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PR(04)20: The EFTA Surveillance Authority brings Norway before the EFTA Court for maintaining a provision requiring up-front payment of completion costs in life assurance contracts


The EFTA Surveillance Authority has decided to bring Norway before the  EFTA Courtfor failure to fulfil its obligations under Article 33 of the Life Assurance Directive[1].

According to this provision, Norway may not prevent a consumer from entering into an assurance contract with an assurance company authorized in another EEA state, as long as such a contract does not conflict with legal provisions protecting the “general good” (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 the one which is best suited to accommodate their needs.

Norwegian legislation[2] requires that all costs concerning the completion of a life assurance contract must be paid at the latest together with the first premium payment (referred to as up-front payment of completion costs). Completion costs are defined as costs that accrue directly from the completion of the contract. The purpose of the requirement is to provide transparency for the consumers and further to facilitate a subsequent change of assurance supplier. Norway also argues that the transparency has increased competition between assurance providers, which in turn has resulted in lower prices for consumers.

In the Authority’s view, the Norwegian provision, which limits consumers’ freedom to choose between different assurance products offered within the EEA, constitutes a restriction on the free provision of assurance services as it excludes a consumer from concluding a contract where the payment for the completion costs is distributed over a certain period. Such a restriction can only be justified if it is objectively necessary and in proportion to the objective pursued. In the opinion of the Authority, the aims behind the disputed provision can be fulfilled by less restrictive measures, such as ensuring that the consumers receive sufficient information about the completion costs involved concerning an assurance product. Such an information requirement would be sufficient to ensure transparency and, therefore, competition among assurance providers. Consequently, the Norwegian provision is not deemed to be in compliance with Article 33 of the Life Assurance Directive.

For further information please contact Mr. Niels Fenger, Director, telephone (+32)(0)2 286 18 30.

[1]Directive 2002/83/EC of the European Parliament and of the Council of 5 November 2002 concerning life assurance

[2]Section 3(2) of Norwegian Regulation of 21 November 1989 No 1167

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