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PR(03)23: Financial services: Reasoned opinion sent to Norway on a provision requiring the up-front payment of completion costs of life assurance contracts


On 24 July 2003, the EFTA Surveillance Authority delivered a reasoned opinion to Norway concerning a requirement in Norwegian law on the up-front payment of completion costs of life assurance contracts. In its reasoned opinion, the Authority maintains that the requirement on the up-front payment of completion costs is contrary to Article 28 of the Act referred to at point 12a of Annex IX to the EEA Agreement, “the Third Life Assurance Directive” (92/96/EEC). 

It follows from that provision that the EEA State of commitment, in this case Norway, should not prevent a policy-holder from concluding an assurance contract with an assurance company authorized in another EEA state, as long as that does not conflict with legal provisions protecting, inter alia, consumer interests in Norway. The objective of the provision is to give consumers access to the widest possible range of assurance products available in the EEA so that they can choose that which is best suited to their needs.

National provisions protecting consumer interests may constitute restrictions on the free movement of assurance services. Such provisions must therefore be applied without discrimination and they must be objectively necessary and in proportion to the objective pursued. 

Section 3(2) of the Norwegian Regulation of 21 November 1989 No 1167 requires that completion costs of assurance contracts must be paid up-front. Completion costs are defined as those costs that accrue directly from the completion of the contract. The purpose of that requirement is to provide transparency for the consumers and further to facilitate a subsequent change of assurance supplier. Norway further argues that the transparency as to the amount of completion costs being charged, has increased competition between assurance providers, which has had the effect of reducing those costs for the consumers.

The provision prevents a policyholder from concluding contracts where the payment for the completion costs is distributed over a certain period. In the Authority’s view such a provision limits consumers’ right to choose between all the different assurance products offered for sale in the EEA. Such national restrictions can only be justified if they are objectively necessary and in proportion to the objective pursued. It is the opinion of the Authority that the aims behind the disputed Norwegian provision can be fulfilled by less restrictive measures, such as ensuring that the consumers receive sufficient information about the assurance products in order to choose the product best suited to their needs. It is also the view of the Authority that competition in the Norwegian market should be attained by providing access for the widest possible range of assurance products. The provision is therefore not in compliance with Article 28 of the Third Life Assurance Directive.

The purpose of a reasoned opinion is to give the State in question a last chance to take corrective measures before the Authority decides whether to bring the matter before the EFTA Court. Norway has been given three months to take the measures necessary to comply with the reasoned opinion.

For further information please contact Mr. Per Andreas Bjørgan, Legal Officer, telephone (+32)(0)2 286 18 36.

24 July 2003

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