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What general rules, requirements and procedures govern the conclusion of (re)insurance contracts in your jurisdiction?
The Act on Insurance Contracts 69/1989 governs the conclusion of direct insurance contracts. It is divided into two chapters. Chapter A governs non-personal insurance, while Chapter B governs personal insurance. Most provisions are identical in the two chapters, but there is a stronger element of consumer protection in the rules set out in Chapter B compared to Chapter A.
The Insurance Contracts Act does not apply to reinsurance contracts, credit or other surety insurances.
Are (re)insurance contracts subject to any mandatory/prohibited provisions?
The provisions of Chapter B (personal insurance) of the Insurance Contracts Act are mandatory without exceptions.
The provisions of Chapter A (non-personal insurance) of the act are mandatory for all direct insurance contracts, with the exception of credit and surety contracts. They are also mandatory for contracts entered into with enterprises that meet the following criteria:
- The insurance relates to undertakings that, at the time of concluding the contract or at subsequent renewals, meet a minimum of two of the following requirements:
- the number of employees exceeds 250;
- the sales earnings are a minimum of Nkr100 million according to the most recent annual accounts; and
- assets according to the most recent balance sheet are a minimum of Nkr50 million;
- The business is carried out mostly abroad;
- The insurance relates to a ship that is subject to registration under Section 11 of the Maritime Act, or to such installations as referred to in Sections 33(1) and 507 of the Maritime Act;
- The insurance relates to an aircraft; or
- The insurance relates to goods in international transit, including transportation to and from the Norwegian Continental Shelf.
The only provisions in the Insurance Contracts Act from which there is no derogation are Sections 7 and 8, which allow third parties to make direct action claims against a liability insurer if the insured is insolvent or bankrupt.
Can any terms by implied into (re)insurance contracts (eg, a duty of good faith)?
Norwegian insurance law does not operate with the traditional ‘implied terms’ doctrine.
The Insurance Contracts Act dictates the interpretation of insurance terms so that terms may not be interpreted in a different manner than its natural wording, or invalidated in whole or in part. In addition, if the parties entering into the insurance contract had a different understanding of its terms or cover from what transpires from a natural reading of it, the former prevails as long as that understanding is allowed under the act.
For insurance contracts not governed by the Insurance Contracts Act, the general duty of loyalty between the contractual parties apply, which may impose duties on the parties that cannot be read from the wording of the contract.
What standard or common contractual terms are in use?
Cooperation between insurers on insurance terms is not allowed and there are therefore no official commonly agreed sets of insurance contractual term.
Most insurance conditions used in the Norwegian market are built in similar manners. It starts with an insuring clause, followed by exclusions and claim handling rules. A particular aspect of most insurance conditions used in the Norwegian market is the lack of definitions, as customers dislike the complexity of the foreign style of definitions and cross references. This results in shorter insurance condition forms, which leaves the final interpretation of the wording of the policies’ conditions to the Financial Complaints Board and the regular courts.
A particular feature of Norwegian insurance law is the mandatory use of both an insurance policy and insurance conditions. The insurance policy resembles the schedule used in the United Kingdom, and includes customer-specific information, along with a reference to the most important exclusions and safety regulations of the insurance conditions. The insurance conditions are standard term documents. Failure to split an insurance agreement into these two documents has no regulatory consequence, but the insurer will lose the right to invoke several of its defences under the Insurance Contracts Act either to terminate an insurance agreement, or to deny or reduce a claim.
What is the state of development in your jurisdiction with regard to the use of ‘smart’ contracts (ie, blockchain based) for (re)insurance purposes? Are any other types of financial technology commonly used in the conclusion of (re)insurance contracts?
Smart contracts are still rare in relation to (re)insurance. The same is true of other types of financial technology, although application-based short-term insurance solutions will reportedly be available in the next few years.
What rules and procedures govern breach of contract (for both (re)insurer and insured)?
Norwegian law does not accept the validity of warranties in insurance contracts and, accordingly, the concept of breach of insurance contract is not recognised. The Insurance Contracts Act operates instead with a list of specific defences that the insurer may invoke against a claim.
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