The European Communities (Life Assurance) Framework (Amendment) Regulations 2011 (the "Amendment Regulations") are designed to give further effect to the provisions of Directive 2002/83/EC (the "Life Insurance Directive"). Effective from 18 November 2011, the Amendment Regulations amend the existing European Communities (Life Assurance) Framework Regulations, 1994 (the "Principal Regulations") and provide for the part transposition of a national discretion under Articles 18 and 19 of the Life Insurance Directive in permitting life insurance companies to conduct non-life classes 1 and 2 business (accident and sickness, respectively) where authorised to do so.
It is now possible for an insurance undertaking, whose head office is situated in the State, to carry on both the business of life assurance and non-life insurance falling within non-life classes 1 and 2, in circumstances where:
(i) it has been authorised in accordance with the European Communities (Non-Life Insurance) Framework Regulations, 1994 to conduct such insurance;
(ii) the business of life assurance and non-life insurance are managed separately; and
(iii) the undertaking only carries out non-life insurance to which the non-life classes 1 and 2 relate.
Where an insurance undertaking is authorised to carry on both the business of life assurance and non-life insurance, it must comply with certain requirements, including the following:
- compliance with accounting rules governing life insurance for all of its activities;
- activities relating to non-life classes 1 and 2 carried on by insurance undertakings shall be subject to the rules applicable to life insurance activities in the event of a winding up or reorganisation of the insurance undertaking;
- the insurance undertaking is prohibited from carrying on health insurance business;
- the management of the life insurance and the non-life insurance businesses must be separate and organised in a manner such that the respective interests of life policyholders and non-life policyholders are not prejudiced and that profits from the life insurance business benefit life policyholders as if the undertaking only carried on the business of life assurance;
- the separation of the management must ensure that the minimum financial obligations (i.e. the solvency margins) in respect of each of the activities, are not borne by the other activity. Where the solvency margin in respect of one activity is insufficient, the deficient activity will be subject to the measures of the Central Bank of Ireland which may include the authorisation of a transfer from one activity to the other.
For further details, please see - S.I. No. 593/2011 — European Communities (Life Assurance) Framework (Amendment) Regulations 2011.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.