Dáil Éireann debate -
Tuesday, 7 Apr 1992

Vol. 418 No. 4

Written Answers. - EC Non-Life Insurance Directive.

Bernard Allen

Question:

68 Mr. Allen asked the Minister for Industry and Commerce if he will outline the implications for Ireland of the recent European Council Agreement on the Non-Life Insurance Framework Directive which was adopted on 19 December 1991.

Minister for Industry and Commerce (Mr. O'Malley)

Political agreement on the Third Council Framework Directive on Non-Life Insurance was reached on 19 December 1991 and following consultation with the European Parliament, a formal common position was adopted on 25 February 1992.

This directive, which is due for implementation in mid-1994, represents a major step forward towards completion of the internal market in insurance and the logical progression from the partial liberalisation already achieved under the Second Non-Life Directive, which was implemented in June of last year. The Third Directive will institute a Community-wide system of single licence authorisation whereby overall supervision of the branches and all cross-Border services business of an insurance company will be the responsibility of the supervisory authority in the member state where its head office is located.

The directive includes a provision which will ensure that no insurance product can be marketed which does not conform with provisions relating to the general good in each member state. It also includes certain "information" requirements which insurance companies must disclose to clients when a contract is being effected. I am confident that the directive ensures satisfactory prudential controls on the solvency of insurance undertakings and adequate protection of policyholders.

Certain monopolies and exemptions which were permitted under previous insurance directives will now be abolished under this directive; this will have a direct effect on the Voluntary Health Insurance Board. Although the Irish health insurance market will be open to competition following the implementation of this directive, all insurers operating here will be obliged to market only health insurance schemes that comply with the principles of community rating, lifetime cover and open enrolment. Accordingly, the existing balance between public and private health care is likely to be maintained.

Overall I consider that the adoption of this Third Non-Life Insurance Framework Directive is a singular achievement, striking as it does a balance between greater liberalisation for insurance activities and a high level of protection for the insurance consumer which, it is hoped, will lead to increased competition and freedom of choice to the advantage of all parties.