European internal insurance market Flashcards
Alpine insurance tradition
A manifestation of solidarity, low selectivity, low segmentation of risks, high premiums, state supervision, long-term contracts
Maritime insurance tradition
Competitive and bargained-for price, high selectivity, high segmentation of risks, low premiums, a posteriori solvent checking, short term contracts
A Member State can impose its own restrictive legislation upon foreign undertakings if
(i) justified by an imperative reason relating to the general good
(ii) necessary
(iii) respects the principle of proportionality
(iv) not discriminatory
(v) has not already been treated by home Member State
Three pillar model of Solvency II
Pillar I: Quantitative requirements and how to calculate them
Pillar II: Qualitative requirements (risk management and supervision)
Pillar III: Supervisory reporting and disclosure of information requirements
Pillar I: quantitative requirements
A sophisticated and global assessment of all the different risks based on their market value, both on liabilities side (technical provisions and insurance risk), and on assets side (market risk, credit risk, operation risk, liquidity risk)
Solvency capital requirement
The SCR is tTto ensure that the (re)insurance company will be able to meet its obligations over the next 12 months with a probability of at least 99.5%
Minimum capital requirement
The threshold below which the national supervisor (regulator) would intervene. The MCR is intended to correspond to an 85% probability of adequacy over a one-year period and is bounded between 25% and 45% of the SCR.
Commission v. Germany 205/84 (1986)
Germany failed to fulfil its obligations under Art 59 & 60 by requiring insurance undertakings to be established in its territory if they wish to provide direct insurance business and co-insurance there (except for compulsory insurance and insurer who directs his business principally towards its territory)
Concept of the “general good”
Judge-made, developed in the case law of the EC Court of Justice, allowing Member states, in absence of harmonisation of law, to maintain certain national measures, even if these measures restrict the free movement of services and establishment.
