CELEX: 51979PC0355
Language: en
Date: 1979-07-05
Title: PROPOSAL FOR A COUNCIL DIRECTIVE ON THE COORDINATION OF LAWS, REGULATIONS AND ADMINISTRATIVE PROVISIONS RELATING TO INSURANCE CONTRACTS

N o C 190/2                            Official Journal of the European Communities                                   28. 7. 79
                                                             II
                                                     (Preparatory Acts)
                                               COMMISSION
                 Proposal for a Council Directive on the coordination of laws, regulations and
                                 administrative provisions relating to insurance contracts
                              (Submitted by the Commission to the Council on 10 July 1979)
THE COUNCIL OF T H E EUROPEAN                                     Whereas, however, pending subsequent coordination
COMMUNITIES,                                                      of national rules governing insurance contracts, that
                                                                  Directive maintained in respect of other risks the
Having regard to the T r e a t y establishing the                 principle of the application of the law in force in the
E u r o p e a n Economic Community, and in particular             State in which the risk is situated; whereas such
Articles 57 (2) and 66 thereof,                                   coordination, by establishing a balance between the
                                                                  interests of the insurer on the one hand and the
                                                                  protection of the policyholder and the insured person
Having regard to the proposal f r o m the Commission,
                                                                  on the other, is likely to enable f r e e d o m of choice to
                                                                  be extended and thus to facilitate the exercise of
Having regard to the opinion of the European Par-                 freedom to provide services;
liament,
Having regard to the opinion of the Economic and                  Whereas it was considered advisable to exclude f r o m
Social Committee,                                                 the scope of the Directive, marine, aviation and
                                                                  transport insurance because of their widely inter-
Whereas, pursuant to the Treaty, any discrimination               national character and the freedom traditionally
in relation to the provision of services which is based           allowed to the parties in concluding such contracts;
on the fact that an undertaking is not established in             whereas the credit and suretyship insurance classes
the M e m b e r State in which the service is provided has        display peculiarities which, pending subsequent coordi-
been prohibited since the end of the transitional                 nation, justify not making them subject to the
period; whereas this prohibition applies to services              provisions of this Directive as they stand;
provided f r o m any establishment in the Community,
whether it is the head office of an undertaking or an
                                                                  Whereas a m o n g the fundamental problems posed by
agency or branch;
                                                                  legislation    on     insurance    contracts       are    the
                                                                  consequences resulting firstly f r o m the conduct of the
Whereas the second Council Directive                ./EEC         policyholder at the time of the conclusion and in the
of . . . on the coordination of laws, regulations and             course of the contract concerning the declaration of
administrative provisions relating to direct insurance            the risk and of the claim, and secondly his attitude
other than life assurance and laying down provisions              with regard to the measures to be taken in the event
to facilitate the effective exercise of freedom to                of a claim;
provide, services, granted the parties freedom to
choose the law applicable to the contract, firstly in             Whereas it is also necessary to regulate certain
the case of risks classified as transport, primarily on           general questions relating in particular to the
account of their frequently international character,              existence of cover depending on the payment of the
and secondly in the case of certain risks which are               premium, the duration of the contract, and the
defined by precise criteria in respect of which there is          position    of    insured    persons      who      are    not
less need of protection for insured persons;                      policyholders;
 ---pagebreak--- 28. 7. 79                            Official Journal of the E u r o p e a n Communities                               N o C 190/3
Whereas, as regards the problems regulated in this                   2.      Pending the issue of such a document, the
Directive, M e m b e r States may be authorized to adopt             policyholder shall be entitled to receive, at the earliest
different solutions only where this is expressly                     opportunity, a d o c u m e n t which attests to the
provided for in the text of the Directive; whereas any               existence of an insurance contract and contains at
other approach would call into question the objectives               least the information referred to in paragraph 1 (a),
of the Directive; whereas, however, there is nothing                 (b) and (c).
to prevent the parties f r o m derogating f r o m the
provisions adopted pursuant to the Directive,                        3.      If, after the contract has been concluded, any
provided      that    such      derogations     favour     the       change occurs that affects the information referred to
policyholder, insured person or third party.                         under paragraph 1 (a) to (f), the insurer shall furnish
                                                                     the policyholder with a document notifying such
                                                                     change.
                                                                     4.      If provisional cover is provided, the policyholder
HAS ADOPTED THIS DIRECTIVE:                                          shall receive a document which certifies that such
                                                                     cover has in fact been provided and which contains at
                                                                     least the information referred to in paragraph 1 (a),
                            Article 1
                                                                     (b), (c) and (f).
T h e object of this Directive is to coordinate the
                                                                     5.      T h e documents referred to in              the   above
fundamental laws, regulations and administrative
                                                                     paragraphs have only a probative value.
provisions governing insurance contracts relating to
one of the classes contained in point A of the Annex
to Directive 7 3 / 2 3 9 / E E C of 24 July 1973 on the              6.      T h e contract shall be drafted in the language of
coordination of laws, regulations and administrative                 the M e m b e r State whose law is applicable.
provisions relating to the taking-up and pursuit of the              However, the policyholder shall be entitled to
business of direct insurance other than life assurance               stipulate as a condition precedent to the conclusion of
('), with the exception of the classes contained in                  the contract that all documents relating to the
points 4 (railway rolling stock), 5 (aircraft), 6 (ships             conclusion, a m e n d m e n t and p e r f o r m a n c e of the
(sea, lake and river and canal vessels)), 7 (goods in                insurance contract be translated into the language of
transit), 11 (aircraft liability), 12 (liability for ships           his habitual residence, provided such language is an
(sea, lake and river and canal vessels)), 14 (credit)                official language of the Community.
and 15 (suretyship).
                                                                     7.      Notwithstanding the provisions of this Article,
                                                                     the laws of the M e m b e r States may authorize a
                                                                     simplified form for insurance contracts concluded f o r
                            Article 2                                 a short period and for bearer policies.
 1.     Every insurance contract shall give rise to the
 issue to the policyholder of a d o c u m e n t containing at
 least the following information:
                                                                                                  Article 3
 (a) the name and address or head office of the
      contracting parties;                                            1.      W h e n concluding the contract, the policyholder
                                                                      shall declare to the insurer any circumstances of
 (b) the subject matter of the insurance               and    a
                                                                      which he is aware which may influence the insurer's
      description of the risks covered;
                                                                      assessment       or     acceptance    of  the       risk. T h e
 (c) the amount insured or the method of calculating                  policyholder shall not be obliged to declare to the
      it;                                                             insurer circumstances which are already k n o w n to the
                                                                      latter or which are c o m m o n knowledge. Any
 (d) the amount of the premium or contribution or the                 circumstance in respect of which the insurer has
      method of calculating it;                                       asked specific questions in writing shall, in the
 (e) the dates on which premiums or contributions fall                absence of proof to the contrary, be regarded as
      due;                                                            influencing the assessment and acceptance of the risk.
 (f) the duration of the contract and the times at                    2. (a) If circumstances which were u n k n o w n to both
      which cover commences and expires and, where it                           parties w h e n the contract was concluded come
      applies, the time of automatic renewal.                                   to light subsequently, or if the policyholder has
                                                                                failed to fulfil the obligation referred to in
                                                                                paragraph 1, the insurer shall be entitled,
 (') OJ No L 228, 16. 8. 1973, p. 3.                                            within a period of two months f r o m the date
 ---pagebreak--- N o C 190/4                                  Official Journal of the European Communities                                28. 7. 79
           on which he becomes aware of the fact, to                  4.     If the policyholder has failed to fulfil the
           propose an a m e n d m e n t to the contract.              obligation referred to in paragraph 1 with the
                                                                      intention of deceiving the insurer, the latter may
    (b)      (i) T h e policyholder shall be entitled to a
                                                                      terminate the contract.
                 period of 15 days f r o m the date on which
                  he    receives      the   proposal    for   an
                  amendment in which to accept or reject it.          (a) T h e insurer shall take such action within two
                 If the policyholder rejects the proposal or               months f r o m the date on which he becomes
                 fails to reply within the above time limit,               aware of such facts;
                 the insurer may terminate the contract
                 within a period of eight days by giving 15           (b) by way of damages, premiums paid shall be
                 days' notice.                                             retained by the insurer w h o shall be entitled to
                                                                           the payment of all premiums d u e ;
            (ii) If the contract is terminated, the insurer
                 shall r e f u n d to the policyholder the pro-       (c) the insurer shall not be liable in respect of any
                 portion of the premium of the period for                  claim.
                 which cover is not provided.
           (iii) If a claim arises before the contract is
                                                                      5.     In the cases referred to in paragraphs 3 and 4,
                 amended or before termination of the
                                                                      the burden of proof of fraudulent or improper
                 contract has taken effect, the insurer shall
                                                                      conduct on the part of the policyholder shall rest on
                 provide the agreed cover.
                                                                      the insurer.
3.      If the policyholder has failed to fulfil the
obligation referred to in paragraph 1 and may be
considered to have acted improperly, the insurer may                                             Article 4
terminate the contract or propose an amendment
to it.                                                                1.     From the time w h e n the contract is concluded,
                                                                      the policyholder shall declare to the insurer any new,
                                                                      circumstances or changes in circumstance of which
(a) T h e insurer shall choose either to terminate the               the insurer has requested notification in the contract.
     contract or to propose an amendment to it within                 Such declaration shall be made not later than the time
     two months f r o m the date on which he becomes                 when the risk increases where this is attributable to an
     aware of such facts. Termination shall take effect               intentional act of the policyholder; in all other cases,
      15 days after the date on which the policyholder                it must be made immediately the policyholder
     is notified thereof at his last k n o w n address.               becomes aware of the increase.
     If the insurer has proposed an amendment to the
     contract, the policyholder shall be entitled to                  2.    T h e insurer may, within two months of the date
     accept or reject it within 15 days f r o m the date              on which he was notified of the increase of the risk,
     on which he receives the proposal for an                         propose an a m e n d m e n t to the contract in accordance
     amendment. If the policyholder refuses the                      with the procedure laid d o w n in Article 3 (2) (b).
     proposal or fails to reply, the insurer may
     terminate the contract within eight days by giving
      15 days' notice.                                                3.     If the policyholder has failed to fulfil the
                                                                      obligation referred to in paragraph 1, such failure to
                                                                      give notice shall not give rise to any sanction where it
(b) If the contract is terminated the insurer shall                   relates to a new circumstance or change in circum-
     r e f u n d to the policyholder the proportion of the
                                                                     stances which is not liable to appreciably and
     premium in respect of the period for which cover
                                                                     permanently increase the risk and lead to an increase
     is not provided.
                                                                     in the premium.
(c) If a claim arises before the contract is amended or
     before termination of the contract has taken                    4.     If the policyholder has failed to fulfil the
     effect, the insurer shall be liable to provide only             obligation referred to in paragraph 1, the insurer
     such cover as is in accordance with the ratio                   may, within t w o months of the date on which he
     between the premium paid and the premium that                   becomes aware of such fact, propose an a m e n d m e n t
     the policyholder should have paid if he had                     to the contract in accordance with the procedure laid
     declared the risk correctly.                                    down in Article 3 (2) (b).
 ---pagebreak--- 28. 7. 79                           Official Journal of the European Communities                                N o C 190/5
5.       If the policyholder has failed to fulfil the           15 days has elapsed f r o m the date on which the
obligation referred to in paragraph 1 and may be                policyholder is notified, in writing and after the date
considered to have acted improperly, Article 3 (3)              on which payment is due, of the penalty.
shall apply.
                                                                This provision shall not apply to any failure to pay
6.       If the policyholder has failed to fulfil the           the first premium or the single premium of an annual
obligation referred to in paragraph 1 with the                  contract where the contract or the law provides that
intention of deceiving the insurer, the latter may              commencement of cover shall be conditional upon
terminate the contract.                                         payment of such premium.
(a) T h e insurer shall take such action within two
       months f r o m the date on which he becomes
       aware of such fact;
                                                                                          Article 8
(b) by way of damages, any premiums paid shall be
       retained by the insurer w h o shall be entitled to
                                                                1.    If a claim arises, the policyholder shall take all
       the payment of all premiums due;
                                                                reasonable steps to avoid or reduce the consequences.
(c) the insurer shall not be liable in respect of any           In particular, instructions f r o m the insurer or
       claim arising after the increase of the risk.            compliance with specific provisions on this point
                                                                contained in the contract shall be considered
7.       In the cases referred to in paragraphs 5 and 6,        reasonable.
the burden of proof of fraudulent or improper
conduct on the part of the policyholder shall rest on           2.    Any costs incurred by the policyholder in per-
the insurer.                                                    forming the obligation referred to in paragraph 1
                                                                shall be borne by the insurer.
                           Article 5
                                                                3.    If the insurer is required, u n d e r the contract, to
                                                                pay in respect of only part of the loss, he shall be
Any unjustified payment made pursuant to Articles 3             obliged to r e f u n d only a proportion of the costs
and 4 shall be refunded.                                        referred to in the preceding paragraph unless the
                                                                policyholder acted on his instructions.
                            Article 6                           4.    If the policyholder fails to comply with the
                                                                provision laid d o w n in p a r a g r a p h 1, and may be
If, while the contract is in force, the risk has                considered to have acted improperly, the insurer may
diminished appreciably and permanently because of               claim compensation for the loss which he has
circumstances other than those covered by the                   suffered.
contract, and if this justifies a reduction in the
premium, the policyholder shall be entitled to                  5.    If the insurer proves that the policyholder's
terminate the contract without compensation if the              failure to fulfil the obligation laid d o w n in paragraph
insurer does not consent to reduce the premium pro-              1 was intended to cause him loss or to deceive him,
portionately.                                                   he shall be released f r o m all liability to m a k e payment
                                                                in respect of the claim.
T h e right to terminate the contract shall arise
immediately the insurer refuses to reduce the
premium or, where he fails to reply to the
policyholder's proposal, after a period of 15 days                                         Article 9
 following such proposal.
                                                                 1.   If a claim arises, the policyholder shall declare it
W h e r e the contract is terminated, the insurer shall
                                                                to the insurer in accordance with the conditions and
r e f u n d to the policyholder a proportion of the
                                                                time limits laid d o w n in the policy.
premium corresponding to the period for which cover
is not provided, less the administrative costs involved.
                                                                T h e time limit must be reasonable. Such time limit
                                                                may be fixed by national laws for certain classes of
                                                                insurance.
                            Article 7
                                                                2.    T h e insurer may require the policyholder to
Failure to pay a premium or part thereof shall be               provide all the necessary information and documents
penalized only after a period of grace of at least              on the circumstances and consequences of the claim.
 ---pagebreak---  N o C 190/6                              Official Journal of the E u r o p e a n Communities                       28. 7. 79
3.     If the policyholder fails to fulfil the obligations        (d) as regards sickness insurance and contracts drawn
referred to in paragraphs 1 and 2, and may be                            up on the same basis as life assurance contracts,
considered to have acted improperly, the insurer shall                   national law may, by way of derogation f r o m
be entitled to claim compensation for the loss he has                    subparagraphs (a) and (b), limit or prohibit termi-
suffered.                                                                nation of the contract by the insurer.
4.     If the insurer proves that the policyholder's
failure to fulfil one of the obligations laid d o w n in                                    Article 11
paragraphs 1 and 2 was intended to cause him loss or
to deceive him, he shall be released f r o m all liability
                                                                  If the insured person is not the policyholder, he shall
to make payment in respect of the claim.
                                                                  have the same rights against the insurer as Article
                                                                  8 (2) grants to the policyholder. H e shall be treated in
                                                                  the same way as the latter for the purposes of Articles
                                                                  3 (1), 4 (1), 8 (1) and 9 (1) and (2) as regards the
                             Article 10
                                                                  obligations referred to in those Articles where he has
                                                                  knowledge of the contract and is able to fulfil such
1.     T h e circumstances and conditions in which the            obligations.
contract may be denounced or terminated shall be set
out in the contract either directly or by reference to
the law.                                                                                    Article 12
                                                                  T h e parties to the contract may agree on more
2.     T h e contract may be terminated without notice
                                                                  favourable terms for the policyholder, insured person
only where one of the parties has failed to fulfil one
                                                                  or injured third party than are provided for in this
of its obligations with the intention of deceiving the
                                                                  Directive.
other. T h e policyholder may also be granted a right
under national law to terminate the contract without
notice in other circumstances.
                                                                                            Article 13
3.     W i t h o u t prejudice to the circumstances referred      M e m b e r States shall bring into force the measures
to in paragraph 2:                                                necessary to comply with this Directive within 18
                                                                  months of its notification. T h e y shall forthwith
(a) premature termination on the part of the                      inform the Commission thereof.
     policyholder or the insurer shall not take effect
     until a period of 15 days has elapsed f r o m the
     date on which notice of termination is given, as
     the case may be, to the insurer or to the                                              Article 14
     policyholder at his last k n o w n address;
                                                                  After notification of this Directive, M e m b e r States
(b) if provision is made in the contract for automatic            shall ensure that the Commission is informed, in
     renewal, such renewal shall take effect in each              sufficient time for it to submit its comments, of any
     case for a period not exceeding one year, unless             new laws, regulations or administrative provisions
     one of the parties gives notice of termination at            which they intend to adopt. T h e y shall also inform
     least two months before the date of expiry of the            the other M e m b e r States thereof.
     current insurance period;
(c) if the contract is for a period of more than three
    years, the policyholder may terminate it at the                                         Article l')
     end of the third year or of any subsequent year
    by giving at least two months' notice;                        This Directive is addressed to the M e m b e r States.