CELEX: 51987PC0643
Language: en
Date: 1987-11-26
Title: Proposal for a second Coordination Directive on Non-Life Insurance (freedom of services) (Communication from the Commission)

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (87) 643
Vol. 1987/0304
 ---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) modifié en dernier
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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
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Regulation (EU) 2015/496 of 17 March 2015 (OJ L 79, 27.3.2015, p. 1), this file is open to the
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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), zuletzt geändert durch die
Verordnung (EU) Nr. 2015/496 vom 17. März 2015 (ABI. L 79 vom 25.3.2015, S. 1), ist dieser Akt
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2015/444 vom      13.   März 2015     über die   Sicherheitsvorschriften für den Schutz von  EU-
Verschlusssachen als herabgestuft angesehen.
 ---pagebreak---     COMMISSION OF THE EUROPEAN COMMUNITIES
                                                        COM ( 87 ) 643 final
                                           Brussels , 26 November 1987
I .
I
I
I
                                 Proposal
             for a second Coordination Directive on
             Non-Life Insurance ( freedom of services )
                  ( Communication from the Commission )
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                             (iohü feV' "
 ---pagebreak---                                                                         Сом счг
              DRAFT COMMUNICATION FROM THE COMMISSION TO THE COUNCIL
The proposal for a Directive to facilitate the exercise of freedom of services
in non-life    insurance which  the Council   is now invited to consider on the
basis of the Presidency compromise is of crucial importance for the internal
market . It has been the subject of innumerable meetings since it was first put
forward in 1975 and has been before Ministers on many occasions , most recently
in December 1984 . Sharp differences of approach on many major issues had
hitherto made it impossible to reach agreement , and the work was interrupted
for two years pending the outcome of cases before the Court of Justice .
The situation has now changed radically as a result of the judgements
delivered by the Court in December 1986 .      Throughout this year the Economic
Affairs Group has been pursuing work on the text of the Directive in the light
of these    judgements .   The results of   this work   are to   be found    in the
Presidency compromise .
The Commission 's position is based upon the agreed political objective of
achieving the internal market by 1992 and takes account of the reasoning of
the Court . Freedom of establishment in the insurance sector has already been
given practical effect by the 1973 and 1979 Directives .         To create a true
single market , however , we need the decisive step of freedom of services , with
home country control ,    as set out in the White Paper .    This is essential to
allow industrial and commercial purchasers of insurance to have access to the
full range of insurance products at the best price ,    which is only possible in
a Community-wide market .
The judgements bring clear progress .   In the first place , the Court ruled that
host States could not require insurance undertakings wishing to cover risxs
situated in their territory to be established there .     Beyond that ,   the Cou'-t
drew an important distinction between those purchasers of insurance who can ce
 ---pagebreak---                                                                         СаМ Сцг
              DRAFT COMMUNICATION FROM THE COMMISSION TO THE COUNCIL
The proposal for a Directive to facilitate the exercise of freedom of services
in non-life    insurance which  the Council   is now invited to consider on the
basis of the Presidency compromise is of crucial importance for the internal
market . It has been the subject of innumerable meetings since it was first put
forward in 1975 and has been before Ministers on many occasions , most recently
in December    1984 .  Sharp differences of approach on many major issues had
hitherto made it impossible to reach agreement , and the work was interrupted
for two years pending the outcome of cases before the Court of Justice .
The situation has now changed radically as a result of the judgements
delivered by the Court in December 1986 .      Throughout this year the Economic
Affairs Group has been pursuing work on the text of the Directive in the light
of these    judgements .   The results of   this work   are to   be found    in the
Presidency compromise .
The Commission 's position is based upon the agreed political objective of
achieving the internal market by 1992 and takes account of the reasoning of
the Court . Freedom of establishment in the insurance sector has already been
given practical effect by the 1973 and 1979 Directives . To create a true
single market , however , we need the decisive step of freedom of services , with
home country control ,    as set out in the White Paper .    This is essential to
allow industrial and commercial purchasers of insurance to have access to the
full range of insurance products at the best price ,    which is only possible in
a Community-wide market .
The judgements bring clear progress .   In the first place , the Court ruled that
host States could not require insurance undertakings wishing to cover ris<s
situated in their territory to be established there .     Beyond that ,   the Cowt
drew an important distinction between those purchasers of insurance who can ce
 ---pagebreak---                                                                         СаМ счг
              DRAFT COMMUNICATION FROM THE COMMISSION TO THE COUNCIL
The proposal for a Directive to facilitate the exercise of freedom of services
in non-life    insurance which  the Council   is now invited to consider on the
basis of the Presidency compromise is of crucial importance for the internal
market . It has been the subject of innumerable meetings since it was first put
forward in 1975 and has been before Ministers on many occasions , most recently
in December 1984 . Sharp differences of approach on many major issues had
hitherto made it impossible to reach agreement , and the work was interrupted
for two years pending the outcome of cases before the Court of Justice .
The situation has now changed radically as a result of the judgements
delivered by the Court in December 1986 .      Throughout this year the Economic
Affairs Group has been pursuing work on the text of the Directive in the light
of these    judgements .   The results of   this work   are to   be found    in the
Presidency compromise .
The Commission 's position is based upon the agreed political objective of
achieving the internal market by 1992 and takes account of the reasoning of
the Court .   Freedom of establishment in the insurance sector has already been
given practical effect by the 1973 and 1979 Directives . To create a true
single market , however , we need the decisive step of freedom of services , with
home country control ,    as set out in the White Paper .    This is essential to
allow industrial and commercial purchasers of insurance to have access to the
full range of insurance products at the best price ,    which is only possible in
a Community-wide market .
The judgements bring clear progress . In the first place , the Court ruled that
host States could not require insurance undertakings wishing to cover ris<s
situated in their territory to be established there .     Beyond that ,   the Cou^t
drew an important distinction between those purchasers of insurance who can ce
 ---pagebreak---                                                                         Сам (, цг
              DRAFT COMMUNICATION FROM THE COMMISSION TO THE COUNCIL
The proposal for a Directive to facilitate the exercise of freedom of services
in non-life    insurance which  the Council   is now invited to consider on the
basis of the Presidency compromise is of crucial importance for the internal
market . It has been the subject of innumerable meetings since it was first put
forward in 1975 and has been before Ministers on many occasions , most recently
in December 1984 . Sharp differences of approach on many major issues had
hitherto made it impossible to reach agreement , and the work was interrupted
for two years pending the outcome of cases before the Court of Justice .
The situation has now changed radically as a result of the judgements
delivered by the Court in December 1986 .      Throughout this year the Economic
Affairs Group has been pursuing work on the text of the Directive in the light
of these    judgements .   The results of   this work   are to   be found    in the
Presidency compromise .
The Commission 's position is based upon the agreed political objective of
achieving the internal market by 1992 and takes account of the reasoning of
the Court . Freedom of establishment in the insurance sector has already been
given practical effect by the 1973 and 1979 Directives . To create a true
single market , however , we need the decisive step of freedom of services , with
home country control ,    as set out in the White Paper .    This is essential to
allow industrial and commercial purchasers of insurance to have access to the
full range of insurance products at the best price ,    which is only possible in
a Community-wide market .
The judgements bring clear progress .   In the first place , the Court ruled that
host States could not require insurance undertakings wishing to cover ris<s
situated in their territory to be established there .     Beyond that ,   the Cou-'t
drew an important distinction between those purchasers of insurance who can ce
 ---pagebreak---                                          - 2 -
 regarded as capable of protecting their own interests and deciding from whc*r         >
they should buy insurance (" larger risks ") and those consumers for                 --
national protection by the host State is still justified in the present states       ^
of Community law (" mass risks "). This distinction is drawn at point 49 in Case      -
205 / 84 , where it is said : " There may be cases where , because of the nature ok
the risk insured and of the party seeking insurance ,          there is no need to.
protect the latter by the application of the mandatory rules of his national,
 law ". This passage opens up the possibility of the rapid achievement            a-
common market with home country control for those buyers of insurance judged            '
capable of    looking after themselves .      It applies particularly to non-tife
insurance purchased by business enterprises .
For mass risks , however , the implication of the judgements is that host States
may continue to apply their national regulations on contract conditions ( the
small print which hardly anybody reads ) and technical reserves ( the amounts
invested so that claims can be met ).        Linked with this they may impose on
insurers a requirement to seek authorisation .       This host-State control is a
heavy regime which would leave freedom of services so unattractive to insurers
that it is likely to be little used .      This situation could only be changed by
major harmonisation .
The distinction drawn by the Court in paragraph 49 provides the basis for us
to create the Community-wide insurance market , with home country control ,
which European trade and industry want , whilst yet giving maximum protection
to the man in the street . The Presidency proposal , in its general approach ,
clearly recognises this . It accepts , as does the Commission , that the benefits
of a common market with home country control for mass risks must be postponed
to a second stage , because the provision of the necessary protection for
policyholders would require much further detailed harmonisation for which we
do not have time at present . But for larger risks it seeks to create a true
common market for larger risks which would be in operation by 1992 .
                                                                                          n
 ---pagebreak--- This approach calls first of all for a definition of those cases - the larger
risks - where the protection of the policyholder or insured party is not
paramount . This is the only test that should be applied . It is not a question
of opening up a particular percentage of the market . Representations made by
the European associations of those carrying on trade and industry and of those
exercising liberal professions show that quantitative criteria , if they must
be adopted at all , should be kept very low . People carrying on business are
capable of making business decisions .
The Presidency compromise would require industrial and commercial businesses
to satisfy two out of three criteria ( 250 employees , 12.8 million ECUS
turnover ,   6.2 million ECUS balance sheet total ) to enable them to be
classified as larger risks . There is a danger that this would exclude many
medium-sized businesses .  The Commission therefore considers that it would be
preferable to treat these criteria as simple alternatives . Even then , we think
that experience would show these thresholds to be so high that they would
exclude many small businesses having no need of protection .       The Directive
should therefore provide for the Commission to review the thresholds in the
light of experience and to modify them accordingly through the use of its
implementing powers .
The treatment accorded to those cases which come above the threshold must be
based entirely upon the principle of home country control .    This must not be
made conditional upon any other factors , such as a harmonisation of technical
reserves . This is consistent with the view of the Court , as clearly expressed
in the coinsurance judgements .
There is a further necessary condition if a genuine common market is to be
created for larger risks . This is that insurers having an establishment in a
Member State should be free to cover any given risk there either from that
establishment or from an establishment in another Member State .             Any
restrictions on this principle of " cumul " for larger risks are therefore
unacceptable .   They would destroy the common market .    Most of the larger
European insurance undertakings have establishments in most Member States .   If
they could not provide cross-frontier services into the States where they have
establishments , they could not provide cover under a single contract for
commercial and industrial concerns which have risks throughout the Community .
 ---pagebreak---                                         4
Yet such cover is desperately needed because it reduces the costs of Europeans
industry . There is a serious risk that it would be powerful insurance groups
from third countries , acting through a subsidiary company established in a
single Member State , that wouLd be best placed to provide sucn cover . We
cannot desire this result .
In short ,  we must create a genuine and complete common market for those cases
where the policyholder or insured person does not need the detailed protection
of his own national    legislation . It must   be clearly understood that the
Commission would be unable to accept any      text which did not   respect this
objective .