APPENDIX 4
EUROPEAN COMMUNITIES (LIFE ASSURANCE)
(AMENDMENT) REGULATIONS, 1985.
[S.I. NO. 296 OF 1985]
Ref: EC4/195
Secretary
Department of Industry, Trade, Commerce and Tourism
I am directed by Mr. Gerard Collins, T.D., Chairman of the Joint Committee on the Secondary Legislation of the European Communities to refer to the European Communities (Life Assurance) (Amendment) Regulations, 1985 [S.I. No. 296 of 1985]
which was made by your Minister on 6 September, 1985 for the purpose of giving effect to Council Directive 79/267/EEC.
I am to request you to explain for the information of the Joint Committee why Article 3 of the Regulations is necessary in order to give effect to Council Directive 79/267/EEC.
Seamus Phelan
Principal Committee Clerk
8 January, 1986.
Ref. No. INS 102/41
Your Ref: EC4/195
Mr. Seamus Phelan
Principal Committee Clerk
I refer to your minute of 8 January, 1985 addressed to the Secretary of this Department regarding the European Communities (Life Assurance) (Amendment) Regulations, 1985 [S.I. No. 296 of 1985].
Attached please find a brief note outlining the background to and reasons for the inclusion of Article 3 of the Regulations.
I hope that this clarifies the matter. If you require any further information, please do not hesitate to contact me.
_________________________
Jennifer Redmond
Executive Officer
Insurance Section
10 January, 1986.
PERMANENT HEALTH INSURANCE
1.Prior to the implementation of the Life Assurance Regulations of 1984, PHI was treated as non-life insurance under the Insurance Act, 1936, although life insurers could also transact PHI in conjunction with a life insurance policy.
PHI is, under the Life Directive of 1979, clearly defined as life insurance (Class IV) and, since the implementation of the Life Assurance Regulations in 1984, can legally be transacted by authorised life insurers only.
2.Those non-life insurers transacting PHI prior to 14 March, 1984 (the effective date of the Life Assurance Regulations)
were allowed a transitional period of 18 months within which to transfer their PHI business to authorised life insurers.
This period was set by the Department after consultation with the companies involved who considered that 18 months would be sufficient time to enable them to effect the transfer of their PHI business portfolios. However, one of the three insurers involved, Norwich Union, was unable to meet the deadline of 15 September, 1985 largely due to indecision on its part as to whether it would in fact continue to write PHI in Ireland. The company has the largest share of the Irish PHI market but has found the business to be very unsatisfactory and unprofitable in recent years.
3.In the middle of 1985, Norwich Union decided not to take on any more new business. However, because of its contractual commitments, the company could not terminate its existing policies. PHI is only terminable by the insurer in special circumstances defined in the contract. On the basis of advice received from the A.G.’s Office, the existing business will have to be transferred to an authorised life insurer, notwithstanding the company’s decision to effectively withdraw from the market once existing business has been concluded. It could take a working-life time (40 years) to run-off the existing portfolio.
4.It was considered that a 6 months extension of the transitional period provided by Article 8(3) of the Life Regulations should be sufficient to allow Norwich Union to regularise the carrying on of its Irish PHI business which they plan to do by transferring its portfolio through the Courts to the Norwich Union Life branch office whose authorisation will have to be extended for the purpose.
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