European Business Law, the fourth volume in our series, shows how the European authorities simultaneously abolish all restrictions on access to and exercise of economic activities and support the growth of domestic markets, through the harmonization the internal legislation or the enactment of genuinely unified regulations.

European Business Law

As for other Financial services (banking see No  11.14 et seq., or investment services No 11.19 et seq.), Directive No 2009/138 makes the taking up of insurance activities subject to prior authorization by the supervisory authorities of the home Member State (Art. 14), which is valid for the whole of the European Union and covers the right of establishment and the freedom to provide services (Art. …

Conditions governing authorization

As for other Financial services (banking see No  11.14 et seq., or investment services No 11.19 et seq.), Directive No 2009/138 makes the taking up of insurance activities subject to prior authorization by the supervisory authorities of the home Member State (Art. 14), which is valid for the whole of the European Union and covers the right of establishment and the freedom to provide services (Art. 15). The undertaking seeking authorization must adopt one of the legal forms set out in Annex III of the directive (Art. 17) and comply with the speciality principle , by virtue of which undertakings must limit their objects to the business of insurance and operations arising directly therefrom, to the exclusion of all other commercial business (Art. 18) . The head offices of insurance and reinsurance undertakings must be situated in the same Member State as their registered offices (Art. 20).

The insurance or reinsurance undertaking must provide the supervisory authorities with certain information before it can be granted authorization. It must provide its scheme of operations, which, inter alia, sets out the nature of the risks or commitments it proposes to cover; a forecast balance sheet; estimates of the future Solvency Capital Requirement; estimates of the future Minimum Capital Requirement; estimates of the financial resources intended to cover technical provisions, the Minimum Capital Requirement and the Solvency Capital Requirement (Art. 18 and 23). The undertaking must hold the eligible basic own funds to cover the absolute floor of the Minimum Capital Requirement of EUR 2.2 million for non-life insurance undertakings, EUR 3.2 million for life insurance or reinsurance undertakings (Art. 18(d), referring to Art. 129(1)(d)). It must also show evidence that it will be in a position to hold eligible own funds to cover the Solvency Capital Requirement, as provided for in Article 100 and the eligible basic own funds to cover the Minimum Capital Requirement, as provided for in Article 128 (Art. 18(e) and (f)). Lastly, it must show that it will be in a position to comply with the system of governance referred to in Chapter IV, Section 2 and, in regard to non-life insurance, to communicate the name and address of all claims representatives appointed in each Member State other than the Member State in which the authorization is sought for certain types of risk. 

Where close links exist between the insurance undertaking or reinsurance undertaking and other natural or legal persons, the supervisory authorities grant authorization only if those links do not prevent the effective exercise of their supervisory function (Art. 19). The supervisory authorities of the home Member State will not grant to an undertaking an authorization to take up the business of insurance or reinsurance before they have been informed of the identities of the shareholders or members, direct or indirect, whether natural or legal persons, who have qualifying holdings in that undertaking and of the amounts of those holdings. If they are not satisfied as to the qualifications of the shareholders or members, taking into account the need to ensure the sound and prudent management of an insurance or reinsurance undertaking, the competent authorities must refuse authorization (Art. 24).

On the other hand, Member States cannot require the prior approval or systematic notification of general and special policy conditions, of scales of premiums, of the technical bases, used in particular for calculating scales of premiums and technical provisions, or of forms and other printed documents which an undertaking intends to use in its dealings with policy holders or ceding or retro-ceding undertakings (Art. 21) and they cannot retain or introduce prior notification or approval of proposed increases in premium rates except as part of general price-control systems. The European Court of Justice thus held, in an application as to the interpretation of legislation since recast, that the rate-freezing rules of a Member State applicable to all contracts of insurance in respect of third-party liability arising from the use of motor vehicles in relation to risks situated within its territory, violates the principle of freedom to set premiums , contrary to a bonus-malus system which does not prevent the freedom to set the basic premium . Similarly, a Member State may not require insurance undertakings marketing a standard form insurance contract for the first time in its territory to systematically send the competent ministry an information sheet containing information on the general conditions of insurance policies . 

Any decision to refuse an authorization must state full reasons and be notified to the undertaking concerned and be subject to a right to apply to the courts where an authorization is refused (Art. 25).

See, prior to adoption of Directive No 2009/138, on the possibility - in spite of the specialty principle - for mutual undertakings to whose sole business is that of insurance to create a mutual benefit body which has legal personality and legal autonomy and engages in commercial business where the capital subscribed to that body by those undertakings does not exceed the value of their free assets and provided that, in each case, the undertaking's liability is limited to the value of its capital contribution: Case C-109/99 Association basco-béarnaise des opticiens indépendants [2000] ECR I-7247, LawLex200700001602JBJ.

The speciality principle does not preclude insurance undertakings holding shares in a company operating in an area other than insurance, Case C-241/97 Försäkringsaktiebolaget Skandia [1999] ECR I-1879, LawLex200900000893JBJ; Case C-109/99 Association basco-béarnaise des opticiens indépendants [2000] ECR I-7247, LawLex200700001602JBJ.

Case C-59/01 Commission v Italy [2003] ECR I-1759, LawLex200900001063JBJ . 

Case C-346/02 Commission v Luxembourg [2004] ECR I-7517, LawLex200900000417JBJ and Case C-347/02 Commission v France [2004] ECR I-7557, LawLex200900000430JBJ.

Case C-296/98 Commission v France [2000] ECR I-3025, LawLex200900001428JBJ.

European Business Law

133. Conditions governing authorization

Demandez un accès gratuit
au contenu exclusif Livv – juristes d’entreprise

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

133. Conditions governing authorization

Demandez un accès gratuit au contenu exclusif Livv – juristes d’entreprise

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

Demandez un accès gratuit
au contenu exclusif Livv – juristes d’entreprise