The Solvency ii
Directive
SUBSECTION
4 - REINSURANCE
Article 11
Reinsurance
As far
as reinsurance is concerned this Directive shall
not apply to the
activity of reinsurance conducted or fully guaranteed by the
government of a Member State when this is acting,
for reasons of
substantial public interest, in the capacity of reinsurer of
last
resort, including in circumstances where such a role is required by
a situation in the market in which it is not feasible to obtain
adequate commercial cover.
Article 12
Reinsurance
undertakings closing their activity
1. Reinsurance
undertakings which by 10 December 2007 have ceased to conduct new
reinsurance contracts and exclusively administer their existing
portfolio in order to terminate their activity shall not be subject
to this Directive.
2. Member States shall draw up a list of
the reinsurance undertakings concerned and communicate that list to
all the other Member States.
SECTION 3 -
DEFINITIONS
Article 13
Definitions
For the
purposes of this Directive, the following definitions shall
apply:
(1) insurance undertaking means a direct life or
non-life insurance undertaking which has received authorisation in
accordance with Article 14;
(1a) captive insurance
undertaking means an insurance undertaking owned either by a
financial undertaking other than an insurance or a reinsurance
undertaking or a group of insurance or reinsurance undertakings
within the meaning of point (c) of Article 210(1), or by a
non-financial undertaking, the purpose of which is to provide
insurance cover exclusively for the risks of the undertaking or
undertakings to which it belongs or of an undertaking or
undertakings of the group of which the captive insurance undertaking
is a member;
(2) third country insurance undertaking
means an
insurance undertaking which would require authorisation in
accordance with Article 14, if it had its head office in the
Community;
(3) reinsurance undertaking means an undertaking,
which has received authorisation in accordance with Article 14 to
carry on reinsurance activities;
(3a) captive reinsurance
undertaking means a reinsurance undertaking owned either by a
financial undertaking other than an insurance or a reinsurance
undertaking or a group of insurance or reinsurance undertakings
within the meaning of point (c) of Article 210(1) or by a
non-financial undertaking, the purpose of which is to provide
reinsurance cover exclusively for the risks of the undertaking or
undertakings to which it belongs or of an undertaking or
undertakings of the group of which the captive reinsurance
undertaking is a member;
(4) third country reinsurance
undertaking means a reinsurance undertaking which would require
authorisation in accordance with Article 14 if it had its head
office in the Community;
(5) reinsurance means either of the
following:
(a) the activity consisting in
accepting risks
ceded by an insurance undertaking or third country insurance
undertaking or by another reinsurance undertaking or third country
reinsurance undertaking;
(b) in the case of the association
of underwriters known as Lloyd's, the activity consisting in
accepting risks, ceded by any member of Lloyd's, by an insurance or
reinsurance undertaking other than the association of underwriters
known as Lloyd's;
(6) home Member State means any of the
following:
(a) for non-life insurance, the Member State in
which the head office of the insurance undertaking covering the risk
is situated;
(b) for life insurance, the Member State in
which the head office of the insurance undertaking covering the
commitment is situated;
(c) for reinsurance, the Member State
in which the head office of the reinsurance undertaking is
situated;
(7) host Member State means the Member State other
than the home Member State in which an insurance or a reinsurance
undertaking has a branch or provides services;
for life and non-life
insurance the Member State of the provision of services means
respectively the Member State of the commitment and the Member State
in which the risk is situated, if the commitment or risk is covered
by an insurance undertaking or a branch situated in another Member
State;
(8) supervisory authorities means the national
authorities which are empowered by law or regulation to supervise
insurance or reinsurance undertakings;
(9)
"branch" means an
agency or a branch of an insurance or reinsurance undertaking which
is located in the territory of a Member State other than the home
Member State ;
(9a) establishment
means the head office or
branch of an undertaking;
(10) Member State
where the risk is
situated means any of the following:
(a) the Member State
in which the property is situated, where the insurance relates
either to buildings or to 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) in all cases not explicitly
covered by points (a), (b) or (c), the Member State in which either
of the following is situated:
(i) the habitual residence of
the policyholder;
(ii) if the policyholder is a legal
person, that policyholder's establishment to which the contract
relates;
(11) Member State of the commitment
means the Member
State in which any of the following is situated:
(a) the
habitual residence of the policyholder;
(b) if the
policyholder is a legal person, that policyholder's establishment,
to which the contract relates;
(12) parent undertaking means a
parent undertaking within the meaning of Article 1 of Directive
83/349/EEC;
(13) subsidiary undertaking means any subsidiary
undertaking within the meaning of Article 1 of Directive 83/349/EEC,
including subsidiaries thereof ;
(14) ---
(15)
close links
means a situation in which two or more natural or legal persons are
linked by control or participation, or a situation in which two or
more natural or legal persons are permanently linked to one and the
same person by a control relationship ;
(15a)
control means
the relationship between a parent undertaking and a subsidiary
undertaking, as set out in Article 1 of Directive 83/349/EEC, or a
similar relationship between any natural or legal person and an
undertaking;
(15b) intra-group transaction means any
transaction by which an insurance or reinsurance undertaking relies
either directly or indirectly on other undertakings within the same
group or on any natural or legal person linked to the undertakings
within that group by close links, for the fulfilment of an
obligation, whether or not contractual, and whether or not for
payment;
(16) participation means the ownership, direct or by
way of control, of 20 % or more of the voting rights or capital of
an undertaking;
(17) qualifying holding
means a direct or
indirect holding in an undertaking which represents 10 % or more of
the capital or of the voting rights or which makes it possible to
exercise a significant influence over the management of that
undertaking
(18) regulated market means either of the
following:
(a) in the case of a market situated in a Member
State, a regulated market as defined in Article 4(1)(14) of
Directive 2004/39/EC;
(b) in the case of a market situated
in a third country, a financial market which fulfils the following
conditions:
(i) it is recognised by the home Member State of
the insurance undertaking and meets requirements
comparable to those
under Directive 2004/39/EC;
(ii) the financial instruments
dealt in on that market are of a quality comparable to that of the
instruments dealt in on the regulated market or markets of the home
Member State;
(19) national bureau means a national insurers'
bureau as defined in Article 1(3) of Directive
72/166/EEC;
(20) national guarantee fund
means the body
referred to in Article 1(4) of Directive 84/5/EEC;
(21)
financial undertaking means any of the following
entities:
(a) a credit institution, a financial institution
or an ancillary banking services undertaking within the meaning of
Article 4(5) and (21) of Directive 2006/48/EC║;
(b) an
insurance undertaking, or a reinsurance undertaking or an insurance
holding company within the meaning of point (e) of Article
210(1);
(c) an investment firm or a financial institution
within the meaning of point 1 of Article 4(1) of Directive
2004/39/EC ;
(d) a mixed financial holding company within the
meaning of Article 2(15) of Directive 2002/87/EC ║;
(22)
special purpose vehicle means any undertaking,
whether incorporated
or not, other than an existing insurance or reinsurance undertaking,
which assumes risks from insurance or reinsurance undertakings and
which fully funds its exposure to such risks through the proceeds of
a debt issuance or any other financing mechanism where the repayment
rights of the providers of such debt or financing mechanism are
subordinated to the reinsurance obligations of such an undertaking
;
(22a) large risks means :
a) risks classified under
classes 4, 5, 6, 7, 11 and 12 in point A of Annex I;
b) risks
classified under classes 14 and 15 in point A of Annex I, where the
policyholder is engaged professionally in an industrial or
commercial activity or in one of the liberal professions, and the
risks relate to such activity;
c) risks classified under
classes 3, 8, 9, 10, 13 and 16 in point A of Annex I in so far as
the policyholder exceeds the limits of at least two of the following
three criteria:
(i) balance-sheet total: EUR 6 200
000;
(ii) net turnover: EUR 12 800 000;
(iii) average
number of employees during the financial year: 250.
If the
policyholder belongs to a group of undertakings for which
consolidated accounts within the meaning of Directive 83/349/EEC are
drawn up, the criteria set out in point (c) of the first
subparagraph shall be applied on the basis of the consolidated
accounts.
Member States may add to the category mentioned in
point (c) of the first subparagraph risks insured by professional
associations, joint ventures or temporary groupings;
(23)
outsourcing means an arrangement of any form between an insurance or
reinsurance undertaking and a service provider, whether a supervised
entity or not, by which that service provider performs a process, a
service or an activity, whether directly or by sub-outsourcing,
which would otherwise be performed by the insurance or reinsurance
undertaking itself;
(23a) governance function means an
internal capacity to undertake practical tasks. The risk management
function, compliance function, internal audit function and actuarial
function are governance functions;
(24) underwriting risk
means the risk of loss, or of adverse change in the value of
insurance liabilities, due to inadequate pricing and provisioning
assumptions;
(25) market risk means the risk of loss, or of
adverse change in the financial situation, resulting, directly or
indirectly, from fluctuations in the level and in the volatility of
market prices of assets, liabilities and financial instruments;
(26) credit risk means the risk of loss, or of adverse
change in the financial situation, resulting from fluctuations in
the credit standing of issuers of securities, counterparties and any
debtors to which insurance and reinsurance undertakings are exposed,
in the form of counterparty default risk, or spread risk, or market
risk concentrations;
(27) operational risk means the risk of
loss arising from inadequate or failed internal processes, or from
personnel and systems, or from external events;
(28)
liquidity risk means the risk that insurance and reinsurance
undertakings are unable to realise investments and other assets in
order to settle their financial obligations when they fall
due;
(29) concentration risk means all risk exposures with a
loss potential which is large enough to threaten the solvency or the
financial position of insurance and reinsurance
undertakings;
(30) risk mitigation techniques means all
techniques, which enable insurance and reinsurance undertakings to
transfer part or all of their risks to another party;
(31)
diversification effects means the reduction in the risk exposure of
insurance and reinsurance undertakings and groups
related to the
diversification of their business, resulting from the fact that the
adverse outcome from one risk can be offset by a more favourable
outcome from another risk, where those risks are not fully
correlated;
(32) probability distribution forecast
means a
mathematical function that assigns to an exhaustive set of mutually
exclusive future events a probability of realisation;
(33)
risk measure means a mathematical function which assigns a monetary
amount to a given probability distribution forecast and increases
monotonically with the level of risk exposure underlying that
probability distribution forecast;
CHAPTER
II
TAKING UP OF BUSINESS
Article 14
Principle
of authorisation
1. The taking up of the business of direct
insurance or of reinsurance covered by this Directive shall be
subject to prior authorisation.
2. The authorisation referred
to in paragraph 1 shall be sought from the supervisory authorities
of the home Member State by the following:
(a) any
undertaking which is establishing its head office within the
territory of that State;
(b) ---
(c) any insurance
undertaking which, having received an authorisation pursuant to
paragraph 1, wishes to extend its business to an entire class or to
insurance classes other than those already
authorised;
Article 15
Scope of
authorisation
1. An authorisation pursuant to Article 14
shall be valid for the entire Community.
It shall permit insurance
and reinsurance undertakings to carry on business there, that
authorisation covering also the right of establishment and the
freedom to provide services.
2. Subject to Article 14,
authorisation shall be granted for a particular class of direct
insurance as listed in point A of Annex I or in Annex II.
It shall
cover the entire class, unless the applicant wishes to cover only
some of the risks pertaining to that class.
The risks
included in a class may not be included in any other class except in
the cases referred to in Article 16(1).
Authorisation may be
granted for two or more of the classes, where the national law of a
Member State permits such classes to be carried on
simultaneously.
3. As far as non-life
insurance is concerned,
Member States may grant authorisation for the groups of classes
listed in point B of Annex I.
The supervisory authorities may
limit authorisation requested for one of the classes to the
operations set out in the scheme of operations referred to in
Article 23.
4. Undertakings subject to this Directive may
engage in the activity referred to in Article 6 only if they have
received authorisation for class 18 in point A of Annex I without
prejudice to Article 16(1). In that event this Directive shall apply
to the operations in question.
5. As far as
reinsurance is
concerned, authorisation shall be granted for non-life reinsurance
activity, life reinsurance activity or all kinds of reinsurance
activity.
The application shall be considered in the light
of the scheme of operations to be submitted pursuant to point (c) of
Article 18(1) and the fulfilment of the conditions laid down for
authorisation by the Member State from which the authorisation is
sought.
Article 16
Ancillary risks
1. An
insurance undertaking which has obtained an authorisation for a
principal risk belonging to one class or a group of classes as set
out in Annex I may also insure risks included in another class
without the need to obtain authorisation in respect of such risks
provided that the risks fulfil all the following
conditions:
(a) they are connected
with the principal
risk,;
(b) they concern the object which is covered against
the principal risk;
(c) they are covered by the contract
insuring the principal risk.
2. By way of Derogation from
paragraph 1, the risks included in classes 14, 15 and 17 in point A
of Annex I may not be regarded as risks ancillary to other
classes.
However, legal expenses insurance as set out in
class 17 may be regarded as risk ancillary to class 18, where the
conditions laid down in the paragraph 1 and either of the following
are fulfilled:
(a) the main risk relates solely to the
assistance provided for persons who fall into difficulties while
travelling, while away from home or while away from their permanent
residence;
(b) the insurance concerns disputes or risks
arising out of, or in connection with, the use of sea-going
vessels.
Article 17
Form of the insurance or
reinsurance undertaking
1. The home Member State shall
require every undertaking for which authorisation is sought under
Article 14 to adopt one of the forms set out in Annex III.
2.
Member States may set up undertakings in any public-law form
provided that such bodies have as their object insurance or
reinsurance operations under conditions equivalent to those under
which private-law undertakings operate.
3. The Commission may
adopt implementing measures relating to the extension of the forms
set out in Annex III.
Those implementing measures designed
to amend non-essential elements of this Directive inter alia by
supplementing it, shall be adopted in accordance with the regulatory
procedure with scrutiny referred to in Article
304(3).
Article 18
Conditions for
authorisation
1. The home Member State shall require every
undertaking for which authorisation is sought to:
(a) as far
as insurance undertakings are concerned,
limit their objects to the
business of insurance and operations arising directly there from,
to the exclusion of all other commercial business;
(b) as far
as reinsurance undertakings are concerned,
limit their objects to
the business of reinsurance and related operations; this requirement
may include a holding company function
and activities with respect
to financial sector activities within the meaning of Article 2(8) of
Directive 2002/87/EC;
(c) submit a scheme of operations in
accordance with Article 23;
(d) hold the eligible basic own
funds to cover the absolute floor of the Minimum Capital Requirement
provided for in point (d) of Article 127(1);
(e) 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, going forward;
(f) show evidence that it will be in a
position to hold eligible basic own funds to cover the Minimum
Capital Requirement, as provided for in Article 125, going
forward;
(g) show evidence that it will be in a position to
comply with the system of governance referred to in Chapter IV,
Section 2;
(h) as far as non-life insurance is concerned
communicate the name and address of all claims representatives
appointed pursuant to Article 4 of Directive 2000/26/EC in each
Member State other than the Member State in which the authorisation
is sought if the risks to be covered are classified in class 10 of
point A of Annex I, other than carrier's liability.
2. An
insurance undertaking seeking authorisation to extend its business
to other classes or to extend an authorisation covering only some of
the risks pertaining to one class shall be required to submit a
scheme of operations in accordance with Article 23.
It shall,
in addition, be required to show proof that it possesses the
eligible own funds to cover the Solvency Capital Requirement and
Minimum Capital Requirement provided for in Articles 100(1) and
126.
3. Without prejudice to paragraph 2, an insurance
undertaking carrying on life activities, and seeking
authorisation
to extend its business to the risks listed in classes 1 or 2 in
point A of Annex I as referred to in Article 72, shall demonstrate
the following:
(a) that it possesses the eligible basic own
funds to cover the absolute floor of the Minimum Capital Requirement
for life insurance undertakings and the absolute floor of the
Minimum Capital Requirement for non-life insurance undertakings, as
referred to in point (d) of Article 127(1);
(b) that it
undertakes to cover the minimum financial obligations referred to in
Article 73, going forward.
4. Without prejudice to paragraph
2, an insurance undertaking carrying on non-life activities for the
risks listed in classes 1 or 2 in point A of Annex I, and seeking
authorisation to extend its business to life insurance risks as
referred to in Article 72, shall demonstrate that the following:
(a) that it possesses the eligible basic own funds to cover
the absolute floor of the Minimum Capital Requirement for life
insurance undertakings and the absolute floor of the Minimum Capital
Requirement for non-life insurance undertakings, as referred to in
point (d) of Article 127(1);
(b) that it undertakes to cover
the minimum financial obligations referred to in Article 73(3) going
forward.
Article 19
Close links
Where
close links exist between the insurance undertaking or reinsurance
undertaking and other natural or legal persons, the supervisory
authorities shall grant authorisation only if
those links do not
prevent the effective exercise of their supervisory
functions.
The supervisory authorities
shall refuse
authorisation if the laws, regulations or administrative provisions
of a third country governing one or more natural or legal persons
with which the insurance or reinsurance undertaking has close links,
or difficulties involved in the enforcement of those laws, prevent
the effective exercise of their supervisory functions.
The
supervisory authorities shall require insurance or reinsurance
undertakings to provide them with the information
they require to
monitor compliance with the conditions referred to in the first
paragraph on a continuous basis.
Article 20
Head
office of the insurance or reinsurance undertaking
Member
States shall require that the head offices of insurance or
reinsurance undertakings be situated in the same Member State as
their registered offices.
  
Return to Index
Solvency ii Introduction (1) to (10)
Solvency ii Introduction (11) to (20)
Solvency ii Introduction (21) to (30)
Solvency ii Introduction (31) to (40)
Solvency ii Introduction (41) to (50)
Solvency ii Introduction (51) to (60)
Solvency ii Introduction (61) to (70)
Solvency ii Introduction (71) to (80)
Solvency ii Introduction (81) to (95)
Solvency ii Articles 1 to 10
Solvency ii Articles 11 to 20
Solvency ii Articles 21 to 30
Solvency ii Articles 31 to 39
Solvency ii Articles 40 to 49
Solvency ii Articles 50 to 62
Solvency ii Articles 63 to 71
Solvency ii Articles 72 to 85
Solvency ii Articles 86 to 99
Solvency ii Articles 100 to 125
Solvency ii Articles 126 to 142
Solvency ii Articles 143 to 159
Solvency ii Articles 160 to 173
Solvency ii Articles 174 to 203
Solvency ii Articles 204 to 215
Solvency ii Articles 216 to 233
Solvency ii Articles 234 to
262
Solvency ii Articles 263 to 298
Solvency ii Articles 300 to 313
Solvency ii ANNEX 1 to 3
Solvency ii ANNEX 4 to 5
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