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European Insurance Contract Law Commission Expert Groups final report

In an ever-increasing effort to improve the EU single market by making it easier for providers and consumers to buy and sell cross-border, the European Commission began work in 1999 to look at how differences in contract law can cause barriers to cross-border trade.

In early 2013, the European Commission decided they would like to look specifically at insurance contract law, an area that has been of considerable interest amongst academic specialists for over a decade.

They set up a group of experts from across the EU, representing the views of industry, academics and consumers. This group met on a monthly basis throughout 2013, and published a report on February 27, 2014 (pdf).

How was the ABI involved?

Whilst not represented directly on the Expert Group, the ABI has taken an interest and was able to liaise closely with other members on the Expert Group.

These included the insurance trade body Insurance Europe, of which the ABI is a member, and also the Law Society of England Scotland and Wales, the Lloyds Market Association, and Standard Life.

The ABI worked to ensure, along with other members of the Group, that the final report presented a more realistic picture of the true impact of differences in contract law than the European Commission had originally suggested.

What does the report say?

As well as considering general differences in insurance contract law, the report also looked in more detail at contract law barriers related to motor insurance, liability insurance, and life insurance (including pensions).

Discussions unveiled a variety of different understandings as to what constitutes ‘contract law’. It was also clear that insurance contract laws do differ between Member States. Depending on the definition of what “contract law” is, these differences can have an impact on the cost of operating cross border, and/or on the design of an insurance contract. The impact is different depending on the type of insurance. However, the Expert Group found no evidence to suggest that differences in contract law actually prevent insurance from being sold cross-border (whether under Freedom of Services or Freedom Of Establishment), nor could it conclude that the elimination of this barrier would have any impact at all on the volume of insurance currently sold cross-border.

Instead, experts agreed that a host of other important factors have a decisive factors impact on the cross-border provision and purchase of insurance within the internal market. These include, but are by no means limited by:

  • Language
  • Culture & history
  • Understanding the risk
  • Specific knowledge of any local market
  • Other regulations set by professional bodies, supervisors, non-contract law
  • Different tax regimes

What does this mean for UK insurers?

There is no immediate impact on insurance firms based in the UK.

Whilst the report itself concludes that differences in contract law are only a minor barrier to the provision of cross-border insurance, it is clear that there is a political drive within the EU institutions to “fix” the problem of differences in contract laws across the EU (see the European Commission’s press release).

One policy option previously considered is to create what is commonly termed a “29th regime” - a legal regime to sit in parallel to the existing 28 Member State legal regimes. It is unclear what impact this could have on the insurance industry in the UK, but we believe there is very little commercial demand for such a regime – either from providers or from consumers.

What is next?

The European Commission will not publish a consultative Green Paper in June 2014 as originally planned, as they prefer to wait until after the new Justice Commissioner is in place (not likely to be before November 2014).

In the meantime, it is organising informal meetings with stakeholders and member states, to collate views on the issue of contract law. In particular they are interested in:


  • Is the picture drawn by the expert group accurate?
  • Have the problems been under or over-estimated in the expert group’s report?
  • Do you share the views of the expert group?


  • Do you think an EU intervention is justified?
  • If so, what type of intervention would it be?

Based on these discussions, they can advise the new Commissioner accordingly and draft a consultation paper.

In the meantime, as the European Commission’s overall policy objective is to create a “pan-European insurance product“, two “pilot projects” have been identified as potential examples for this “pan-European insurance product”, namely cloud insurance products and private pension products. The European Commission plans to group together firms who are interested in developing such a product – both big international companies and some niche players.

Find out further information on a pan-EU pension product.

Last updated 01/07/2016