COUNCIL DIRECTIVE 92/96/EEC of 10 November 1992 on the coordination of laws, regulations and administrative provisions relating to direct life assurance and amending Directives 79/267/EEC and 90/619/EEC (third life assurance Directive)
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the European Economic Community, and in particular Articles 57 (2) and 66 thereof,
Having regard to the proposal from the Commission (1),
In cooperation with the European Parliament (2),
Having regard to the opinion of the Economic and Social Committee (3),
1. Whereas it is necessary to complete the internal market in direct life assurance, from the point of view both of the right of establishment and of the freedom to provide services, to make it easier for assurance undertakings with head offices in the Community to cover commitments situated within the Community;
2. Whereas the Second Council Directive 90/619/EEC of 8 November 1990 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 (4) has already contributed substantially to the achievement of the internal market in direct life assurance by granting policy-holders who, by virtue of the fact that they take the initiative in entering into a commitment with an assurance undertaking in another Member State, do not require special protection in the Member State of the commitment complete freedom to avail themselves of the widest possible life assurance market;
3. Whereas Directive 90/619/EEC therefore represents an important stage in the merging of national markets into an integrated market and that stage must be supplemented by other Community instruments with a view to enabling all policy-holders, irrespective of whether they themselves take the initiative, to have recourse to any assurer with a head office in the Community who carries on business there, under the right of establishment or the freedom to provide services, while guaranteeing them adequate protection;
4. Whereas this Directive forms part of the body of Community legislation already enacted which includes the First Council Directive 79/267/EEC of 5 March 1979 on the coordination of laws, regulations and administrative provisions relating to the taking up and pursuit of the business of direct life assurance (5) and Council Directive 91/674/EEC of 19 December 1991 on the annual accounts and consolidated accounts of insurance undertakings (6);
5. Whereas the approach adopted consists in bringing about such harmonization as is essential, necessary and sufficient to achieve the mutual recognition of authorizations and prudential control systems, thereby making it possible to grant a single authorization valid throughout the Community and apply the principle of supervision by the home Member State;
6. Whereas, as a result, the taking up and the pursuit of the business of assurance are henceforth to be subject to the grant of a single official authorization issued by the competent authorities of the Member State in which an assurance undertaking has its head office; whereas such authorization enables an undertaking to carry on business throughout the Community, under the right of establishment or the freedom to provide services; whereas the Member State of the branch or of the provision of services may no longer require assurance undertakings which wish to carry on assurance business there and which have already been authorized in their home Member State to seek fresh authorization; whereas Directives 79/267/EEC and 90/619/EEC should therefore be amended along those lines;
7. Whereas the competent authorities of home Member States will henceforth be responsible for monitoring the financial health of assurance undertakings, including their state of solvency, the establishment of adequate technical provisions and the covering of those provisions by matching assets;
8. Whereas the performance of the operations referred to in Article 1 (2) (c) of Directive 79/267/EEC cannot under any circumstances affect the powers conferred on the respective authorities with regard to the entities holding the assets with which that provision is concerned;
9. Whereas certain provisions of this Directive define minimum standards; whereas a home Member State may lay down stricter rules for assurance undertakings authorized by its own competent authorities;
10. Whereas the competent authorities of the Member States must have at their disposal such means of supervision as are necessary to ensure the orderly pursuit of business by assurance undertakings throughout the Community whether carried on under the right of establishment or the freedom to provide services; whereas, in particular, they must be able to introduce appropriate safeguards or impose sanctions aimed at preventing irregularities and infringements of the provisions on assurance supervision;
11. Whereas the provisions on transfers of portfolios must be adapted to bring them into line with the single legal authorization system introduced by this Directive;
12. Whereas provision should be made for the specialization rule laid down by Directive 79/267/EEC to be relaxed so that those Member States which so wish are able to grant the same undertaking authorizations for the classes referred to in the Annex to Directive 79/267/EEC and the insurance business coming under classes 1 and 2 in the Annex to Directive 73/239/EEC (7); whereas that possibility may, however, be subject to certain conditions as regards compliance with accounting rules and rules on winding-up;
13. Whereas it is necessary from the point of view of the protection of lives assured that every assurance undertaking should establish adequate technical provisions; whereas the calculation of such provisions is based for the most part on actuarial principles; whereas those principles should be coordinated in order to facilitate mutual recognition of the prudential rules applicable in the various Member States;
14. Whereas it is desirable, in the interests of prudence, to establish a minimum of coordination of rules limiting the rate of interest used in calculating the technical provisions; whereas, for the purposes of such limitation, since existing methods are all equally correct, prudential and equivalent, it seems appropriate to leave Member States a free choice as to the method to be used;
15. Whereas the rules governing the spread, localization and matching of the assets used to cover technical provisions must be coordinated in order to facilitate the mutual recognition of Member States' rules; whereas that coordination must take account of the measures on the liberalization of capital movements provided for in Council Directive 88/361/EEC of 24 June 1988 for the implementation of Article 67 of the Treaty (8) and the progress made by the Community towards economic and monetary union;
16. Whereas, however, the home Member State may not require assurance undertakings to invest the assets covering their technical provisions in particular categories of assets, as such a requirement would be incompatible with the measures on the liberalization of capital movements provided for in Directive 88/361/EEC;
17. Whereas, pending the adoption of a directive on investment services harmonizing inter alia the definition of the concept of a regulated market, for the purposes of this Directive and without prejudice to such future harmonization that concept must be defined provisionally, to be replaced by the definition harmonized at Community level, which will give the home Member State of the market the responsibilities for these matters which this Directive transitionally gives to the assurance undertaking's home Member State;
18. Whereas the list of items of which the solvency margin required by Directive 79/267/EEC may be made up must be supplemented to take account of new financial instruments and of the facilities granted to other financial institutions for the constitution of their own funds;
19. Whereas the harmonization of assurance contract law is not a prior condition for the achievement of the internal market in assurance; whereas, therefore, the oppportunity afforded to the Member States of imposing the application of their law to assurance contracts covering commitments within their territories is likely to provide adequate safeguards for policy-holders;
20. Whereas within the framework of an internal market it is in the policy-holder's interest that he should have access to the widest possible range of assurance products available in the Community so that he can choose that which is best suited to his needs; whereas it is for the Member State of the commitment to ensure that there is nothing to prevent the marketing within its territory of all the assurance products offered for sale in the Community as long as they do not conflict with the legal provisions protecting the general good in force in the Member State of the commitment and in so far as the general good is not safeguarded by the rules of the home Member State, provided that such provisions must be applied without discrimination to all undertakings operating in that Member State and be objectively necessary and in proportion to the objective pursued;
21. Whereas the Member States must be able to ensure that the assurance products and contract documents used, under the right of establishment or the freedom to provide services, to cover commitments within their territories comply with such specific legal provisions protecting the general good as are applicable; whereas the systems of supervision to be employed must meet the requirements of an internal market but their employment may not constitute a prior condition for carrying on assurance business; whereas, from this standpoint, systems for the prior approval of policy conditions do not appear to be justified; whereas it is therefore necessary to provide for other systems better suited to the requirements of an internal market which enable every Member State to guarantee policy-holders adequate protection;
22. Whereas, for the purposes of implementing actuarial principles in conformity with this Directive, the home Member State may nevertheless require systematic notification of the technical bases used for calculating scales of premiums and technical provisions, with such notification of technical bases excluding notification of the general and special policy conditions and the undertaking's commercial rates;
23. Whereas in a single assurance market the consumer will have a wider and more varied choice of contracts; whereas, if he is to profit fully from this diversity and from increased competition, he must be provided with whatever information is necessary to enable him to choose the contract best suited to his needs; whereas this information requirement is all the more important as the duration of commitments can be very long; whereas the minimum provisions must therefore be coordinated in order for the consumer to receive clear and accurate information on the essential characteristics of the products proposed to him as well as the particulars of the bodies to which any complaints of policy-holders, assured persons or beneficiaries of contracts may be addressed;
24. Whereas publicity for assurance products is an essential means of enabling assurance business to be carried on effectively within the Community; whereas it is necessary to leave open to assurance undertakings the use of all normal means of advertising in the Member State of the branch or of provision of services; whereas Member States may nevertheless require compliance with their national rules on the form and content of advertising, whether laid down pursuant to Community legislation on advertising or adopted by Member States for reasons of the general good;
25. Whereas, within the framework of the internal market, no Member State may continue to prohibit the simultaneous carrying on of assurance business within its territory under the right of establishment and the freedom to provide services; whereas the option granted to Member States in this connection by Directive 90/619/EEC should therefore be abolished;
26. Whereas provision should be made for a system of penalties to be imposed when, in the Member State in which the commitment is entered into, an assurance undertaking does not comply with those provisions protecting the general good that are applicable to it;
27. Whereas some Member States do not subject assurance transactions to any form of indirect taxation, while the majority apply special taxes and other forms of contribution; whereas the structures and rates of such taxes and contributions vary considerably between the Member States in which they are applied; whereas it is desirable to prevent existing differences leading to distortions of competition in assurance services between Member States; whereas, pending subsequent harmonization, application of the tax systems and other forms of contribution provided for by the Member States in which commitments entered into are likely to remedy that problem and it is for the Member States to make arrangements to ensure that such taxes and contributions are collected;
28. Whereas it is important to introduce Community coordination on the winding-up of assurance undertakings; whereas it is henceforth essential to provide, in the event of the winding-up of an assurance undertaking, that the system of protection in place in each Member State must guarantee equality of treatment for all assurance creditors, irrespective of nationality and of the method of entering into the commitment;
29. Whereas technical adjustments to the detailed rules laid down in this Directive may be necessary from time to time to take account of the future development of the assurance industry; whereas the Commission will make such adjustments as and when necessary, after consulting the Insurance Committee set up by Directive 91/675/EEC (9), in the exercise of the implementing powers conferred on it by the Treaty;
30. Whereas it is necessary to adopt specific provisions intended to ensure smooth transition from the legal arrangements in existence when this Directive becomes applicable to those that it introduces; whereas care should be taken in such provisions not to place an additional workload on Member States' competent authorities;
31. Whereas, pursuant to Article 8c of the Treaty, account should be taken of the extent of the effort which must be made by certain economies at different stages of development; whereas, therefore, transitional arrangements should be adopted for the gradual application of this Directive by certain Member States,
HAS ADOPTED THIS DIRECTIVE: