GIM10060 - Non-resident insurers: regulatory background: EEA insurers: further guidance on meaning of ‘branch’ and ‘provision of services’

Further guidance on the distinction between a ‘branch’ and the ‘provision of services’ is contained in the European Commission document ‘Commission Interpretative Communication: Freedom to provide services and the general good in the insurance sector’ EC(1999)5046 of 2 February 2000.

The Commission takes the view that for the links between an independent person – such as, for example, an independent intermediary – and an insurance undertaking to be regarded as meaning that the insurance undertaking falls within the scope of the rules governing the right of establishment rather than those applicable to the freedom to provide services, the independent person must meet three cumulative conditions. These are that the person must

• be subject to the direction and control of the insurance undertaking he represents
• be able to commit the insurance undertaking, and
• have received a permanent brief.

There is nothing to prevent a company both having an establishment in the extended sense of Article 3 and also providing services. Indeed the company may use facilities of the establishment in connection with the provision of services without making that provision through a branch, if the activities of the establishment are ancillary to the insurance contract. This would apply, for example, to the use of risk assessment services or of local medical services, or to receipt of notices of claims relating to policies entered into under the freedom to provide services.

The use of fixed, ATM-type electronic machines for carrying out insurance transactions (such as issuing travel insurance policies at airports) is covered by the rules on the freedom to provide services, unless the machines are attached to branches opened by the insurer in the host Member State concerned.

Cross-border insurance activities carried on via electronic commerce are subject to the provisions of the Insurance Directives relating to the freedom to provide services.