).
(a) produce a certificate issued by competent authorities
     of the head office Member State certifying that it
     possesses for its activities as a whole the minimum                                     Article 13
     solvency margin calculated in accordance with                  1.    Commitments covered by way of freedom to
     Article 19 of the First Directive and that, in                provide services shall be subject, not to Article 12, but to
     accordance with Article 6 (1) of the said Directive,          Article 14 where the policy-holder takes the initiative in
     the autorization enables the undertaking to operate           seeking a commitment from the undertaking.
     outside the Member State of establishment;
                                                                   The policy-holder shall be deemed to have taken the
(b) produce a certificate issued by the competent auth-            initiative:
     orities of the Member State of establishment indi-
     cating the classes in respect of which the undertaking        — where the initial contact between the policy-holder
     is authorized to transact business and certifying that             and the undertaking, regardless of the means used, is
     those authorities do not object to the undertaking's               made by the policy-holder,
     transacting business by way of freedom to provide
     services;                                                         or
                                                                   — where the contract is concluded in the Member State
(c) submit a scheme of           operations   containing   the          in which the undertaking is established without there
     following particulars:                                            having been any prior contact between the policy-
     — the nature of the commitments which the under-                  holder and the undertaking in the Member State in
         taking proposes to cover in the Member State of               which the policy-holder has his habitual residence.
         provision of services,
     — the general and special conditions of the                   2.     An undertaking which proposes to cover
         assurance policies which it proposes to use there,        commitments in a Member State under the arrangements
     — the premium rates which the undertaking                     provided for in this Article shall not solicit business or
         envisages applying and the technical bases which          engage in any advertising there relating to such activity
         it proposes to use for each class of business,            apart from publishing notices indicating its address and
     — the forms and other printed documents which it              the classes in respect of which it is authorized to transact
                                                                   business in the Member State of establishment from
          intends to use in its dealings with policy-holders,
                                                                   which it proposes to cover commitments.
in so far as these are also required of established under-
takings.                                                           3.     Where the policy-holder takes the initiative in
                                                                   seeking the commitment from the undertaking through a
                                                                   broker, he shall sign, before the contact with the under-
2.     The competent authorities of the Member State of            taking takes place, a statement to the effect that he
provision of services may require that the particulars             wishes the broker to make enquiries as to the assurance
referred to in paragraph 1 (c) be supplied to them in the          arrangements available in one or more Member States
official language of that State.                                   other than that in which he has his habitual residence;
                                                                   such broker shall be the person referred to in Article 2
                                                                   (1) (a) of Directive 77/92/EEC. The broker shall not
3.     The competent authorities of the Member State of
                                                                   engage in any advertising concerning the possibility of
provision of services shall have a period of six months
                                                                   seeking commitments under the arrangements provided
from receipt of the documents referred to in paragraph 1
                                                                   for in this Article.
in which to grant or refuse authorization on the basis of
the compliance or non-compliance of the particulars in
the scheme of operations submitted by the undertaking              4.     Before entering into a commitment under the
with the laws, regulations and administrative provisions           arrangements provided for in this Article, the policy-
applicable in that State.                                          holder shall sign a statement to the effect that he takes
 ---pagebreak--- 15. 2. 89                              Official Journal of the European Communities                                 No C 38/13
note of the fact that the commitment is subject to the           notably as regards establishing the time when the parties
rules of supervision of the country of the undertaking           entered into the contract.
which is to cover the commitment.
                          Article 14                                                        Article 16
1.     Each Member State within whose territory an               Member States' legislation shall provide that an under-
undertaking intends, under conditions of freedom to              taking established in a Member State may cover within
provide services, to cover commitments within the                that State by way of freedom to provide services from an
meaning of Article 13 of this Directive shall require that       establishment in another Member State at least:
the undertaking:
(a) produce a certificate issued by the competent auth-          — commitments within the meaning of Article 13 of this
     orities of the head office Member State certifying               Directive,
     that it possesses for its activities as a whole the
     minimum solvency margin calculated in accordance            — commitments within the          meaning of Article 10 but
     with Article 19 of the First Directive and that, in              not of Article 13 coming      within classes in respect of
     accordance with Article 6 (1) of the said Directive,             which the undertaking          established in the first
     the authorization enables the undertaking to operate             Member      State lacks        authorization     there in
     outside the Member State of establishment;                       accordance with Article 6     of the First Directive.
(b) produce a certificate issued by the competent auth-
     orities of the Member State of establishment indi-          If, however, in the latter case that undertaking has such
     cating the classes in respect of which the undertaking      authorization, the first Member State may prevent such
     is authorized to transact business and certifying that      provision of services,
     those authorities do not object to the undertaking's
     transacting business by way of freedom to provide
     services;                                                                              Article 17
(c) state the nature of the commitments which it                  1.    Where an undertaking referred to in Article 11
     proposes to cover in the Member State of provision          intends to amend the information referred to in Article
     of services.                                                 12 (1) (c) or 14 (1) (c), it shall submit the amendments to
                                                                 the competent authorities of the Member State of
2.     Each Member State shall make provision of a right         provision of services. Those amendments shall be subject
to apply to the courts in respect of a refusal to issue the      to the provisions of Articles 12 (3) and 14 (1), as the case
certificate referred to in paragraph 1 (a) or (b).               may be.
3.     The undertaking may commence activities as from
the certified date on which the authorities of the               2.     Where the undertaking intends to extend its acti-
Member State of provision of services are in possession          vities to commitments within the meaning of Article 10
of the documents referred to in paragraph 1.                     but not of Article 13 of this Directive, it shall follow the
                                                                 procedure laid down in Articles 11 and 12.
4.     This Article shall also apply where the Member
State in whose territory an undertaking intends, by way
of freedom to provide services, to cover commitments             3.     Where the undertaking intends to extend its acti-
other than those referred to in Article 13 of this               vities to commitments within the meaning of Article 13
Directive does not make the taking-up of such activity           or Article 14 (4) of this Directive, it shall follow the
conditional on official authorization.                           procedure laid down in Articles 11 and 14.
                          Article 15
                                                                                            Article 18
A policy-holder who concludes an individual life
assurance contract under conditions of freedom to                Undertakings which, by virtue of Article 13 (3) of th«
provide services as set out in Article 13 shall have a           First Directive, carry on simultaneously the activities
period of at least 30 days from the time when the parties        referred to in the Annex to the First Coordination
entered into the contract within which to cancel the             Directive (non-life insurance) and those listed in Article
contract.                                                         1 of the First Directive shall not, by way of freedom to
                                                                 provide services, cover any commitments in any of the
The giving of notice of cancellation by the policy-holder        classes referred to in the First Directive.
shall have the effect of releasing him from any obligation
arising from the contract.
                                                                                            Article 19
These provisions shall not apply to contracts of two
months' duration or less.                                         1.    Member States of provision of services may
                                                                 maintain or introduce laws, regulations or administrative
The legal effects of cancellation shall be determined by         provisions justified on policy-holder protection grounds,
the law applicable to the contract as defined in Article 4,      concerning, in particular, approval of general and special
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policy conditions, of forms and other printed documents            prevention of the further covering of commitments by
for use in dealings with policy-holders, of scales of              the undertaking by way of freedom to provide services
premiums and of any other document necessary for the               within its territory. In the case of commitments covered
normal exercise of supervision on condition that the               by way of freedom to provide services other than those
rules of the Member State of establishment are insuf-              within the meaning of Article 13 of this Directive, such
ficient to achieve the necessary level of protection and           steps shall include withdrawal of the authorization
the requirements of the Member State of provision of               referred to in Article 12. Member States shall ensure that
services do not go beyond what is necessary in that                within their territory it is possible to effect the notifi-
respect.                                                           cations necessary for such steps.
2.     However, with regard to commitments within the              5.     The foregoing provisions shall not affect the right
meaning of Article 11 of this Directive, Member States             of Member States to punish irregularities committed
of provision of services shall not lay down provisions             within their territory.
requiring approval or notification of general and special
policy conditions, scales of premiums, forms and other
printed documents which the undertaking intends to use             6.     If the undertaking which has committed the irregu-
in its dealings with policy-holders.                               larity has an establishment or owns property in the
                                                                   Member State of provision of services, the supervisory
                                                                   authorities of the latter may, in accordance with national
                           Article 20                              law, apply the administrative penalties prescribed for
                                                                   such irregularity by way of enforcement against such
 1.    Any undertaking providing services shall submit to         .establishment or property.
the competent authorities of the Member State of
provision of services all documents requested of it for the
purposes of implementing this Article, in so far as under-         7.     Any step taken under paragraphs 2 to 6 involving
takings established there are also obliged to do so.               penalties or restrictions on the provision of services must
                                                                   be properly justified and communicated to the under-
                                                                   taking concerned. Even such measure shall be subject to
2.     If the competent authorities of a Member State              the right to apply to the courts in the Member State in
establish that an undertaking providing services within its        which the authorities adopted it.
territory does not comply with the legal provisions
applicable to it in that State, such authorities shall
request the undertaking concerned to put an end to the              8.    Where steps are taken under Article 24 of the First
irregular situation.                                               Directive, the competent authorities of the Member State
                                                                   of provision of services shall be informed accordingly by
                                                                   the authority which takes them and, where the steps are
 3.    If the undertaking in question fails to comply with         taken under paragraphs 1 and 3 of the said Article, take
 the request referred to in paragraph 2, the competent             whatever action is necessary to safeguard the interests of
 authorities of the Member State of provision of services           assured persons.
 shall inform the competent authorities of the Member
 State of establishment accordingly. The latter authorities
 shall take all appropriate steps to ensure that the under-         In the event of withdrawal of authorization under Article
 taking concerned puts an end to the irregular situation.           26 of the First Directive, the competent authorities of the
 The nature of those measures shall be communicated to              Member State of provision of services shall be informed
 the authorities of the Member State of provision of                accordingly and shall take appropriate steps to prevent
 services.                                                          the establishment concerned from continuing to conclude
                                                                    assurance contracts by way of freedom to provide
                                                                    services within the territory of that Member State.
The competent authorities of the Member State of
 provision of services may also apply to the competent
 authorities responsible for the head office of the                 9.     Every two years the Commission shall submit to the
 assurance undertaking if the services are being provided           Council a report summarizing the number and type of
 by agencies or branches.                                           cases in which, in each Member State, decisions refusing
                                                                    authorization have been communicated under Article 12
                                                                    or measures have been taken under paragraph 4.
 4.    If, despite the steps thus taken by the Member State         Member States shall cooperate with the Commission by
 of establishment, or because such steps prove inadequate           providing it with the information required for the report.
 or are lacking in the Member State in question, the
 undertaking persists in violating the legal provisions in
 force in the Member State of provision of services, the
                                                                                             Article 21
 latter Member State may, after informing the supervisory
 authorities of the Member State of establishment, take             In the event of an assurance undertaking being wound
 appropriate steps to prevent further irregularities,               up, commitments arising from contracts underwritten by
 including, in so far as it is strictly necessary, the              way of freedom to provide services shall be met in the
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same way as those arising from that undertaking's other                                    Article 24
assurante contracts, no distinction being made on
grounds of the nationality of assured persons or bene-           Every assurance contract concluded by way of freedom
ficiaries.                                                       to provide services shall be subject only to the indirect
                                                                 taxes and parafiscal charges on assurance premiums of
                                                                 the Member State of commitment within the meaning of
                                                                 Article 2 (e).
                           Article 22
 1.    Where an operation is offered by way of freedom
to provide of services, the policy-holder shall, before any      The law applicable to the contract pursuant to Article 4
commitment is entered into, be informed of the Member            shall not affect the tax arrangements applicable.
State in which the head office, agency or branch with
which the contract is to be concluded is established.
                                                                 Each Member State shall, subject to subsequent harmon-
Any document issued to the policy-holder shall contain           ization, apply to undertakings which provide services in
the information        referred    to in the      preceding      its territory its own national provisions concerning
subparagraph.                                                    measures to ensure the collection of indirect taxes and
                                                                 parafiscal charges due under the first subparagraph.
2.     The contract or other document granting cover,
together with the assurance proposal where it is binding
upon the proposer, shall specify the address of the estab-                                 TITLE IV
lishment which grants the cover and that of the head
office.                                                                                 Final provisions
                                                                                           Article 25
                                                                 The Commission and the competent authorities of the
                          Article 23                             Member States shall collaborate closely with a view to
 1.   Where the provision of services is conditional upon        facilitating the supervision of the kinds of insurance and
authorization by the Member State of provision of                the operations referred to in the First Directive within
services, the amount of the technical reserves, including        the Community.
mathematical reserves, and the rules on profit sharing
and on the surrender and paid-up values for the
contracts concerned shall be determined under the super-
                                                                 Each Member State shall inform the Commission of any
vision of that Member State in accordance with the rules
                                                                 major difficulties to which application of this Directive
it has laid down or, failing such rules, in accordance
                                                                 gives rise inter alia to a Member State becoming aware
with established practice in that Member State. The
                                                                 of an abnormal transfer of business referred to in the
covering of those reserves by equivalent and matching
                                                                 First Directive to the detriment of undertakings estab-
assets, the location of those assets and the application of
                                                                 lished in its territory and to the advantage of agencies
the rules on profit sharing and on surrender and paid-up
                                                                 and branches located just beyond its borders.
values shall be under the supervision of that Member
State in accordance with its rules or practice.
                                                                 The Commission and the competent authorities of the
2.     In all other cases, those various operations shall be     Member States concerned shall examine such difficulties
under the supervision of the Member State of estab-              as quickly as possible in order to find an appropriate
lishment, in accordance with its rules or practice.              solution.
3.    The Member State of establishment shall ensure
                                                                 Where necessary, the Commission shall submit appro-
that the reserves relating to all the contracts which the
                                                                 priate proposals to the Council.
undertaking concludes through the establishment
concerned are sufficient and covered by equivalent and
matching assets.
                                                                                           Article 26
4.    In the circumstances referred to in paragraph 1, the       The Commission shall forward to the Council and the
Member State of establishment and the Member State of            European Parliament regular reports, the first on . . ., on
provision of services shall exchance any information             the development of the market in assurance and oper-
necessary for carrying out their respective duties under         ations transacted under conditions of freedom to provide
paragraphs 1 and 3.                                              services.
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                        Article 27                                                    Article 28
Member States shall amend their national provisions to        Upon notification of this Directive, Member States shall
comply with this Directive within 18 months of the date       ensure that the texts of the main laws, regulations or
of its notification and shall forthwith inform the            administrative provisions which they adopt in the field
Commission thereof.                                           covered by this Directive are communicated to the
                                                              Commission.
The provisions amended in accordance with this Article                                Article 29
shall be applied within 24 months of the date of notifi-
cation of this Directive.                                     This Directive is addressed to the Member States.