How is the writing of insurance contracts regulated in your jurisdiction?
Insurance & Reinsurance (3rd edition)
In general terms, and according to consumer protection legislation, all contracts involving consumer relations – including insurance contracts – must be drafted in a clear and precise manner, especially the clauses that may impose limitation on consumer rights. Specifically with regard to insurance contracts, the Law (Decree 73/1966) confers on the regulating and market supervision bodies, respectively, the National Council of Private Insurance (CNSP) and the Superintendence of Private Insurance (SUSEP) the power to establish the general characteristics of insurance contracts and also the policy conditions to be mandatorily used.
Swiss insurance companies as well as foreign insurers wishing to do business in or from Switzerland have to be authorised by the Swiss Financial Market Supervisory Authority (Eidgenössische Finananzmakrtaufsicht –FINMA) before they may do so as a matter of principle.
The FINMA has the competency to supervise the activities of insurance companies doing business in or from Switzerland in accordance with the Financial Market Supervision Act (Bundesgesetz vom 22. Juni 2007 über die Eidgenössiche Finanzmarkaufsicht, Finanzmarktaufsichtsgesetz, FINMAG- FINMASA).
The Insurance Supervision Act (Bundesgesetz betreffend die Aufsicht über Versicherungsuntermen vom 17. 12. 2006, Versicherungsaufsichtsgetz, VAG- ISA) sets down the regulatory requirements that have to be met by insurance companies in order to obtain a license and the business rules that have to be respected in the proper course of the conduct of their business up until run-off. The ISA is relatively lean when compared with the more detailed and more technical Insurance Supervision Ordinance (Verordnung betreffend die Beaufsichtigung von Versicherungsunternehmen, Aufsichtsverordnung AVO- ISO), which complements it. The ISA and ISO are further complemented by Circulars of the FINMA that give details concerning the FINMA’s supervisory practice. Such Circulars are binding on the FINMA so far as the supervisory practices described in its Circulars are concerned.
The relationship between an insurance company and its policyholders is predominantly regulated by the Insurance Contract Act (Bundesgesetz über den Versicherungsvertrag of 1908, Versicherungsvertragsgesetz, VAG- ICA). The provisions of the ICA are themselves complemented by the general principles of the Code of Obligations (Obligationenrecht, OR-CO).
Both, the ISA and the ICA are currently under revision. After the Parliament had declined a full revision (Totalrevision) of the ICA in 2013 it mandated the Federal Council (Bundesrat) to prepare a partial revision (Teilrevision) focussing on certain selected matters. A pre-draft for consultation (Vernehmlassungsvorlage) of the partially revised ICA was published by the Federal Council in July 2017 and stakeholders were invited to take part in the consultation. In November 2017 the Federal Council released the draft ICA (“Draft ICA”). The draft has been dealt with by the Parliament since the beginning of 2018. It is expected that the revised ICA could enter into force in 2020.
The revision of the ISA is still at an earlier stage. The Federal Council started its consultation of the stakeholders and published the pre-draft of the revised ISA in November 2018 (“Pre-Draft ISA”). The consultation was closed at the end of February 2019. The next step will be the release of a draft law by the Federal Council.
Though we can neither foresee whether the Parliament will adopt the Draft ICA (with or without further amendments), nor whether and what further amendments will be made to the Pre-Draft ISA following the consultation, we endeavour to highlight in the following where (possible) changes could affect our answers to the questions below:
Pursuant to the Insurance Business Act of South Korea (“IBA”), licensed insurers shall have “Basic Documents” in the Korean language pursuant to the Presidential Decree which include insurance business manuals, policies and methods of calculating premiums and liability reserves with Explanatory Materials and consent forms.
Insurers are required to file a prior report to the Financial Supervisory Service (“FSS”) which include forms and rates (“File-and-Use”). File-and-Use procedures must be complied with for (1) insurance products expressly required to be filed for approval pursuant to law, (2) bancassurance products, and (3) insurance products pursuant to Presidential Decree for the protection of insurance policyholders. In the event that an insurance product does not fall under any of the foregoing conditions under the IBA, then the insurer may file a post-hoc report on a quarterly basis (“Use-and-File”).
According to the General Banking and Insurance Act, Law No. 26702 ('General Law') and the Insurance Contract Act, Law No. 29946 ('ICA'), the insurers are free to set the conditions of their policies, its rates and other conditions. The insurance contract is concluded with the consent of the parties, although the policy has not been issued nor the premium payment has been made. Notwithstanding the foregoing, the ICA establishes that the minimum requirements that, among others, the policies must contain are the following:
(a) Complete personal data of the insurer and the contractor;
(b) Specification of the insured person, asset or insured benefit;
(c) Risks covered and exclusions;
(d) Date and term;
(e) Declared value, sum assured or scope of coverage;
(f) Franchises and deductibles agreed;
(g) Schedule of instalments of the premium;
(h) Official registration of the broker and the commission to be received, if applicable;
(i) In cases of life insurance and personal accidents with death or incidental death coverage, the policy must expressly state that the contract is part of the National Information Registry of Life Insurance Contracts and Personal Accidents with coverage of death or accidental death;
(j) In cases of property damage insurance, the policy must contain the indication of the performance of the contractor if two policies cover the same risk.
The content of the policies has a greater regulation in the matter of personal, compulsory and mass insurance. In these cases, the policies must be subject to the minimum conditions and/or clauses that will be approved by resolution of the Superintendent. Moreover, in said matters, the Superintendence of Banking, Insurance and AFP ('SBS') expressly approves and before its application, the minimum conditions and/or clauses of the insurance contracts. In other cases, policies should only be made known to the SBS before use and apply.
Likewise, the ICA has a declarative list of prohibited clauses that, if included in the insurance policies, are null and void.
Since China is a continental law country, the sources of law are statutory codes. In China, the sources of insurance law mainly consist of:
a the PRC Insurance Law;
b judicial interpretations issued by the Supreme People’s Court;
c other relevant laws promulgated by the National People’s Congress; and
d regulations and guidelines issued by China Banking and Insurance Regulatory Commission (CBIRC, previously known as China Insurance Regulatory Commission, CIRC) and other relevant government institutions.
Pursuant to the PRC Insurance Law, an insurance contract is defined as an agreement in which an applicant and an insurer set out their respective rights and obligations under the insurance policy. An insurance contract is formed when an insurance applicant applies for insurance and the insurer accepts the application. The insurer shall issue to the insurance applicant an insurance policy or any other insurance certificate in a timely manner.
The main source of law specifically relevant for insurance contracts is the Danish Insurance Contracts Act, which sets out certain rights and obligations of the parties to an insurance contract. The Act applies unless the parties to the contract agree otherwise. However, a number of the provisions in the Act are mandatory and hence cannot validly be derogated from. The Act holds a number of general provisions that apply to all insurance contracts, and a number of special provisions that only apply to certain types of insurances, e.g. life insurance, accident insurance and health insurance.
Apart from the mandatory provisions in the Danish Insurance Contracts Act, insurance contracts are subject to the general principles of Danish contract law, according to which the parties to a great extent enjoy the freedom of contract, allowing the parties to agree on the terms and conditions governing their relationship.
In brief, contracts, including insurance contracts, are formed under Danish contract law on the basis of an offer and an acceptance. The insurance policy constitutes the con-tract, which holds the terms and conditions that the parties have agreed upon. It is worth noting that the fact that the policyholder does not react to an offer from the in-surance company will not in itself substantiate a contractual obligation. However, dur-ing the insurance period, insurers may have an interest in changing the policy terms, and in such instances Danish courts have accepted that under certain circumstances, revised policy terms are binding on the policyholder even in the absence of an explicit acceptance.
Writing insurance is thoroughly regulated in France. Insurance companies that write insurance contracts in France operate within a specific legal and regulatory framework, which stems from a number of key legal sources (chief amongst which are the French Insurance Code and the French Mutual Code) and is heavily influenced by European Regulations. This framework regulates all the main aspects of the industry, from the licensing of insurance companies and the prudential and financial requirements to which they are subject to the distribution and content of insurance contracts.
An independent administrative authority called the APCR (Autorité de Contrôle Prudentiel et de Résolution) is responsible for licensing and supervising insurance activities (as well as reinsurance and banking activities). It also issues guidelines, relating to best practice, and can hand down sanctions, in instances where insurance companies have fallen foul of their obligations.
In addition, the AMF (Autorité des Marchés Financiers) and the ACPR are working closely through a common platform (Pôle commun), whose purpose is to ensure consumer protection with regard to:
- marketing practices, especially in relation to the advertising of life insurance products, and compliance with Law No. 2016-1691 of 9 December 2016, which sets out new requirements regarding, inter alia, transparency and anti-corruption;
- business practices, particularly regarding alternative distribution channels such as cold calling.
The formation and content of individual insurance contracts are also subject to regulation, namely by way of a body of specific requirements, which are set out in the French Insurance Code and intended to promote transparency and ensure that parties to an insurance contract appreciate the precise nature and extent of the cover provided under the contract and their respective obligations in connection with the said contract. This legal framework inter alia governs:
- insurers’ duty to provide information and advice to the insured before the execution of contract,
- the way the risk is disclosed during the underwriting phase (i.e. by way of a questionnaire that is prepared by the insurer and completed by the potential insured), or
- substantive and formal requirements by which all insurance contracts must abide (for instance, certain types of clauses are mandatory and must be included in all insurance policies, whereas other types of clauses, such as exclusion clauses or warranty forfeiture clauses, are unenforceable unless they meet strict requirements as to their wording or layout).
Insurance contracts in Australia are regulated by various Commonwealth Acts which deal with both the activity of insurers and reinsurers and the writing of the contracts. The activity of insurers is regulated by (i) the Insurance Act 1973 (Cth) (IA) for general insurers, (ii) the Life Insurance Act 1995 (Cth) (LIA) for life insurers, and (iii) the Private Health Insurance (Prudential Supervision) Act 2015 (Cth) for private health insurers. The writing of insurance contracts is separately regulated by (i) the Insurance Contracts Act 1984 (Cth) (ICA) which regulates contracts of general insurance and life insurance, (ii) the Marine Insurance Act 1909 (Cth) which regulates contracts of marine insurance and (iii) the Private Health Insurance Act 2007 (Cth) which regulates contracts of health insurance.
Insurance supervision in Germany is mainly regulated by the Insurance Supervisory Act (Versicherungsaufsichtsgesetz, VAG). The VAG contains provisions regarding, inter alia, authorisation, fund requirements and governance for insurance and reinsurance undertakings. The VAG was reformed in order to transpose the Directive 2009/138/EC ("Solvency II Directive") into domestic law as of 1 January 2016. The Solvency II Directive is supplemented by the Commission Delegated Regulation (EU) 2015/35 of 10 October 2014 which is directly applicable in Germany.
In addition to the provisions of the VAG, insurance and reinsurance undertakings have to comply with a wide range of provisions in German law, e.g. under civil, company and data protection law.
The relevant regulatory body in Germany for insurance and reinsurance activities is the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, BaFin). It supervises all private and public insurance undertakings which carry on private insurance business within the scope of the VAG and have their registered office in Germany. In addition, there are supervisory authorities of the Federal States which are mainly responsible for supervising public insurers whose activities are restricted to the particular Federal State and private insurers who are of lesser financial and economic significance.
Insurance and reinsurance undertakings which have their registered office in another EU Member State, or in a state which is party to the Agreement on the European Economic Area (EEA), and conduct business in Germany under the European Passport or Single License Principle are mainly subject to their home country's supervision, especially in prudential matters. Additional requirements apply for establishing a branch. BaFin closely cooperates with foreign supervisory authorities, especially within the European System of Financial Supervision including the European Insurance and Occupational Pensions Authority (EIOPA).
The Insurance Contract Law, 1981 (hereinafter: The Contract Law) regulates the format and the content of insurance contracts. The insurance contract must be in writing and the proposal form must be attached to the policy. If the proposal form is not attached the Insurer will not be able to rely on it in case of a claim. The insurance contract must be in the format required by the Contract Law.
In addition, the Commissioner of Insurance issued several regulations which dictate wording of certain private line policies which refer to conditions that should be included or should not be included in insurance contracts (such as Household Policy, Travel Policy, Motor Vehicle Bodily Injury).
According to the Control Over Financial Services (Insurance) Law, 1981 (hereinafter: the Control Law) any new insurance program or any change in the terms of an existing program must be notified in advance to the Commissioner of Insurance and receive his approval to the change.
The Legislative Decree of 7 September 2005, n. 209 (herein after only the Italian Private insurance Code) makes clear that only public companies, cooperatives and mutual insurance companies or equivalent foreign companies can practice insurance and reinsurance. Foreign insurers based in an EU Member State can write business in Italy directly under the freedom of services principle, in accordance to EU legislation and national implementation rules.
To start their operations any of the above mentioned enterprises, regardless if they are Italian or foreign, shall apply to the IVASS (the Italian Supervisory Agency) for an authorization to underwrite insurance and reinsurance in Italy. A notable exception were the Lloyd’s syndicates that were specially authorized by way of the Industry Ministry Decree 02.07.1986 due to their special historical status. New insurance and/or reinsurance companies wishing to do business in Italy shall seek and obtain IVASS’s authorization order (if the undertaking has its head office in Italy) or by a formal acknowledgment of the certification issued by any other competent EU supervising authority where the company has a registered office. The newly authorized (re)insurance company can start operating only after IVASS’s authorization, or the formal acknowledgment, has been published in the Italian Official Journal.
Writing of insurance contracts is regulated by the Insurance Business Act and the Financial Services Agency (the “FSA”) supervises insurance companies. Offering new insurance products requires approval from the FSA, (“Insurance Product Approval” – regular processing takes 90 days, standardised 45 days). However, regarding certain types of insurance where there is little fear of insufficient policyholder protection, such as fire insurance, a notification system to the regulatory authorities has been adopted, although notification may not be required in cases where insurance companies state in the statement of business procedures that special provisions related to business insurance are to be established or modified without notifications. (“Flexible Provision System”).
The writing of insurance contracts in Poland is regulated by the Polish Civil Code of 23 April 1964 (the “Civil Code”) and by the Polish Act on Insurance and Reinsurance Activity of 11 September 2015 (the “Insurance Law”). Additional rules are also laid down in the Commission Delegated Regulation (EU) 2015/35 (the “Delegated Regulation”), which applies directly in Poland.
The Civil Law regulates the scope, content, rules of conclusion and termination of insurance contracts.
The Insurance Law implements Directive 2009/138/EC on the taking-up and pursuit of the business of insurance and reinsurance (the “Solvency II Directive”). It regulates, among other things, the licensing of insurance and reinsurance companies, supervision over insurance and reinsurance activity, insurance secrecy, outsourcing, solvency capital requirements and other obligations and requirements for insurance and reinsurance undertakings. It also contains some provisions regulating insurance contracts (in addition to those provided for in the Civil Code).
The Insurance Law sets out the rules for the conduct of activity by (a) insurance and reinsurance undertakings established in Poland, (b) the Polish branches (the so-called “main branches”) of insurance or reinsurance undertakings established in non-EU countries (third countries) as well as (c) the insurance or reinsurance undertakings established in the EU or EEA Member States, which conduct activity in Poland on the basis of the freedom of establishment (in the form of branches) or on the basis of the freedom of services (on a cross-border basis).
In addition to the above regulations, there are also a number of recommendations and guidelines which are issued for insurance and reinsurance companies by the Polish Financial Supervision Authority (Komisja Nadzoru Finansowego – “KNF”).
The regulation of the insurance business in Chile has a legal statute that is structured as follows:
- the rules on "contract" which are located predominantly in articles 512 et seq. of the Commercial Code , in addition to some rules of the Law on the Protection of Consumer Rights in cases of insurance contracts concluded with consumers;
- the legal norms that regulate the activity or operation of insurance companies, contained preferably in Decree with Force of Law number 251 (hereinafter DFL 251). In the case of insurance companies, DFL 251 also contemplates the minimum capital regime and technical reserves, rules on corporate governance, liquidation, among others;
- the norms that refer to the supervision of insurance activity, contained in two normative bodies: on the one hand, Law 21,000 that creates from 2017 a new institutionality is supervised in Chile -opted by an integrated supervision system or Allfinanz- in charge of the Commission for the Financial Market (hereinafter CMF) and, on the other hand, the norms of DFL 251 that regulate the activity of the subjects that intervene in the insurance industry (insurers, insurance brokers and adjusters).
Mexican insurance contracts are governed by the Insurance Contract Law (“LCS”). The LCS applies to all insurance contracts, except for maritime insurance governed by the Navigation and Maritime Commerce Law (“LNCM”) published in the Official Gazette of the Federation (Diario Oficial de la Federación) (“DOF”) on 1 June 2006.
The insurance contract is formed through the consent of the parties. According to Article 21.1 of the LCS the insurance contract comes into effect when the insured receives a confirmation that the insurance company accepted his request for insurance coverage, regardless of whether any written evidence such as an insurance policy or certificate is issued. The effectiveness of an insurance contract should not be subject to the condition that the respective insurance policy or any other document evidencing its acceptance is issued nor to the condition that the respective premium is paid.
The regulation of insurers and reinsurers (collectively, "(re)insurers") in the United Kingdom ("UK") changed substantially following the 2007-2008 financial crises and the implementation of the Solvency II directive.
The Financial Services and Markets Act 2000 ("FSMA") established a system for the regulation of various “regulated activities”, as set out in the Financial Services and Markets Act 2000 (Regulated Activities Order) 2001 ("RAO"). Whilst the UK's regulatory framework derives mainly from FSMA and its related implementing legislation and rules, it is also substantially influenced by and, where required, implements various European laws, including the Solvency II Directive.
Under FSMA no person may carry on a "regulated activity" in the UK unless they are an "authorised person" or an "exempt person". Authorisation to carry on (re)insurance business in the UK may be obtained directly from the relevant UK regulator, or for a European headquartered (re)insurer firm, by passporting into the UK from that European head office's jurisdiction.
A review by the UK government in the wake of the crisis led in 2013 to the then single financial services regulator, the Financial Services Authority ("FSA"), being replaced by, and its functions distributed between, two new regulatory authorities, the Prudential Regulation Authority ("PRA") and the Financial Conduct Authority ("FCA") (together the "Regulators").
(Re)insurers are regulated by both Regulators (and are therefore described as being "dual-regulated"), although the PRA acts as the "lead regulator" and therefore is the main point of contact for supervisory decisions. Insurance intermediaries are regulated by the FCA only (see further paragraph 4 below).
The UK's regulatory system also applies to Lloyd's of London ("Lloyd's), a specialist reinsurance market in the City of London within which multiple financial backers, grouped in syndicates, come together to pool and spread risk. Both Lloyd's and syndicates operating within it are dual-regulated. The majority of reinsurance business written by underwriters at Lloyd’s (also known as "members") is placed through brokers and both members and brokers are regulated by the FCA.
As noted above, much of UK insurance regulation derives from EU law. As a result the potential exit of the UK from the EU ("Brexit") results in some uncertainty as to the future (both immediate and long-term) of insurance regulation in the UK.
The European Union (Withdrawal) Act 2018 repeals the European Communities Act 1972 on "Brexit day" and provides that almost EU and EU-derived law will be "onshored" as it stands immediately before the UK's departure from the EU. It also provides the government with wide powers, exercisable for two years following Brexit, to amend UK law to rectify deficiencies arising from the disapplication of EU law and the onshoring process. The UK Treasury has indicated that immediately following Brexit certain of such powers will be delegated to the PRA and FCA. The regulators have in turn issued some announcements setting out how they intend to use these delegated powers.
The PRA and FCA's approach to insurance regulation is not expected to change immediately post-Brexit. Accordingly, in the short-term, Brexit will affect firms which operate cross-border in the UK and Europe, either passporting their insurance permissions outwards from the UK to the EU or inwards from the EU to the UK. In the event of a no-deal Brexit this passporting would no longer be available.
Most (re)insurers affected have planned for this contingency and taken steps to restructure their business to ensure that they are able to continue to operate in the event of a no-deal Brexit. The UK and EU insurance regulators have also agreed memoranda of understanding setting out how the regulators intend to cooperate with respect to supervision, enforcement and exchange on information in a no-deal Brexit scenario. These memoranda have not been made public.
The European Insurance and Occupational Pensions Authority ("EIOPA") has also published recommendations for national EU insurance regulators with respect to how UK insurers operating in the EU should be treated in no-deal scenario in order to minimise disruption to policyholders. These guidelines suggest that UK insurers will be able to run-off existing cross-border business although they will not be able to enter into new contracts or renew or extend existing contracts.
Belgium is a civil law jurisdiction. The Civil Code includes summary provisions on insurance, as well as general rules on contract and tort. The Code of Economic Law regulates consumer contracts and market practices.
In addition, Belgium has detailed legislation on contracts of insurance. The main sources of insurance law in Belgium are:
• Law of 13 March 2016 on the status and supervision of insurance and reinsurance undertakings (the “2016 Law”);
• the Law of 4 April 2014 on insurance (“the 2014 Law”);
• various Royal Decrees implementing the 2016 Law, such as the Royal Decree of 22 February 1991 on the general regulation on the supervision on insurance (“the 1991 Decree”);
• various Royal Decrees implementing the 2014 Law, such as:
- Royal Decree of 14 November 2003 regarding the activity of life insurance (the “2003 Decree”);
- Royal Decree of 16 April 2018 setting out the conditions for compulsory motor insurance contracts; and
- Royal Decree of 25 March 1996 implementing the Law of 27 March 1995 on insurance and reinsurance mediation and insurance distribution;
Belgium has a “twin-peaks” supervisory model. The National Bank of Belgium (the “NBB”) assumes responsibility for prudential supervision of the financial sector. A separate authority, the Financial Services and Markets Authority (“FSMA”), is responsible for regulation of financial services and markets, including the conduct of business of (re)insurance undertakings in Belgium, and for the registration and regulation of (re)insurance intermediaries.
Both the NBB and the FSMA provide guidance on the interpretation and application of the 2014 and 2016 Laws. Their Regulations are often ratified by a Royal Decree.
The McCarran-Ferguson Act (the “Act”), passed by Congress in 1945, explicitly provides for state regulation of insurance. The insurance industry is, therefore, almost exclusively regulated by the individual fifty states’ governments. Each state has an insurance or financial services department which implements and administers regulations concerning a wide variety of matters, including insurers’ (i) finances, (ii) market conduct, (iii) premium rates and policy forms, and (iv) the amount and type of capital insurers must hold as security for their policy obligations. Insurers are generally regulated by the insurance department of the state in which they are domiciled.
Most state regulators are members of the National Association of Insurance Commissioners (“NAIC”) which is a regulatory support and standard-setting organization that promulgates model laws and regulations in an effort to standardize and coordinate insurance regulation across the fifty states, the District of Columbia, and U.S. territories.
The UAE is often described has having two separate but interconnected and interdependent insurance markets: the 'onshore' UAE market and the 'offshore market' which comprises the Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM), of which the latter two are largely wholesale ‘offshore’ reinsurance centres.
With the exception of the DIFC and ADGM, the UAE insurance market is supervised by the UAE Federal Insurance Authority (IA) pursuant to Federal Law No. 6 of 2007 on the Establishment of the Insurance Authority and Regulation of its Operations as amended by Federal Law No. 3 of 2018 (Insurance Law).
The IA oversees all insurance business in the UAE. However, for the offshore insurance market i.e. insurers based within the DIFC or the ADGM, the Dubai Financial Services Authority (DFSA) and the Financial Services Regulatory Authority (FRSA), respectively, regulate DIFC and ADGM-based insurers and reinsurers. Each regulator has its own specific requirements for the authorisation, licensing and regulation of companies offering insurance services.
In addition to the above, there are separate dedicated regulators for the health insurance sector in some of the individual Emirates including the Dubai Health Authority, the Department of Health of Abu Dhabi and the Sharjah Health Authority.
In relation to the actual writing of insurance contracts and policy wording, the majority of policies executed in the UAE incorporate London market wordings. Policies issued in the UAE are to be issued in Arabic (article 28 of the Insurance Law), and may be translated into any other language. If there is a difference in interpretation between the two languages, the Arabic version will prevail.
Should there be uncertainty as to the meaning of a policy term, it will be construed by the court in favour of the obligor (article 266(1) Civil Code). It is permissible to construe ambiguous wording in policies in a manner detrimental to the party that put it forward or the party that benefits from it if they are deemed to be contracts of adhesion (article 266(2) Civil Code). Should there be scope for interpretation of the policy, the court will make enquiries into the ‘mutual intentions of the parties’, as well as the nature of the transaction, and the trust and confidence that should exist between the parties (article 265(2) Civil Code). However, where the wording of a policy is clear, it may not be departed from by way of interpretation to ascertain the intention of the parties (article 265(1) Civil Code).
The Indonesian Commercial Code, the Indonesian Civil Code, Law 40 of 2014 on Insurance (Insurance Law) and Financial Services Authority (OJK) Regulation 23/POJK.05/2015 on Insurance Products and the Marketing of Insurance Products (OJK Regulation 23/2015) regulate the writing of insurance contracts in Indonesia. OJK Regulation 23/2015 specifically provides for the minimum requirements and restrictions applicable to insurance contracts (e.g. payment methods, including required currency, grace periods for premiums and contributions, and dispute settlement mechanisms).
All insurance contracts are required to be filed with the Insurance Development and Regulatory Authority of India (IRDAI), ie, the Indian Insurance Regulator, in accordance with the applicable product filing guidelines issued by the IRDAI.
Insurers are permitted to market group health insurance products and commercial general insurance products without the prior approval of the IRDAI, subject to compliance with applicable laws. However, life insurance products, retail general insurance products and individual health insurance products can only be offered if the terms and conditions of these products have been approved by the IRDAI.
Further, there are extraneous rules that impact policy terms. For example, the Insurance Act 1938 gives the policyholder a right to override contrary policy terms in favour of Indian law and jurisdiction, and Indian policyholders cannot be stopped from approaching the Consumer Courts.
The writing of insurance contracts is regulated by the Civil and Commercial Code, the Life Insurance Act 1992 (“LIA”), the Non-Life Insurance Act 1992 (“NLIA”), and subsidiary laws issued thereunder. In addition, certain types of insurance are regulated by specific laws; namely compulsory motor insurance under the Motor Accident Victims Protection Act 1992, and social security under the Social Security Act 1990.
The Office of Insurance Commission (“OIC”), under the supervision of the Ministry of Finance (“MOF”), is the main authority regulating insurance and reinsurance companies in Thailand.
The writing of insurance contracts is regulated by the Insurance Contract Act (Versicherungsvertragsgesetz; VersVG), which governs the rights and duties of both the insurer and the insured. The general sections of the VersVG are set out in Articles 1 to 49 and cover all types of insurance contracts. In addition, the VersVG sets out specific rules for different insurance branches such as indemnity insurance, fire insurance, personal liability insurance, legal protection insurance, life insurance, private health insurance and casualty insurance. Maritime insurance and reinsurance contracts are explicitly excluded by the scope of application of the VersVG.
However, the VersVG does not regulate every single aspect of insurance contracts. Rather, it is supplemented by the provisions of the Austrian Civil Code (Allgemeines Bürgerliches Gesetzbuch; ABGB). Matters such as conclusion, transferability, conversion and termination of contracts are (partly) regulated by the ABGB. When insuring consumers, certain provisions of the Consumer Protection Act (Konsumentenschutzgesetz; KSchG) and other consumer-specific statutory provisions have to be borne in mind as well. Moreover, special laws for certain types of insurance contracts exist, as is the case with motor third party liability insurance (Kraftfahrzeug-Haftpflichtversicherungsgesetz; KHVG).
In addition, certain provisions of the Insurance Supervision Act (Versicherungsaufsichtsgesetz; VAG) may be of relevance when writing insurance contracts, e.g. the insurer’s information obligations towards the insured.
There is no statutory definition of a contract of insurance under Irish law. The law in relation to insurance contracts in Ireland is primarily governed by common law principles, the origins of which can be found in case law. The Irish courts have addressed this issue on a case by case basis. The decision of the English courts in Prudential Insurance Company v Inland Revenue Commissioners  2 KB 658, which sets out the elements of an insurance contract, is the seminal English case in this area and is of persuasive authority in Ireland. The cumulative test in the Prudential case can be summarised as follows:
- The contract must provide that the insured, in return for consideration, will become entitled to something on the occurrence of some event.
- The event must be one that involves an element of uncertainty.
- The insured must have an insurable interest in the subject matter of the contract.
The Central Bank of Ireland (the “Central Bank”) is responsible for the prudential regulation of (re)insurers and intermediaries operating in Ireland. The Central Bank regulates the pursuit of (re)insurance business, rather than simply the issuance of insurance contracts. An insurer must seek authorisation for the specific classes of insurance business it intends to underwrite. There are 18 classes of non life insurance business and nine classes of life insurance business as set out in Schedules 1 and 2 of the European Union (Insurance and Reinsurance) Regulations 2015 (the “2015 Regulations”). A reinsurer can seek authorisation for life (re)insurance business, non life (re)insurance business, or both.
Generally speaking, the Central Bank has no involvement in supervising the writing of insurance contracts and insurers retain significant freedom of contract. It should be noted that the Central Bank does not require the submission of product documents by insurers operating in the Irish market. However, the Central Bank may, from time-to-time, request that an insurer provides its general and special policy conditions, scales of premiums and other documents which the insurer uses in its dealings with policyholders. The Central Bank may request such information in respect of an insurance contract in order to verify its compliance with applicable requirements.
The Central Bank undertakes ongoing reviews and assessments of a (re)insurer’s corporate governance, risk management and internal control systems. The Central Bank regularly conducts themed inspections across the industry.
Insurance contracts will be subject to general principles of Norwegian contract law, including the provisions of the Norwegian Contracts Act. While parties are free to agree the terms that will apply to their contract, their freedom of contract may be limited by the provisions of the Norwegian Insurance Contracts Acts, which is generally of mandatory application to contracts of insurance.
The provisions of Part B (Life Insurance) of the Insurance Contracts Act may not be contracted out of to the detriment of insureds. The provisions of Part A (Non-Life Insurance) may be contracted out of, other than in respect of an injured third party's direct right of action against an insolvent tortfeasor's liability insurer.
It should be noted that the right to contract out of the remaining provisions of the Insurance Contracts Act applies only to the extent the insured entity is a commercial insured; i.e. entities satisfying two of the following three conditions:
- having more than 250 employees;
- having sales income of at least NOK 100 million; or
- having assets of at least NOK 50 million.
The commercial insureds exception also applies to entities whose operations take place mainly abroad, or where the insurance relates to shipping, aviation or international transport.
It is important to note that even where the ICA has been contracted out of under the commercial insureds exception, the ICA's terms will still apply where a policy is silent on an issue that is regulated by the ICA.
Finally, the Norwegian courts have the power to amend the terms of insurance contracts on a case-by-case basis out of reasonableness considerations under the Norwegian unfair contract terms regulations contained in section 36 of the Norwegian Contracts Act, although there is little case law on this and in non-consumer insurance the threshold for applying section 36 is extremely high.