Information regarding legislation relating to insurance activities in Norway based on the «general good» doctrine.
This document contains information regarding important legislation pertaining to the activities of foreign insurance companies in Norway. Finanstilsynet emphasises that the following provisions do not pretend to be exhaustive regarding the regulation of insurance activities in Norway.
I. General legislation
The following legislation applies to the activities in Norway of both life and non-life insurance companies:
- Act of 27 November 1992 no. 111 on Choice of Law in Relation to Insurance
- Act of 16 June 1989 no. 69 on Insurance Contracts chapter 11 and 19 with appurtenant regulations apply.
- Act of 16 June 1972 no. 47 on Marketing.
- Act of 13 June 1980 no. 24 on Tax Administration chapter 6. Please be advised that insurance companies pursuant to section 6-6 and 6-7 of the Act are obliged to submit statements as regards the insurance amount etc. to the tax authorities. Questions relating to taxes should be directed to the Ministry of Finance.
- Act of 10 July 2005 no. 41 on Insurance Mediation and Regulation on Insurance Mediation of 9 December 2005 no. 1421 deals with insurance mediation.
- Act of 25 June 1999 nr. 46 on Financial Contracts and Financial Assignments (Financial Contracts Act). Agreements on loans issued to employees or members of the scheme might fall under this act.
- Act of 20 June 2003 on measures to combat the laundering of proceeds of crime etc. applies to activities exercised in Norway.
- Act of 27 June no 62 on Individual Pension Scheme and other Norwegian acts concerning pensions as mentioned below.
Section 1-6 in the Insurance Act regarding duty of confidentiality applies. The provisions concerns any information received about the business or private circumstances of others, unless the company/branch is obliged by law to disclose such information. The same applies to others who perform assignments on behalf of the company/branch.
It should also be mentioned that Norwegian legislation prohibits a Norwegian insurance broker from receiving commission from insurance companies. The commission is to be paid directly by the policyholder. The prohibition is directed both at the insurance broker and at the insurance company. The prohibition is aimed at preventing doubts as to the independent role of the broker. However, the prohibition does not apply to mediation of insurance contracts issued by EEA insurance companies which are not established in Norway, provided that the commission received from the insurance company is transferred to the principal (customer).
An insurance company is obliged at all times, at the request of Finanstilsynet, to provide the information concerning its activities that Finanstilsynet needs in order to perform its supervision in accordance with the legislation applying in Norway.
II. Further legislation relating to life insurance activities in Norway
1. Norwegian legislation concerning the duty to give information to policyholders etc.
Provisions on information in the Act on Insurance Contracts
Act of 16 June 1989 no. 69 on Insurance Contracts chapters 2 and 11, sections 9-3 and 19-3 and appurtenant regulations laid down in accordance with section 11-4 apply to foreign insurance companies in Norway. The provisions concern i.a. the insurer's duty to provide information to policyholders and to the insured.
Legislation in the Insurance Acts on information
Keeping of accounts
The Insurance Act section 9-23 or 10-6, with appurtenant regulations relating to the keeping and statement of accounts, apply. A life insurance company is obligated to provide regular information to the policyholder as regards the financial status of the insurance contract. With regard to pensions, this legislation also applies to former employees with a paid up insurance policy or a pension capital certificate.
Information to policyholders regarding different elements in the adopted price tariff
Section 9-5 first paragraph in the Insurance Act regarding the contents of the applied price tariff and payment of premiums applies. These provisions require the life insurance company to inform the policyholder about the different elements included in the calculation, and other terms or conditions of importance in the calculation of premiums.
Provisions in the pension acts on information to the employees
Act 24 March 2000 no 16 on Defined Benefit Occupational Pensions section 2-8 and Act 24 November 2000 nr 81 on Defined Contribution Occupational Pension (will be available in English shortly) section 2-7 with appurtenant regulations of 22. December 2000 no. 1413 state what information the employer has to give to the employees. The insurance company is obliged to give the employer adequate information in order to enable the employer to fulfill his information duties towards the employees. The acts now also contains information requirements concerning keeping of accounts in defined contribution schemes and information concerning the consequences of i.e. the point in time when members decide to withdraw pension benefits from the scheme.
Act of 27 June no 62 on Individual Pension Scheme section 1-6 states what information the pension provider ( life insurance company, bank or a company which manages securities funds ) has to give to the customer /policyholder. If the contract is an insurance contract the provisions supplements the information duties in the Insurance Contract Act chapter II with appurtenant regulation.
2. Further provisions in the Insurance Act which apply to foreign EEA life insurance companies
Act on Insurance of 10 June 2005 no. 44 applies to Norwegian insurance companies. A regulation of 22 September 1995 no. 827 "on Insurance Services and Establishment of Branches of Insurance Companies and Pension Undertakings having their Head Offices in another state in the EEA-area", applies to foreign life insurance companies as well as non-life insurance companies. According to section 10 of the said regulation, some provisions of the Act on Insurance (with appurtenant secondary regulations) apply to all life insurance business carried out in Norway. The legal basis of the regulation is section 2-4 in the Insurance Act.
Transfer of funds accumulated under a pension scheme
Chapter 11 in the Act on Insurance (excluding section 11-14, sixth paragraph second sentence) applies. This legislation entitles the policyholder to transfer a life insurance contract. The same right applies to a former employee with a paid up insurance policy or a pension capital certificate. The right to transfer a contract implies the transfer of the accumulated funds under the contract to another life insurance company, pension fund, bank or management company for securities funds. However, a transfer according to the act implies only termination of the contract and transfer of the corresponding assets to an equivalent contract established in another pension institution. This means that the receiving institution must be authorized to engage in the activity related to the contracts which are to be transferred. Life insurance contracts (including pension schemes) based on biometric risk can therefore not be transferred to a bank or management company for securities funds.
Furthermore Finanstilsynet anticipates that the right to transfer requires the receiving pension institution to having filed a notification of cross-border activity into Norway. The right to transfer applies to a former employee with a paid up insurance policy or a pension capital certificate. Accordingly a paid-up policy can be transferred from one pension institution (life insurance undertaking or pension fund) to another life insurance company, within the EEA jurisdiction. Section 11-13 section one regulates the transfer of a paid-up policy derived from an occupational pension scheme. A paid-up policy derived from a defined benefit scheme must in principle conform to the Norwegian Defined Benefit Pensions Act. It is the understanding of Finanstilsynet that this implies that after a transfer the policy conditions must be largely met by the new pension institution which again implies that all the benefits in the policy must be the same in the contract with the new life insurance company. A policy with life annuity cannot for instance be converted into a policy with limited benefits and neither to a contract with investment choices where the policyholder bears the investment risks. New legislation however permits retirement pension to be withdrawn from the policy (in accordance with section 5-1, 5-7a to 5-7c in the Act) when the policyholder is 62 years old (the old age benefit should in these cases be recalculated on actuarial technical bases). A situation might occur when the accumulated funds transferred are not sufficient in relation to the calculation bases for the provisions for liabilities in the receiving company. Finanstilsynet has to amplify that it is a precondition where paid up policies from a defined benefit pension scheme is concerned, that the policyholder should not be required to pay additional premium when transferring a policy to a new life insurance company.
Unreasonable premiums and insurance terms
The Insurance Act section 6-7 second paragraph, section 9-4, section 9-5 first paragraph and section 9-6 third paragraph apply. Sections 6-7 and 9-6 third paragraph prohibit the use of unreasonable (high) premiums and unreasonable insurance terms. Section 9-4 concerns changes to premiums and states that the company may change the premium and shall in that case set the date on which the new premium shall take effect. Furthermore, the company may not implement any changes before the first ordinary premium due date, and at least four months after the policyholder has been informed of the change. Section 9-5 first paragraph concerns information on the content of the different elements included in the premium.
Profit accumulated in life insurance (pension schemes included)
The Insurance Act section 9-9 and 9-12 apply to the extent that these issues are not regulated in the home state. These provisions deal with the policyholder's right to a share of the accumulated profit in accordance with the individual contract’s contribution to the creation of profit. However, these provisions do not apply if the insurance contract is a contract "without profit" or a contract mentioned in article 25 of Directive 2002/83/EC (unit linked insurance). The right to a reasonable share of the company’s profit shall nonetheless be shown in the insurance terms, unless the terms specifically provide that the insurance does not confer a right to a share of the profits. Regulation of 22 September 1995 no. 827 section 10 provides further rules related to this issue.
3. Provisions in the Financial Institutions Act
According to the Regulation no 827, some provisions in the Act of 10. June 1988 nr 40 on Financial Institutions (and appurtenant regulations) apply to the activities in Norway of foreign EEA pension institutions.
The relevant provisions are laid down in section 2-7 (on cooperation agreements), section 2-11 (on the duty to disclose information on prices and product packages), section 2-12 (on the duty to disclose information to borrowers), section 2-12a (on loan agreements with consumers etc.) and section 2-14 (on product packages etc.).
If an insurance company is subject to corresponding provisions under the legislation of its home state, the Ministry of Finance may grant exemption from the above mentioned provisions.
4. The Norwegian pension law
The following acts with appurtenant regulations apply to occupational pension schemes (in Norwegian only - will later be made available in English):
Life insurance companies intending to offer and undertake defined contribution schemes for sponsors in Norway must notify Finanstilsynet, according to a Regulation of 30 June 2006 with legal basis in the Act on Defined Contribution Occupational Pension. In accordance with section 4 and 6 of the Regulation, the notification must contain further information about the product and the composition of the adopted price tariff used for the contribution schemes offered. The same applies to price tariff changes or other changes to the pension schemes product. The notification shall i.a. include a description of the product, including a description of a compulsory insurance granting premium exemption during disability relative to the degree of disability.
Reference is also made to the Act of 27 June no 62 on Individual Pension Scheme and in particular to chapter 4 concerning individual pension schemes attached to occupational pension schemes.
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Some comments to the legislation mentioned above
The Norwegian pension acts must be interpreted in the light of the EU general good doctrine and the home state’s exclusive right to regulate financial conditions. On the other hand some provisions in the Insurance Act with appurtenant regulations are motivated by consideration of protection of the policyholders or the insured, rather than the financial conditions of the insurance company. This is the case for the provisions in chapter 11 in the Insurance Act with appurtenant regulation relevant to the right to transfer a pension scheme with accumulated funds. With regard to foreign EEA life insurance companies, the provisions must also be interpreted in the light of the EU general good doctrine and the home state’s exclusive right to regulate financial conditions.
For instance when the legal provisions on the right to transfer a pension scheme refer to different kinds of technical provisions (premium reserve, supplementary provisions, fluctuation reserves, claims provisions, risk equalisation fund) the law only addresses what kind of provisions are to be transferred. The actual types and size of the technical provisions are determined from the legislation in the home country of the insurance company. A situation might occur when the accumulated funds transferred are not sufficient in relation to the calculation bases for the provisions for liabilities in the receiving company. In this case, according to section 11-10 third paragraph in the Insurance Act, the policyholder must make a contribution in order to finance the insufficient provisions. The requirement in this case is directed towards the policyholder, and it is not the intention to regulate the technical provisions as such in the foreign EEA insurance company. Reference is however made to the provisions concerning accumulated profit mentioned above.
As mentioned above there is an exception regarding transfer of paid up policies from a defined benefit pension scheme.
III. Further legislation relating to non-life insurance activities in Norway
1. Provisions in the Insurance Act
Reference is made to Act on Insurance of 10 June 2005 no. 44. The regulation of 22 September 1995 no. 827 on Insurance Services and Establishment of Branches of Insurance Companies and Pension Undertakings having their Head Offices in another state in the EEA-area, applies to life insurance as well as non-life insurance companies. The legal basis of the regulation is section 2-4 of the Insurance Act. According to section 10 of the said Regulation, section 6-7 of the Act, which prohibits the use of unreasonable insurance terms, applies.
Insurance contradicting the legal system
Section 12-1 in the Insurance Act applies. The provision prohibits marketing and offering of insurance against sanctions laid down in criminal law if the insurance would contradict the legal system.
Claims regarding damage reported to an agent
Section 12-3 applies. The provisions clarifies that a claim for damage reported to an insurance agent shall be considered as reported to the insurance company.
Information to the policyholder
Section 12-7 first paragraph second sentence in the Insurance Act applies. These provisions require the insurance company when claiming the premium, to inform the policyholder about the different elements included in the calculation of the premium, and other terms or conditions of importance in the calculation of premiums.
Unreasonable premiums and insurance terms etc
The Insurance Act section 12-5 sixth paragraph and section 6-7 apply. The provisions prohibit the use of unreasonable (high) premiums and unreasonable insurance terms. Section 12-6 first and third paragraph concerns changes to premiums and states that the company may change the premium and shall in that case set the date on which the new premium shall take effect. Furthermore, the company may not implement any changes before the first ordinary premium due date, and at least one month after the policyholder has been informed of the change.
2. Non-life insurance guarantee scheme
Reference is also made to section 12 of the above-mentioned Regulation relating to guarantee arrangements. Chapter 2A in Act 6 December 1996 no. 75 on Guarantee Schemes and the appurtenant regulation of 22 December 2006 nr 1617 on non-life insurance guarantee scheme apply. According to Chapter 2 in the said Regulation, a branch of an insurance company with head office in another EEA state, and carrying out non-life insurance activities in Norway, shall be member of the Norwegian non-life insurance guarantee scheme.
3. Compulsory non-life insurance etc.
A number of specific provisions apply to the various compulsory forms of non-life insurance policies. Reference is made to the classes listed under point A of the Annex to Directive 73/239/EEC. The following list of provisions concerning compulsory non-life insurance is not exhaustive.
Workmen’s compensation insurance (Classes 1 & 2)
Companies covering compulsory insurance against accidents and sickness at work (i. e. workmen’s compensation insurance) according to the Act of 16 June 1989 no. 65 on Occupational Injury Insurance must satisfy the following conditions:
- The policy terms must be forwarded to Finanstilsynet prior to offering such cover.
- The policy conditions and all other information relating to the insurance contract must be translated into Norwegian.
- All correspondence with Norwegian employees concerning questions relating to the company’s liability, must be in Norwegian.
- Norwegian employees may require payment for damages in Norwegian Kroner (NOK).
- The company must be a member of «Yrkesskadeforsikringsforeningen» (the Norwegian Occupational Injury Insurers Bureau). The main purpose of the said organisation is to cover claims from employees which are not covered by insurance pursuant to section 7 of the Act on Occupational Injury Insurance.
For your information the address of Yrkesskadeforsikringsforeningen (the Norwegian Occupational Injury Insurers' Bureau) is: PO Box 2551 Solli, 0202 Oslo. Phone: + 47 22 04 86 00.
Insurance contracts covering damage caused by fire (Class 8)
According to the Act of 16 June 1989 no. 70 on Insurance Covering Natural Perils, all insurance contracts covering damage caused by fire must also include coverage against natural perils. Furthermore, all insurance companies underwriting fire insurance in Norway must be member of Norsk Naturskadepool (the Norwegian Pool of Natural Perils), and must collect a fee per each fire insurance policy (a specified percentage of the sum insured). This fee shall cover the expenses of the compensation scheme associated with damages caused by natural perils. The losses due to natural perils are distributed between the companies in accordance with each company’s overall fire insurance premiums, i.e. as a pool. The pool is administered by Norsk Naturskadepool. Additional provisions relating to the obligations and rights of the member companies are laid down according to the Act on Insurance Covering Natural Perils with appurtenant regulations.
For your information the address of Norsk Naturskadepool is: P.o. box 2529 Solli, 0202 Oslo. Phone: (47) 23 28 42 00.
Motor vehicle third party risks (Class 10)
Reference is made to the Protocol relating to the collaboration of the supervisory authorities of the member states of the European Community («the Siena Protocol») as regards motor vehicle third party risks (class 10, not including carrier’s liability). According to the Act of 3 February 1961 on motor insurance liability, and regulations laid down in accordance with this Act, as regards motor vehicle third party liability, a company intending to cover compulsory insurance against motor vehicle third party liability must meet the following conditions:
- The company must be a member of «Trafikkforsikringsforeningen» (The Norwegian Motor Insurers’ Bureau).
- The supervisory authority of the company’s home member state must communicate to Finanstilsynet a declaration of the undertaking’s membership in the Norwegian Motor Insurers’ Bureau, and the name and address of the company’s representative in Norway.
The company must have a representative residing or established in Norway with authority to handle claims, grant compensation to injured parties, and represent the company before Norwegian Courts or authorities. Finanstilsynet presupposes that the general agent (or the person authorised to represent the general agent) will hold the mentioned authority and position in Norway unless otherwise communicated.
For your information, the address of Trafikkforsikringsforeningen is: P.o. box 2551 Solli, 0202 Oslo. Phone: (47) 22 04 86 00.
Insurance against liability related to medicinal products (Class 13)
Compulsory insurance against liability related to medicinal products is regulated in chapter 3 cf. section 3-4 of the Act of 23 December 1988 no. 104 on Product Liability. The policy terms must be forwarded to Finanstilsynet prior to their application.
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Reference is also made to section 7-7, cf. section 7-6 in the Act 16 June 1989 on Insurance Contracts concerning the position of the injured party under liability insurance. This legislation states i.a. that if the insurance contract refers to compulsory liability insurance and the contract is terminated or otherwise cease to apply, this will only have an effect where the injured party is concerned one month after the relevant authority has received notification of the matter.
4. Insurance covering legal expenses (Class 17)
Reference is made to the Protocol relating to the collaboration of the supervisory authorities of the member states of the European Community («the Siena Protocol») as regards legal expenses insurance. Before the company may offer coverage related to legal expenses, the supervisory authority of the company’s home member state must communicate to Finanstilsynet which of the options mentioned in Article 3 no. 2 of Directive 87/344/EEC has been chosen.
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