MacNeil, Ian G.

English

The European Community' s programme for the creation of the Single
Market is now largely complete. Two specific objectives underlie the
measures which have been adopted in the field of insurance. The first
is the application of the principle of "mutual recognition" to
prudential supervision. This is intended to allow insurers to conduct
business throughout the Community subject only to the control of their
home State. The second objective is that purchasers of insurance should
be offered greater choice through the freedom to purchase insurance
from any authorised insurer within the Community.

The introduction of the Single Market in insurance raises two important
issues in the field of contract law. First, the law applicable to the
contract must be clearly determined. Secondly, consideration needs to
be given to the impact which differences in contract law among the
Member States have on the functioning of the Single Market. In
addressing these issues, the Commission initially focused on the need
for harmonisation of insurance contract law. However, as it was not
possible to reach agreement among the Member States, the harmonisation
proposals were abandoned in favour of choice-of-law rules. These rules
will not result in any material change in the rules of English or Scots
law as regards the law applicable to insurance contracts. In most cases
the common law principle allowing a free choice of law will be
preserved. However, the implications of a choice of English or Scots
law as the applicable law will vary according to whether or not the
insured is resident in the United Kingdom.

The Community's approach to insurance contract law can be criticised
on two grounds. First, the complexity of the choice-of-Iaw rules makes
it difficult for the parties to cross-border insurance transactions to
determine their rights and obligations. Secondly, choice-of-law rules
do not address the issue of the impact which differences in insurance
contract law have on the functioning of the Single Market. The French,
German and British models illustrate that there are fundamental
differences among the laws of the Member States. If the benefits of the
Single Market are to be realised it may be necessary to revert to the
policy of harmonisation. This would permit a simpler approach to the
determination of the applicable law and would also make it easier for
business to be transacted on a cross-border basis. However, the
original proposals may require substantial amendment if harmonisation
is to make a material contribution to the achievement of the objectives
of the Single Market in insurance

MacNeil, Iain G.

Edinburgh Research Archive

Insurance contract law in the single European market

https://era.ed.ac.uk/bitstream/1842/7242/1/531109.pdf

Insurance contract law in the single European market

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Edinburgh Research Archive