Internal market in insurance

The European Commission has adopted a communication which spells out its interpretation of the concepts of freedom to provide services and general good as applied to the insurance industry. It specifies the exact scope of the freedom to provide services and defines the legal framework within which a Member State may invoke the general good in order to regulate insurance business in itfs territory.

Financial Services Commissioner Frits Bolkestein commented "the Communication is meant to be a tool to help firms, consumers and national authorities achieve a better-functioning internal market in insurance" The Communication sets out the criteria determining the dividing line between business carried on by an insurance undertaking under conditions of freedom to provide services and business carried on through a branch, e.g. in the event of recourse to independent persons established in the host Member State. It analyses cross-border insurance business carried on via electronic commerce. And it defines the exact scope and terms of use of the notification procedures introduced by the Third Directive. Lastly, it maps out the conditions under which a Member State may invoke the general good to justify national rules (requiring, for example, prior notification of policy conditions, certain rating systems or compulsory excesses in insurance contracts).