S.I. No. 359/1994 - European Communities (Non-Life Insurance) Framework Regulations, 1994

S.I. No. 359 of 1994.

EUROPEAN COMMUNITIES (NON-LIFE INSURANCE) FRAMEWORK REGULATIONS, 1994.

ARRANGEMENT OF REGULATIONS

PART I Citation and Commencement, Interpretation, Scope and Taking up the Business of Non-Life Insurance

Articles

1. Citation and commencement.

2. Interpretation.

3. Technical adjustments.

4. Scope.

5. Powers of Court.

6. Authorisations.

7. Conditions when applying for authorisations.

8. Notification of conditions and documents.

9. Identities of shareholders.

PART 2 Financial Supervision, Assignment of Policies, Technical Reserves Provisions, Solvency Margin, Valuation of Assets, Register of Assets, Discounting, Related Company, Failure to Comply with Technical Reserves Provisions, Withdrawal/Lapse of Authorisation

10. Financial supervision of insurance undertaking.

11. On the spot verification.

12. Assignment of policies.

13. Technical reserves provisions/solvency margin/valuation of assets/register of assets.

14. Discounting.

15. Transactions with a related company.

16. Failure to comply with technical reserves provisions.

17. Withdrawal/lapse of authorisation.

18. Provisions applying on withdrawal/lapse of authorisation.

19. Notification of reasons for revocation.

PART 3 Qualifying Holdings, Amendment to European Communities (Non-Life Insurance) (Amendment) Regulations, 1991, Obligation of Professional Secrecy/Exchanges of Confidential Information

20. Qualifying holdings.

21. Amendment to European Communities (non-life insurance) Amendment Regulations, 1991.

22. Obligations of professional secrecy/exchanges of confidential information.

PART 4 Choice of Law, General Good Requirements, Notification of Documents, Compulsory Insurance, Policyholder Disclosure

23. Law applicable to insurance contracts.

24. General good requirements.

25. Notification of documents/scales of premiums.

26. Compulsory insurance.

27. Policyholder disclosure rules.

PART 5 Right of Establishment, Freedom to Provide Services, Motor Insurance Business, General Conditions, Prevention of Irregularities

28. Provisions related to right of establishment of a Branch outside the State.

29. Amendment to Branch information.

30. Conditions for establishing a Branch in the State.

31. Amendment to Branch information.

32. Conditions for carrying on insurance business by way of services into another Member State.

33. Conditions for carrying on insurance business by way of services into the State.

34. Provisions related to third party motor liability insurance.

35. Amendment to services information.

36. General conditions related to services and branch insurance business.

37. Prevention of irregularities.

PART 6 Advertising, Winding-up, Statistical Requirements

38. Advertising.

39. Winding-up.

40. Statistical information.

41. Statistical requirements regarding services and branch insurance business.

PART 7 Guarantee Schemes, Fiscal Arrangements, Acquired Rights, Right of Appeal

42. Obligation to join guarantee schemes.

43. Fiscal arrangements.

44. Acquired rights.

45. Application of Regulations to branch under Article 44.

46. Right of appeal to Court.

PART 8 Provisions Related to Branches of Third Country Insurance Undertakings, Rules Applicable to the Assignment of Third Country Branch Policies, Rules Applicable to Health Insurance, Sections 93 and 94 of the Insurance Act, 1936 , Penalties, Fees

47. Third country branch provisions.

48. Application for authorisation.

49. Conditions of admission.

50. Technical reserves.

51. Solvency margin.

52. Guarantee Fund.

53. Annual returns.

54. Application of Articles 16 and 17.

55. Advantages under Article 26 of the First Directive/Application of Article 26 (2), (3) and (4).

56. Assignment of third country branch policies.

57. Health Insurance provisions.

58. Interpretation of Sections 93 and 94 of the Insurance Act, 1936.

59. Penalties.

60. Fees.

ANNEXES

Annex I	Defined classes of insurance.
Annex II	Solvency margin and guarantee fund.
Annex III	Valuation of assets.
Annex IV	Matching rules.

SCHEDULES

Schedule 1	Value of dependants.
(Part 1)	Supplementary amount.
(Part 2)	Further provisions related to the value of dependants.
Schedule 2 (Parts I to IV)	Assets to be taken into account only to a specified extent.

S.I. No. 359 of 1994.

EUROPEAN COMMUNITIES (NON-LIFE INSURANCE) FRAMEWORK REGULATIONS 1994.

I, CHARLIE McCREEVY, Minister for Enterprise and Employment, in exercise of the powers conferred on me by section 3 of the European Communities Act, 1972 (No. 27 of 1972), as amended by the European Communities (Amendment) Act, 1993 (No. 25 of 1993), and for the purpose of giving effect to Council Directive No. 73/239/EEC of 24 July, 1973, Council Directive No. 88/357/EEC of 22 June, 1988, Council Directive No. 90/618/EEC of 8 November, 1990, and Council Directive No. 92/49/EEC of 18 June, 1992, hereby make the following Regulations:

PART 1 *Citation and Commencement, Interpretation, Scope and Taking up the Business of Non-Life Insurance*

1 Citation and Commencement.

1.

1. (1) These Regulations may be cited as the European Communities (Non-Life Insurance) Framework Regulations, 1994, and shall come into operation on the 8th day of December, 1994. However, the provisions of these Regulations affecting the annual returns to be made to the Minister in accordance with Article 13 (11) of these Regulations shall apply in respect of every financial year beginning on or after the 1st day of January, 1995.

• (2) These Regulations and the Insurance Acts, 1909 to 1990, Regulations relating to insurance business made under those Acts and Regulations made under the European Communities Act, 1972 , may be cited together as the Insurance Acts and Regulations and shall be construed together as one.

2 Interpretation.

2.

2. (1) In these Regulations, except where the context otherwise requires,—

"authorisation" means—

( a ) authorisation granted by the Minister under these Regulations or under the Regulations of 1976 or the Regulations of 1991 and still in force, or,

( b ) where the context otherwise requires, authorisation granted by the authority charged by law with the duty of supervising the activities of insurance undertakings in a Member State other than the State in accordance with Article 6 of the First Directive as inserted by Article 4 of the Directive.

"branch" means an agency or branch of an insurance undertaking or any permanent presence of an undertaking in the State even if that presence does not take the form of an agency or branch but consists merely of an office managed by the insurance undertaking's own staff or by a person who is independent but has permanent authority to act for the insurance undertaking in the same way as an agency;

"carrying on insurance business by way of establishment" means the covering of a risk by an insurance undertaking in a Member State through a head office or branch situated in that State;

"carrying on insurance business by way of services" means the covering of a risk by an insurance undertaking in a Member State through a head office or branch situated in another Member State;

"the Court" means the High Court;

" the Directive" means EEC Council Directive 92/49/EEC^(1);

"the First Directive" means EEC Council Directive 73/239/EEC^(2);

"the general good" shall be construed in accordance with Article 24 of these Regulations;

"home Member State" means the Member State in which the head office of the insurance undertaking covering a risk is situated;

"insurance undertaking" means—

^(1)O.J. L228, 11.8.1992, page 1.

^(2)O.J. L228, 16.8.1973, page 3.

( a ) for the purpose of carrying on insurance business in the State by way of establishment: the holder of an authorisation under these Regulations or, as the case may be, under Article 6 of the first Directive as inserted by Article 4 of the Directive or the holder of an authorisation under Article 23 of the First Directive;

( b ) for the purpose of carrying on insurance business by way of services, the holder of an authorisation under these Regulations or, as the case may be, under Article 6 of the First Directive as inserted by Article 4 of the Directive;

"Member State" means a Member State of the European Communities;

"Member State of the branch" means the Member State in which the branch covering a risk is situated;

"Member State of the provision of services" means the Member State in which a risk is situated where it is covered by an insurance undertaking or a branch situated in another Member State;

"Member State where the risk is situated" means—

( a ) the Member State in which the property is situated, where the insurance relates either to buildings or buildings and their contents, in so far as the contents are covered by the same insurance policy,

( b ) the Member State of registration, where the insurance relates to vehicles of any type,

( c ) the Member State where the policyholder took out the policy in the case of policies of a duration of four months or less covering travel or holiday risks, whatever the class concerned,

( d ) the Member State where the policyholder has his habitual residence or, if the policyholder is a legal person, the Member State where the latter's establishment, to which the contract relates, is situated, in all cases not explicitly covered by the foregoing subparagraphs;

"non-life insurance" has the meaning assigned by Article 4 of these Regulations;

"the Regulations of 1976" means the European Communities (Non-Life Insurance) Regulations, 1976 ( S.I. No. 115 of 1976 );

"the Regulations of 1991" means the European Communities (Non-Life Insurance) (Amendment) (No. 2) Regulations, 1991 ( S.I. No. 142 of 1991 );

"the Second Directive" means EEC Council Directive 88/357/EEC^(3).

^(3)O.J. L172, 4.7.1998, page 1.

• (2) In these Regulations a reference to any enactment, Council Directive, order or Regulation includes reference thereto as subsequently amended.

• (3) Subject to these Regulations, the provisions of the Insurance Acts and Regulations shall, where applicable and subject to any necessary modifications, apply to all insurance undertakings to which these Regulations relate.

• (4) These Regulations shall have effect, any provision to the contrary in any enactment, order of Regulation passed or made before the making of these Regulations notwithstanding.

3 Technical Adjustments.

3.

3. (1) The Minister may by direction give effect to any technical adjustment adopted in accordance with Article 51 of the Directive subject to such conditions as may be specified from time to time by the Minister.

• (2) The Minister may issue a direction in writing modifying any requirement of these Regulations or of the Annexes or Schedules in the special circumstances of the case, provided that the direction does not conflict with any provision of the First Directive, the Second Directive or the Directive, or Council Directive 90/618/EEC of 8 November, 1990 (O.J. No. L 330, 29.11.1990, p. 44).

4 Scope.

4.

4. (1) Subject to sub-article (2) of this Article, these Regulations apply to insurance business ("non-life insurance") of the classes specified in Part A of Annex I to these Regulations and to undertakings carrying on such insurance.

• (2) These Regulations do not apply to—

( a ) the kinds of insurance specified in paragraph 1 of Article 2 of the First Directive,

( b ) the operations specified in paragraph 2 of Article 2 of the First Directive,

( c ) mutual associations excluded from the application of the First Directive by Article 3 thereof.

5 Powers of Court.

5.

5. The Court shall have full jurisdiction to deal with any application, appeal or other proceedings before the Court in accordance with any provision of these Regulations and may for this purpose make any interim, interlocutory, mandatory, prohibitory or injunctive or ancillary order as the Court may consider necessary or appropriate for the purposes of these Regulations.

6 Authorisations.

6.

6. (1) An insurance undertaking shall not carry on the business of non-life insurance unless it is the holder of an authorisation.

• (2) An authorisation shall be valid throughout the Member States and shall allow an undertaking to carry on insurance business there by way of services and by way of establishment.

• (3) For the purposes of the Insurance Acts and Regulations, an insurance undertaking shall be deemed to be or to have been established in the State if—

( a ) it has in the State an office which is open during normal business hours for the transaction of the business for which it is authorised, and

( b ) it employs at such office persons duly qualified to carry on the business transacted and empowered to issue cover for the authorised classes and to settle claims.

• (4) An insurance undertaking with its head office outside the territories of the Member States may, notwithstanding anything to the contrary in the Insurance Acts and Regulations, carry on insurance business by way of services into the State in the following classes of Annex I to these Regulations, namely, 4, 5, 6, 7, 11 and 12 and in classes 1 and 10 insofar as they relate to the insurance of passengers in marine and aviation vehicles and carrier's liability respectively—

provided that

( a ) where the business is to be written by a branch of the insurance undertaking situated within the territories of the Member States, the insurance undertaking demonstrates compliance with the solvency margin requirements of Article 25 of the First Directive and provides satisfactory evidence that the branch is authorised to write business in the above-mentioned classes,

( b ) where the business is to be written by an insurance undertaking with no establishment within the territories of the Member States a statement is produced from the supervisory authorities of the State in which the head office of the insurance undertaking is situated attesting that the insurance undertaking complies with the solvency requirements in that State and is authorised to underwrite risks covered by the classes mentioned above,

( c ) in the case of the insurance undertakings mentioned in paragraphs (a) and (b) of this sub-article, the nature of risks it is proposed to cover by way of services shall be disclosed in addition to the information required by those paragraphs.

• (5) Where the Minister is satisfied that an undertaking, applying for an authorisation, complies with the appropriate provisions of the Insurance Acts and Regulations, the Minister shall grant that undertaking an authorisation.

• (6) An application for an authorisation may be made to the Minister by—

( a ) any undertaking which has established its head office in the State,

( b ) any insurance undertaking which is the holder of an authorisation related to a particular class or classes of insurance and which proposes to extend its business to another class or classes of insurance.

• (7) An authorisation shall be granted for a class of insurance mentioned at a reference number in Annex I to these Regulations and specified in the Authorisation and shall relate to the entire of that class, except that, where an applicant for an authorisation desires the authorisation to relate only to part of a class as listed in Part A of Annex I to these Regulations, the authorisation shall relate to that part only, but without prejudice to the Minister's powers to require the full guarantee fund relating to the entire class to which such part belongs, as specified in Part B of Annex II to these Regulations.

• (8) The Minister may grant authorisation in respect of any group of classes specified in column (3) of Part D of Annex I to these Regulations in accordance with Part B of that Annex.

• (9) An authorisation granted for a particular class or group of classes of insurance shall also be valid for the purpose of covering ancillary risks included in another class if the conditions specified in Part C of Annex I are fulfilled.

• (10) An insurance undertaking applying for an authorisation to extend its business to other classes of insurance or to extend an authorisation covering only part of a class as listed in Part A of Annex I to these Regulations shall—

( a ) submit to the Minister a scheme of operations in accordance with the provisions contained in Article 7 (2) (b) of these Regulations in relation to such other classes of insurance or such extension of authorisation, and

( b ) prove to the satisfaction of the Minister that it possesses the solvency margin in accordance with the provisions of Annex II of these Regulations and, where a higher minimum guarantee fund is required, that it possesses such minimum guarantee fund.

• (11) The forms of authorisation shall be as specified by the Minister from time to time.

7 Conditions when applying for Authorisation.

7.

7. (1) Any undertaking applying for an authorisation shall comply with the following provisions:

( a ) It shall be a company limited by shares, a company limited by guarantee or an unlimited company within the meaning (in each case) of the Companies Acts, 1963 to 1990; it may also adopt the form of a European Company (SE) when that has been established.

( b ) An undertaking set up in any public law form may apply for an authorisation provided such body has as its object insurance operations under conditions equivalent to those under which private law insurance undertakings operate.

• (2) The undertaking shall also comply with the following provisions:

( a ) It shall limit its operations to the business of insurance and to operations directly arising therefrom, to the exclusion of all other commercial business.

( b ) It shall submit to the Minister a scheme of operations, in accordance with Article 9 of the First Directive to include particulars or proof concerning—

• (i) the nature of the risks which the undertaking proposes to cover;

• (ii) the guiding principles as to reinsurance;

• (iii) the items constituting the minimum guarantee fund;

• (iv) estimates of the costs of setting up the administrative services and the organisation for securing business; the financial resources intended to meet those costs and, if the risks to be covered are classified in class 18 in Part A of Annex I to these Regulations, the resources at the insurance undertaking's disposal for the provision of the assistance promised.

( c ) In addition, for the first three financial years it shall submit to the Minister—

• (i) estimates of management expenses other than installation costs, in particular current general expenses and commissions;

• (ii) estimates of premiums or contributions and claims;

• (iii) a forecast balance sheet;

• (iv) estimates of the financial resources intended to cover its underwriting liabilities and solvency margin.

( d ) It shall possess the minimum guarantee fund in accordance with the provisions of Part B of Annex II to these Regulations.

( e ) It shall be effectively run by persons of good repute with appropriate professional qualifications or experience.

8 Notification of conditions and documents.

8.

8. (1) Nothing in these Regulations shall prevent the introduction by the Minister of regulations or administrative provisions concerning the approval of the memorandum and articles of association of an insurance undertaking and communication of documents necessary for the normal exercise of supervision.

• (2) Notwithstanding sub-article (1) of this Article, the Minister shall not require the prior approval or systematic notification of general and special policy conditions, scales of premiums, forms and other printed documents which an insurance undertaking intends to use in its dealings with policyholders. The Minister may, however, require notification of such general and special policy conditions, scales of premiums, forms and other aforementioned printed documents.

• (3) The Minister may retain or introduce prior notification or approval of proposed increases in premium rates where such notification or approval is operated as part of a general price control system.

9 Identities of shareholders.

9.

9. (1) The Minister shall not grant an authorisation to an undertaking before being informed of the identities of the shareholders or persons who have qualifying holdings, direct or indirect, in that insurance undertaking and of the amounts of such holdings.

• (2) The Minister shall not grant an authorisation if, after taking into account the requirement to ensure the sound and prudent management of an insurance undertaking, the Minister is not satisfied as to the qualifications of the shareholders or members.

• (3) The Minister may require information concerning all shareholders irrespective of the size of their holding.

• (4) For the purpose of this Article—

a "qualifying holding" means a direct or indirect holding in an insurance undertaking which represents10 per cent. or more of the capital or of the voting rights or which makes it possible to exercise a significant influence over the management of the undertaking in which a holding subsists.

PART 2 *Financial Supervision, Assignment of Policies, Technical Reserves Provisions, Solvency Margin, Valuation of Assets, Register of Assets, Discounting, Related Company, Failure to Comply with Technical Reserves Provisions, Withdrawal or Lapse of Authorisation*

10 Conditions governing the financial supervision of insurance business.

10.

10. (1) The financial supervision of an insurance undertaking, including the carrying on of insurance business either by way of services or through branches, shall be the sole responsibility of the home Member State.

• (2) Where the head office of the insurance undertaking is situated in the State the Minister shall be responsible for verification with respect to the insurance undertaking's entire business, its state of solvency, the establishment and maintenance of technical reserves and corresponding covering assets in accordance with the Insurance Acts and Regulations.

• (3) Every insurance undertaking shall have administrative and accounting procedures and internal control mechanisms which in the opinion of the Minister are sound and adequate.

11 On the spot verification.

11.

11. (1) Where an insurance undertaking whose head office is situated in the State carries on insurance business through a branch situated in another Member State, the Minister may, after having informed the supervisory authorities of the Member State of the branch, be empowered to carry out on-the-spot verification of the information required to ensure the financial supervision of the insurance undertaking.

• (2) The supervisory authorities of the Member State of the branch may participate in such verification where the law of the Member State of the branch so allows.

• (3) Where an insurance undertaking whose head office is situated in another Member State carries on insurance business through a branch situated in the State, the Minister may, after having been informed by the supervisory authorities of that Member State, allow the supervisory authorities of the head office Member State to carry out on-the-spot verification of the Information required to ensure the financial supervision of the insurance undertaking.

• (4) The Minister may, in order to ensure compliance with this Article, provide for participation in such verification by the appointment of authorised officers under the Insurance Acts and Regulations.

• (5) The Minister shall take all appropriate measures in order to be satisfied that an insurance undertaking is complying or has the ability to continue to comply with its obligations under the Insurance Acts and regulations and applicable administrative provisions and, in particular, with the scheme of operations referred to in Article 7 (2) (b) of these Regulations.

• (6) The Minister may, in addition, seek such information regarding insurance contracts which are effected through or held by intermediaries and any person concerned shall provide such information to the Minister.

12 Assignment of policies.

12.

12. (1) For the purposes of Section 13 of the Assurance Companies Act, 1909, and subject to the provisions of section 36 of the Insurance Act, 1989 , and of these Regulations, the following provisions shall have effect:

( a ) An insurance undertaking transacting business in the State, proposing to assign all or part of its portfolio of insurance contracts concluded under the right of establishment or freedom to provide services in the State to an insurance undertaking established in the territory of a Member State, may apply to the Court, by petition, for an Order sanctioning the scheme of assignment.

( b ) An insurance undertaking whose head office is situated in the State may, after prior consultation with the Minister, assign all or part of its portfolio of insurance policies including insurance business carried on either by way of services or establishment, to an insurance undertaking established in the State or in another Member State. The assignment shall not be effected unless the supervisory authorities of that insurance undertaking or, where appropriate, the supervisory authorities of the Member State referred to in Article 26 of the First Directive, certify that the insurance undertaking possesses the necessary solvency margin after taking the assignment into account.

( c ) Where a branch, established in another Member State, whose head office is situated in the State proposes to assign all or part of its portfolio of insurance policies covering insurance business carried on either by way of services or establishment, the Minister shall consult the supervisory authority of the Member State of the branch.

( d ) An insurance undertaking whose head office is situated in the State may not assign all or part of its portfolio of insurance policies to an undertaking, established in another Member State, whose head office is not situated in the territory of a Member State.

• (2) ( a ) In the cases referred to in paragraphs (b) and (c) of sub-article (1) of this Article, the assignment shall not be effected without obtaining the agreement of the supervisory authorities of the Member States of the branch and the supervisory authorities of the Member States in which the risks are situated.

( b ) Where the supervisory authorities have not given a response indicating consent to or an opinion on the proposed assignment within three months of receiving notification of the assignment, the assignment shall be deemed to be agreed.

• (3) Where the Minister is consulted in accordance with Article 12 (3) or (4) of the Directive, the Minister shall have a period of three months from the date of consultation by the supervisory authorities of the home Member State within which to issue a response to those authorities.

• (4) Where the Minister has not given a response indicating consent to or an opinion on the proposed assignment at the expiry of the period referred to in sub-article (3) of this Article, the assignment shall be deemed to be agreed.

• (5) An assignment effected in accordance with this Article shall be published subject to the provisions of sub-article (1) of this Article by advertisement once in Iris Oifigiúil and once in each of two daily newspapers published in the State and published in the Member State where the risk is situated in accordance with the law of that Member State.

• (6) An assignment effected in accordance with this Article shall be valid against the policyholders, the insured persons and any other person having rights and obligations arising out of the policies assigned.

13 Technical reserves provisions, solvency margin, valuation of assets, Register of assets.

13.

13. (1) Each insurance undertaking shall establish and maintain:

( a ) technical reserves in respect of all underwriting liabilities assumed by it. The amount of such technical reserves shall be determined in accordance with the rules laid down in Council Directive 91/674/EEC^(4);

( b ) an adequate solvency margin and guarantee fund in respect of its entire business in accordance with Annex II to these Regulations.

• (2) All Assets of an insurance undertaking shall be valued in accordance with Annex III to these Regulations for all purposes of the Insurance Acts and Regulations which require a determination of the value of assets to be made.

• (3) Notwithstanding sub-articles (1) and (2) of this Article, if more than 90 per cent. of the gross premiums written in any accounting class of insurance business adopted for the purposes of the annual returns is reinsured, then the insurance undertaking will be required to maintain technical reserves representing a minimum of 10 per cent. of gross premium income or 10 per cent. of gross technical reserves relating to such business, whichever is the greater, in that class and to hold assets representing that amount accordingly. However, insurance undertakings may reinsure without limit any individual risk.

^(4)O.J. L374, 31.12.1991, page 7.

• (4) Technical reserves may, subject to sub-article (3) be established and maintained after the deduction of reinsurance cessions, provided such reinsurance arrangements are acceptable to the Minister. However, any reduction in technical reserves arising from reinsurance shall be restricted to the extent of the insurance risk transferred under the reinsurance arrangements. Where the reinsurance arrangements are not acceptable, the Minister may require that, in respect of the insurance contracts covered by such arrangements, reserves be maintained before the deduction of reinsurance cessions.

• (5) Each insurance undertaking shall cover its technical reserves by equivalent assets valued in accordance with the Rules set out in Annex III to these Regulations. The matching Rules set out in Annex IV to these Regulations shall apply to such assets.

• (6) An insurance undertaking with its head office in the State shall establish and maintain in the territories of the Member States assets of an amount equivalent to the amount of its technical reserves relating to risks situated within those territories.

• (7) An insurance undertaking with its head office outside the territories of the Member States shall establish and maintain in the State assets of an amount equivalent to the amount of its technical reserves in the State.

• (8) The documents of title of the assets localised in the State or the territories of the Member States in accordance with sub-articles (6) and (7) of this Article shall be held in those territories (or the State as the case may be) and, in the case of an insurance undertaking having its head office outside the territories of the Member States, the authorised agent shall have full authority to dispose of those assets in the name of the insurance undertaking in accordance with any direction from the Minister.

• (9) For the purposes of applying sub-articles (5) and (6) of this Article an asset shall be regarded as being localised in the territories of the Member States (or the State as the case may be) as follows:

( a ) a tangible asset, where it is situated in the territories of the Member States (or the State as the case may be);

( b ) an asset consisting of a claim against a debtor:

• (i) in any case where the debtor is an incorporated company, where the head office of that company is situated in the territories of the Member States (or the State as the case may be);

• (ii) in any case where the debtor is an unincorporated body of persons, where the body of persons is resident or ordinarily resident in the territories of the Member States (or the State as the case may be);

• (iii) in any case where the debtor is an individual, where the individual is resident or ordinarily resident in the territories of the Member States (or the State as the case may be);

( c ) an asset consisting of a listed investment, where it is listed or dealt in a regulated Market in the territories of the Member States (or the Irish Stock Exchange as the case may be);

( d ) an asset consisting of an unlisted investment issued by an incorporated company, where the head office of the company is situated in the territories of the Member States (or the State as the case may be);

( e ) an asset consisting of an approved security where the issuer is established in the territories of the Member States (or the State as the case may be).

• (10) For the purposes of applying sub-articles (5) and (6) of this Article a risk shall be deemed to be situated in the territories of the Member States or the State (as the case may be) as follows:

( a ) property consisting of buildings or buildings and their contents, in so far as the contents are covered by the same policy or other instrument of insurance, if the property is situated in the territories of the Member States (or the State as the case may be);

( b ) vehicles, including land vehicles, railway rolling stock, aircraft, sea, river and canal vessels, if the vehicle is registered in the territories of the Member States (or the State as the case may be);

( c ) travel or holiday risks, whatever the class concerned, if the policy or other instrument of insurance is issued in the territories of the Member States (or the State as the case may be);

or, in any other case, if the policyholder is ordinarily resident in the territories of the Member States (or the State as the case may be) or if the policyholder is a legal person and the establishment to which the policy or other instrument of insurance relates to is situated in the territories of the Member States (or the State as the case may be).

• (11) An insurance undertaking, whose head office is situated in the State, shall furnish to the Minister annually or at such more frequent intervals as the Minister may request such information in such form and manner as the Minister may require, together with statistical documents which are deemed necessary for supervision purposes and in particular in order to verify the state of solvency of the insurance undertaking with respect to its entire business.

• (12) For the purposes of sub-article (11) of this Article, the insurance undertaking shall, in addition, furnish to the Minister annually, or at such more frequent intervals as the Minister may request such information in such form and manner as the Minister may require in order to verify that the technical reserves referred to in this Article are being maintained.

• (13) Every insurance undertaking shall keep a register showing the assets representing the technical reserves required by these Regulations in respect of insurance business carried on in the State in each class by the insurance undertaking and shall furnish to the Minister a certificate of the value of these assets on the closing date for which the accounts and balance sheets of the insurance undertaking are furnished to the Minister, such values being those in such accounts and balance sheets.

• (14) The register shall be maintained at the principal office of the insurance undertaking in the State and shall contain up-to-date details of the assets representing the reserves in respect of non-life insurance business carried on in the State.

• (15) The register shall be open for inspection by an officer or officers of the Minister during normal business hours.

14 Discounting.

14.

14. (1) Implicit discounting or deduction, including discounting or deduction by way of financial reinsurance, whether resulting from the placing of a present value on a provision for an outstanding claim which is expected to be settled later at a higher figure or otherwise effected, such discounting or deduction is prohibited.

• (2) However, explicit discounting or deduction, including by way of financial reinsurance, to take account of investment income is permitted for the purpose of the accounts to be submitted to the Minister in accordance with the European Communities (Non-Life Insurance Accounts) Regulations, 1977, subject to any conditions which the Minister may from time to time deem necessary. In particular, the following conditions shall apply:

( a ) the expected date for the settlement of claims shall be on average at least four years after the accounting date;

( b ) the discounting or deduction shall be effected on a recognised prudential basis; any change in that basis shall be notified, in advance, to the Minister;

( c ) when calculating the total cost of settling claims, an undertaking shall take account of all factors that could cause increases in that cost;

( d ) an undertaking shall have adequate data at its disposal to construct a reliable model of the rate of claims settlements;

( e ) the rate of interest used for the calculation of present value shall not exceed a prudent estimate of the investment income from assets invested as a provision for claims during the period necessary for the payment of such claims. Moreover, it shall not exceed either of the following:

— a rate derived from the investment income from such assets over the preceding five years;

— a rate derived from the investment income from such assets during the year preceding the balance sheet date.

• (3) When discounting or effecting deduction, including such discounting or deduction by way of financial reinsurance, an undertaking shall, in notes accompanying the accounts to be submitted to the Minister in accordance with the European Communities (Non-Life Insurance Accounts) Regulations, 1977, disclose the total amount of provisions before discounting or deduction, the categories of claims which are discounted or from which deductions have been made and, for each category of claims, the methods used, in particular the rates used for the estimates referred to in sub-article (2), paragraphs (c) and (e), and the criteria adopted for estimating the period that will elapse before the claims are settled.

• (4) The permission of explicit discounting or deduction as specified above shall at all times be at the Minister's discretion.

15 Transactions with a related company or companies.

15.

15. (1) Prior to entering into any transaction of a material nature with a related company or companies, including in particular, the provision of loans to and acceptance of loans from a related company or companies, an insurance undertaking shall submit to the Minister a draft of any contract or agreement which is to be entered into by the insurance undertaking in relation to the transaction.

• (2) In this Article—

"related company" has the meaning assigned to it in accordance with Annex III to these Regulations.

16 Failure to comply with technical reserves provisions.

16.

16. (1) Where an insurance undertaking whose head office is situated in the State fails to comply with Article 13 of these Regulations the Minister may, after notifying the supervisory authorities of the Member States in which the risks underwritten by the insurance undertaking are situated, apply to the Court for an order, which the Court is empowered to make, prohibiting the free disposal of the insurance undertaking's assets.

• (2) Where the solvency margin of an insurance undertaking whose head office is situated in the State falls below the minimum amount required by Articles 3 and 4 of Part A of Annex II to these Regulations the Minister shall require that a plan be submitted by the insurance undertaking for the Minister's approval for the restoration of a sound financial position.

• (3) In a case referred to in sub-article (2) of this Article, where it appears to the Minister that the financial situation of the insurance undertaking will deteriorate further, the Minister may apply to the Court for an order, which the Court is empowered to make, restricting or prohibiting the free disposal of the insurance undertaking's assets. In that case, the Minister shall notify the supervisory authorities of the Member States where the insurance undertaking carries on insurance business of this fact and of any order of the Court. The Minister may also request the supervisory authorities of those Member States to take the same measures pursuant to this sub-article.

• (4) Where the solvency margin of an insurance undertaking whose head office is situated in the State falls below the guarantee fund referred to in Part B of Annex II to these Regulations, the Minister shall require the insurance undertaking to submit for approval a short-term finance scheme. The Minister may also apply to the Court for an order, which the Court is empowered to make, restricting or prohibiting the free disposal of the assets of the insurance undertaking. In that case, the Minister shall notify the supervisory authorities of the Member States where the insurance undertaking carries on insurance business of this fact and of any order of the Court. The Minister may also request the supervisory authorities of those Member States to take the same measures pursuant to this sub-article.

• (5) The Minister may apply to the Court for such further orders as may be necessary in order to safeguard the interests of insured persons, in the cases referred to in sub-articles (1) to (4) of this Article.

• (6) Where the head office supervisory authority of an insurance undertaking situated in another Member State requests the Minister to take measures related to the restriction or prohibition of the free disposal of the assets located in the State of the insurance undertaking, the Minister may apply to the Court for an order, which the Court is empowered to make, restricting or prohibiting the free disposal of the assets located in the State of the insurance undertaking.

• (7) The Court may make such order for the purposes of this Article as the Court may think fit.

17 Withdrawal/lapse of Authorisation.

17.

17. An authorisation held by an undertaking whose head office is situated in the State may be revoked by the Minister if the Minister is satisfied that the holder—

( a ) has not used the authorisation for the last twelve months, has expressly renounced the authorisation or has ceased to carry on business covered by the authorisation for more than six months;

( b ) no longer fulfils the conditions required by the Insurance Acts and Regulations for the granting of an authorisation;

( c ) has been unable, within the time allowed, to take the measures contained in the restoration plan or finance scheme referred to in Article 16 of these Regulations, or

( d ) fails seriously in its obligations under the Insurance Acts and Regulations.

18 Provisions applying on withdrawal/lapse of authorisation.

18.

18. Where an authorisation is revoked under Article 17 of these Regulations, the following provisions shall apply:—

( a ) the Minister shall notify the revocation to the supervisory authorities of the other member States in which the undertaking carries on business;

( b ) the Minister shall, in conjunction with the supervisory authorities of the other Member States in which the undertaking carries on business, restrict the free disposal by the undertaking of its assets in accordance with Article 16 (1), 16 (3) and 16 (4) of these Regulations;

( c ) the Minister may take further measures to safeguard the interests of persons insured by the insurance undertaking and may for this purpose apply to the Court for such order as to the Court may seem fit.

19 Notification of reasons for revocation.

19.

19. Any decision to revoke an authorisation under Article 18 shall be supported by precise reasons and notified to the insurance undertaking in question.

PART 3 *Qualifying Holdings, Amendment to European Communities (Non-Life Insurance) (Amendment) Regulations, 1991, Obligation of Professional Secrecy/Exchanges of Confidential Information*

20 Qualifying Holdings.

20.

20. (1) Notwithstanding the provisions of the Companies Acts, 1963 to 1990, any person who proposes to acquire either directly or indirectly, a qualifying holding in an insurance undertaking, shall first notify the Minister indicating the size of the proposed qualifying holding. Such person shall, in addition, be under an obligation to notify the Minister where it is proposed to increase such qualifying holding so that the percentage levels of the voting rights or capital which that person holds, reaches or exceeds any of the percentage levels referred to in sub-article (4) of this Article so that the insurance undertaking would become that person's subsidiary.

• (2) The Minister shall have a period of three months from the date of notification referred to in sub-article (1) of this Article within which to oppose the proposed acquisition where, in view of the necessity to ensure sound and prudent management of the insurance undertaking in question, the Minister is not satisfied as to the suitability of the person referred to in sub-article (1) of this Article.

• (3) Any person who proposes to dispose, either directly or indirectly, of a qualifying holding in an insurance undertaking, shall first notify the Minister indicating the size of the proposed qualifying holding. Such person shall, in addition, be under an obligation to notify the Minister if it is proposed to decrease such qualifying holding so that the percentage levels of the voting rights or capital which that person holds falls below any of the percentage levels referred to in sub-article (4) of this Article so that the insurance undertaking would cease to be that person's subsidiary.

• (4) The percentage levels referred to in sub-articles (1) and (3) are 20 per cent, 33 per cent or 50 per cent.

• (5) An insurance undertaking which becomes aware of any acquisitions or disposals of holdings in its capital so that such holdings exceed or fall below any of the percentage levels referred to in sub-article (4) of this Article shall inform the Minister of such acquisitions or disposals. In addition, the insurance undertaking shall, at such times as may be specified by the Minister and at least once a year, notify the Minister of the names of shareholders or members possessing qualifying holdings and the size of such holdings by reference, for example, to information received at annual general meetings of shareholders or members or as a result of compliance with the Companies Acts, 1963 to 1990. The Minister may, at any time, require information concerning all shareholders irrespective of the size of their holding.

• (6) If the Minister has reason to believe that the control exercised by the person or persons referred to in sub-article (1) of this Article is likely to operate against the prudent and sound management of an insurance undertaking, the Minister may apply to the Court for such order, for the purposes of putting an end to that situation, by way of injunction, suspension of the exercise of the voting right attaching to the shares held by the shareholders or members in question or otherwise as the Court shall think fit.

• (7) The Court, acting under sub-article (6) of this Article, may make such order in relation to the matter as may appear to be necessary.

• (8) Sub-article (6) of this Article shall also apply to persons who fail to comply with the notification requirements referred to in sub-article (1) of this Article. If a holding is acquired contrary to the provisions of this Article the Court may, on the application of the Minister, in addition to any other order which it may make, order the suspension of the corresponding voting rights or the nullity of votes cast.

• (9) In this Article—

"control" means the relationship between a parent undertaking and a subsidiary, as defined in Article 1 of Council Directive 83/349/EEC^(5), or a similar relationship between any natural or legal person and an undertaking;

"qualifying holding" has the meaning assigned to it by Article 9 (4) of these Regulations.

"parent undertaking" means a parent undertaking as defined in Articles 1 and 2 of Council Directive 83/349/EEC;

"subsidiary" means a subsidiary undertaking as defined in Articles 1 and 2 of Council Directive 83/349/EEC; any subsidiary of a subsidiary undertaking shall also be regarded as a subsidiary of the undertaking which is those undertakings' ultimate parent undertaking;

21 Amendment to European Communities (Non-Life Insurance) (Amendment) Regulations, 1991 ( S.I. No. 5 of 1991 ).

21.

21. Article 14 of the Regulations of 1976 as amended by Article 4 of the European Communities (Non-Life Insurance) (Amendment) Regulations, 1991 ( S.I. No. 5 of 1991 ), is hereby amended by the substitution in sub-article (8) of the following paragraph for paragraph (a):

• "(8) ( a ) Every insurance undertaking which is underwriting risks included in Class 14 in Part A of the Annex (referred to subsequently in these Regulations as 'credit insurance') shall, subject to paragraph (d) of this sub-article, set up an equalisation reserve for the purpose of offsetting any technical deficit or above-average claims ratio arising in that class for a financial year."

22 Obligation of Professional Secrecy/exchanges of confidential information.

22.

22. (1) Every person to whom this Article is applicable, including auditors and other experts working or who have worked for or acting or who have acted on behalf of the Minister, shall be bound by the obligation of professional secrecy.

• (2) The obligation of professional secrecy means that, subject to the succeeding sub-article of this Article, no confidential information received in the performance of duties may be divulged to any person or authority whatsoever, except in such form as will ensure that individual insurance undertakings cannot be identified, except by order of a Court in criminal proceedings. Nevertheless, where an insurance undertaking has been declared bankrupt or is being compulsorily wound up, confidential information which does not concern third parties involved in attempts to rescue the undertaking may be divulged where ordered by a court in civil or commercial proceedings.

^(5)O.J. L193, 18.7.1983, page 1.

• (3) Sub-articles (1) and (2) of this Article shall not prevent the competent authorities of different Member States from exchanging information in accordance with the Directives applicable to insurance undertakings. Such information when so exchanged shall be subject to the conditions of professional secrecy laid down in these sub-articles.

• (4) The Minister may conclude co-operation agreements, providing for exchanges of information, with the competent authorities of third countries only if the information disclosed is subject to guarantees of professional secrecy at least equivalent to those provided for in this Article.

• (5) Where the Minister receives confidential information in accordance with sub-articles (1), (2) and (3) of this Article the Minister may use it only—

( a ) to check that the conditions governing the taking up of the business of insurance are met and to facilitate monitoring of the conduct of such business, especially with regard to the monitoring of technical reserves, solvency margins, administrative and accounting procedures and internal control mechanisms,

( b ) to impose sanctions, or

( c ) in court proceedings initiated under Article 46 of these Regulations or under special provisions, provided for in Council Directives adopted in the field of insurance undertakings.

• (6) Sub-articles (1), (2) and (5) of this Article shall not preclude the exchange of information within the State, where there are two or more competent authorities in the State, or between Member States or between competent authorities and—

( a ) authorities responsible for the official supervision of credit institutions and other financial organisations and the authorities responsible for the supervision of financial markets,

( b ) bodies involved in the liquidation and bankruptcy of insurance undertakings and in other similar procedures, and

( c ) persons responsible for carrying out statutory audits of the accounts of insurance undertakings and other financial institutions,

in the discharge of their supervisory functions, or the disclosure to bodies which administer compulsory winding-up proceedings or guarantee funds of information necessary to the performance of their duties. The information received by those authorities, bodies and persons shall be subject to the conditions of professional secrecy laid down in sub-articles (1) and (2).

• (7) In addition, notwithstanding sub-articles (1), (2) and (5) of this Article, the Minister may in accordance with the law of the State authorise the disclosure of certain information to other authorities responsible for the supervision of credit institutions, financial institutions, investment services and insurance companies and to inspectors acting on behalf of those authorities.

• (8) The disclosures may be made only where necessary for reasons of prudential control.

• (9) The information received under sub-articles (3) and (6) of this Article and that obtained by means of on-the-spot verification in accordance with Article 11 of these Regulations may never be disclosed in the cases referred to in this sub-article except with the express consent of the competent authorities which disclosed the information or of the competent authorities of the Member State in which on-the-spot verification was carried out.

PART 4 *Choice of Law, General Good Requirements, Notification of Documents, Compulsory Insurance, Policyholder Disclosure*

23 Choice of Law Applicable to Insurance Contracts.

23.

23. (1) The law applicable to a contract of insurance which covers risks situated within the State or within other Member States shall be determined in accordance with the following provisions:

( a ) Where the habitual residence or central administration of a policyholder is within the territory of the Member State where the risk is situated, the law applicable to the insurance contract shall be the law of that Member State; however where the law of that Member State so allows, the parties may choose the law of another country.

( b ) Where the habitual residence or central administration of a policyholder is not in the Member State where the risk is situated, the parties to the insurance contract may choose to apply either the law of the Member State in which the risk is situated or the law of the country of the policyholder's habitual residence or central administration.

( c ) Where a policyholder pursues a commercial, industrial or professional activity and where the contract covers two or more risks relating to these activities and situated in different Member States, the freedom of choice of the law applicable to the contract extends to the laws of those Member States and of the country of the policyholder's habitual residence or central administration.

( d ) Notwithstanding paragraphs (b) and (c) of this sub-article, where the Member States referred to in those paragraphs grant greater freedom of choice of the law applicable to the contract, the parties may take advantage of this freedom.

( e ) Notwithstanding paragraphs (a), (b) and (c) of this sub-article, where the risks covered by the contract are limited to events occurring in a Member State other than the Member State where the risk is situated the parties may always choose the law of the former State.

( f ) In the case of large risks referred to in Article 5 of the Regulations of 1991, the parties to the contract may choose the law of any country.

( g ) Notwithstanding paragraphs (a) to (f) of this sub-article, where all the other elements relevant to the situation at the time of the choice are connected with one Member State only, nothing shall prejudice the application of the mandatory rules of the law of that Member State, from which the law of that Member State allows no derogation by means of a contract.

( h ) (i) The choice of law referred to in the preceding paragraphs of this Article must be expressed or demonstrated with reasonable certainty by the terms of the contract or the circumstances of the case.

• (ii) If that is not so, or if no choice has been made, the contract shall be governed by the law of the country, from amongst those considered in the relevant subparagraphs of this Article, with which it is most closely connected.

• (iii) Nevertheless, a severable part of the contract which has a closer connection with another country, from amongst those considered in the relevant subparagraphs of this sub-article may by way of exception be governed by the law of that other country. The contract shall be rebuttably presumed to be most closely connected with the Member State in which the risk is situated.

• (iv) Where a Member State includes several territorial units, each of which has its own rules of law concerning contractual obligations, each unit shall be considered as a country for the purposes of identifying the applicable law.

• (2) ( a ) Nothing in this article shall restrict the application of the rules of the law of the forum in a situation where they are mandatory irrespective of the law otherwise applicable to the contract.

( b ) Where the law of a Member State so stipulates, the mandatory rules of the law of the Member State in which the risk is situated or of the Member State imposing the obligation to take out insurance may be applied if and insofar as, under the laws of those States, those rules must be applied whatever the law applicable to the contract.

( c ) Where the contract covers risks situated in more than one Member State, the contract is considered for the purposes of applying this paragraph as constituting several contracts each relating to only one Member State.

• (3) Subject to the preceding sub-paragraphs of this Article, the laws of the State relating to the general rules of private international law shall be applied to the insurance contracts covered by these Regulations.

24 General Good Requirements.

24.

24. In conformity with the general good in accordance with the law of the European Communities, an insurance undertaking shall, in particular, comply with the following criteria—

( a ) the provisions of the Health Insurance Act, 1994 , applicable to the carrying on of health insurance business in the State,

( b ) the provisions of the Road Traffic Act, 1961 , and Regulations under the European Communities Act, 1972 , relating to the insurance of mechanically propelled vehicles,

( c ) the provisions of the Consumer Information Act, 1978 , applicable to insurance contracts and the marketing and selling of insurance products,

( d ) the provisions of the Sale of Goods and Supply of Service Act, 1980, applicable to insurance contracts and the marketing and selling of insurance products,

( e ) the provisions of the Motor Insurance Advisory Board (Establishment) Order, 1984, relating to the statistical requirements of the Board,

( f ) provisions related to the supervision and regulation of insurance intermediaries under the Insurance Acts and Regulations,

( g ) provisions contained in consumer credit legislation adopted by the State,

( h ) any other requirements which the Minister may prescribe by regulations for the general good, and the Minister in so prescribing may have regard to provisions in Codes of Conduct and Practice related to the marketing and selling of insurance and to the content of insurance proposals.

25 Notification of Documents and Scales of Premiums.

25.

25. (1) The Minister shall not make provisions requiring the prior approval or systematic notification of general and special policy conditions, scales of premiums, forms and other printed documents which an insurance undertaking intends to use in its dealing with policyholders. The Minister may, however, require notification of the general and special policy conditions and other documents considered necessary for the purposes of verifying compliance with laws, Regulations and administrative provisions concerning insurance contracts. A notification requirement shall not constitute a prior condition for an insurance undertaking to carry on business in the State.

• (2) The Minister may retain or introduce prior notification or approval of proposed increases in premium rates where such notification or approval is operated as part of a general price control system.

26 Compulsory Insurance.

26.

26. (1) ( a ) Every compulsory contract of insurance shall be in accordance with the specific provisions relating to that insurance laid down in accordance with the laws of the State.

( b ) In the case of conflict between the law of the Member State in which the risk is situated and the law of the Member State which imposes the obligation to take out insurance the law of the latter shall prevail.

( c ) Notwithstanding Article 23 of these Regulations, the law applicable to compulsory contracts of insurance shall be the law of the Member State which imposes the obligation to take out insurance.

( d ) Subject to sub-article (3) of this Article, Article 23 (2) (c) of these Regulations shall apply where the insurance contract provides cover in several Member States of which at least one imposes an obligation to take out insurance.

( e ) Where an undertaking is carrying on compulsory insurance it shall notify the relevant authorities of any cessation of cover and such cessation may be invoked against injured third parties in the circumstances laid down by the law of the State.

( f ) The supervisory authorities shall accept as proof that the insurance obligation has been fulfilled a certificate the content of which is in conformity with the specific provisions relating to that insurance in accordance with the law of the State.

• (2) Notwithstanding anything to the contrary in the Insurance Acts and Regulations, the Minister shall be informed of the general and special conditions of any insurance contract related to compulsory insurance before any such contract of insurance is issued.

27 Policyholder Disclosure Rules.

27.

27. (1) An insurance undertaking or, as the case may be, an insurance intermediary with whom a person seeking insurance deals directly, shall, before any insurance contract is concluded, notify persons seeking insurance and in writing, where requested, of the following, as appropriate—

( a ) the law applicable to the contract where the parties do not have a choice of law, or

( b ) that the parties to the contract are free to choose the applicable law and in this case the law which the insurance undertaking proposes to choose;

and shall also so notify such persons of the arrangements for handling policyholders' complaints concerning insurance contracts including the existence of a complaints body, without prejudice to a person's right of recourse to legal proceedings.

• (2) Sub-article (1) of this Article shall apply only in the case of natural persons.

• (3) The rules for implementing the provisions of sub-article (1) of this Article shall be determined in accordance with the law of the Member State in which the risk is situated.

• (4) Where the risk is situated in the State, the insurance contract documents shall, subject to Section 108 of the Insurance Act, 1936 , which provides for the issue of documents in the Irish language, be provided by the insurance undertaking in the English language.

• (5) Where an insurance undertaking is carrying on insurance business by way of services or by way of establishment, persons seeking insurance shall, before any insurance contract is concluded, be notified of the Member State in which the head office or, where appropriate, the branch with which the insurance contract is to be concluded is situated.

• (6) Any documents issued to the policyholder shall contain the information referred to in sub-article (5) of this Article.

• (7) The provisions of sub-articles (5) and (6) of this Article shall not apply in the case of large risks within the meaning of Article 5 of the Regulations of 1991.

• (8) The contract of insurance or other document granting insurance cover together with the insurance proposal form where it is binding upon the policyholder shall specify the address of the head office, or, where appropriate, of the branch of the insurance undertaking granting cover.

• (9) In the case of the coverage of risk, other than carrier's liability, classified under class 10 of Annex I to these Regulations, an insurance undertaking referred to in Article 34 of these Regulations shall specify in the documents referred to in sub-article (8) of this Article the name and address of the representative of the insurance undertaking referred to in Article 34 (7) of these Regulations.