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IP/02/742

Brussels, 22 May 2002

Insurance: Commission decides to refer France to Court for second time in respect of mutual societies and seeks daily penalty payment of Euro 242 650

The European Commission has decided to take France to the Court of Justice on the basis of Article 228 of the EC Treaty and to seek a daily penalty payment of €242 650 in respect of non-compliance with a judgment of the Court that was delivered at the end of 1999 and refers to the failure to transpose in full the Directives on life assurance (92/96/EEC) and non-life insurance (92/49/EEC), particularly as regards mutual societies regulated by the Mutual Societies Code (see also IP/00/466 and IP/00/876). The Directives should have been fully implemented and applied no later than 1st July 1994. Mutual societies were included in the scope of the Directives at the request of the French Government so that they would be eligible for the advantages that go with the "single passport", i.e. so that they would be able to market their insurance services in other Member States. For its part, the Commission has always stressed in this matter that European legislation is not designed to interfere in how Member States organise their social security systems and that it is not calling into question the promotion by mutual societies of active solidarity policies.

The Court of Justice ruled on 16th December 1999 (Case C-239/98) that France had failed to fulfil its obligations under the EC Treaty to adopt the measures necessary to apply the Third Insurance Directives to some three thousand mutual societies regulated by the Mutual Societies Code. These directives should have been completely implemented before 31st December 1993 and applied no later than 1st July 1994. As France has still not adopted the necessary measures following the 1999 Court judgement, the Commission has decided to refer France back to the Court of Justice under Article 228 of the EC Treaty. In view of the seriousness and duration of this infringement, the Commission has also decided to ask the Court to impose on France a daily penalty payment of €242 650.

It should be recalled that the obligations under the Directives, once these have been fully transposed into French domestic law, will require mutual societies:

  • to comply with the prudential and financial obligations laid down in the directives (adequate technical provisions, solvency margin, etc.);

  • to separate their "insurance" business from their "welfare" business such as pharmacies, opticians, leisure and travel services, holiday centres and the renting out of conference venues (in accordance with the principle of the specialisation of insurance companies in order to protect policyholders' interests against the risks associated with the other activities);

  • bring their arrangements on the transfer of portfolios into line with the directives (when an insurance company decides to sell or transfer a block of contracts to another insurance company, it is essential for the protection of policyholders' interests that the acquisition of the portfolios should not be reserved to other mutual societies);

  • bring their reinsurance arrangements into line with the Treaty (re-insurance contracts must be accessible to all insurance and reinsurance companies in the European Union and not restricted to other mutual societies).

In order to speed up implementation following the Court's judgement, the French Government has adopted certain legislative instruments and in particular it adopted Order No 2001/350 concerning the Mutual Societies Code. Under the combined provisions of Articles 4 and 5-III of that Order, mutual societies and unions carrying on insurance business prior to its publication should have sought approval as provided for by Articles L211-7 and L211-8 of the Mutual Societies Code by 24 April this year. However, given that the French Government recently decided, without consulting the Commission, to extend this delay to 31st December 2002, and given that the regulations needed to implement the Order have still not all been adopted, the Commission decided to refer France to the Court.

This infringement procedure has nothing whatsoever to do with the extensive judicial and administrative dispute between certain members of the liberal professions in France and their supplementary scheme funds regarding the compulsory or optional nature of their membership of the supplementary scheme administered by those funds.


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