Trends and prospects
What are the current trends in and future prospects for the insurance and reinsurance markets in your jurisdiction?
While Norway is not a part of the European Union, under the European Economic Area (EEA) Agreement to which it is a party, Norway must implement certain EU directives and regulations. These directives and regulations have neither direct effect in Norway nor provide Norwegian citizens with rights unless correctly implemented into Norwegian law.
As insurance is deemed EEA-relevant, most EU directives and regulations concerning this sector are implemented into Norwegian law. As many of these provide only minimum requirements, it is not uncommon for Norway to introduce stricter requirements as part of the implementation.
Lately, there has been a surge of new laws and amendments that impose obligations on insurers and insurance intermediates with regards to sales. The Norwegian Financial Supervisory Authority (NFSA) has published guidelines on how to operate within the regulatory framework. Both the NFSA and the Norwegian tax authorities have for the past 10 years had a special focus on unit-link insurances sold by Norwegian and foreign insurers. The NFSA and the tax authorities have issued numerous guidelines making it necessary for foreign insurers to change their products to some degree before these can be allowed to be sold to Norwegian customers.
The legal framework for contractual (non-regulatory) insurance is non-derogatory for most insurance types and customers. It imposes strict obligations on the insurer, while it grants many rights to the insurance customer and the insured. No changes are expected to this framework in the near future beside the introduction of new information duties on sales.
Norwegian insurers have traditionally dominated the national direct insurance market, but for the past 10 years the share of EU-based insurers selling products in Norway through local branches or cross-border sales has increased significantly. Insurers based outside the European Union have only very limited opportunity to operate in the Norwegian market.
By contrast, reinsurance is almost exclusively taken out with foreign insurers. While EU-based reinsurers need to passport their rights to sell reinsurance in Norway, third-party (non-EU) reinsurers do not need to notify their home-state regulators prior to selling reinsurance in Norway.
What is the primary legislation governing the (re)insurance industry in your jurisdiction?
The Act on Financial Enterprises and Financial Groups 2015 (the Financial Enterprises Act) and related regulations, including the Regulation on Financial Enterprises and Financial Groups 1502/2016, govern insurance businesses conducted in Norway by insurers and reinsurers incorporated in Norway, including:
- the licence application process;
- the requirements concerning corporate bodies and control functions;
- specific operating requirements and capital requirements; and
- the solvency capital requirement.
Further requirements stem from the Act on Insurance Activity 2005.
Insurers and reinsurers incorporated in a member state of the European Economic Area that conduct their business through branches established in Norway are governed by both the regulatory requirements in their home states and the regulatory requirements of the Financial Enterprises Act and the Act on Insurance Activity, with certain exceptions.
Insurers and reinsurers that conduct activities in Norway on a cross-border basis exclusively are governed by the licence and other regulatory requirements of their home states. Only a few specific requirements in the Financial Enterprises Act and Act on Insurance Activity apply to their practice, mostly related to information duties on sales.
Which government bodies regulate the (re)insurance industry in your jurisdiction and what is the extent of their powers?
The regulator for the Norwegian insurance and reinsurance industry is the Norwegian Financial Supervisory Authority (NFSA) and, in some situations, the Norwegian Ministry of Finance.
In cases of breach of the regulatory framework, the NFSA and the ministry may impose sanctions in the form of corrective orders, revocation of licences and issuance of fines.
Ownership and organisational requirements
Ownership of (re)insurers
Are there any restrictions on ownership of or investment in (re)insurers in your jurisdiction, including any limits on foreign ownership/investment?
Yes. Insurers and reinsurers are subject to provisions on ownership control, which apply to all ‘financial enterprises’ as defined by the Financial Enterprises Act. The provisions on ownership control in the act implement Directive 2007/44/EC. Under the Financial Enterprises Act, acquisitions of so-called ‘qualified holdings in a financial enterprise’ are subject to pre-approval by the Ministry of Finance or the Norwegian Financial Supervisory Authority (NFSA). A ‘qualifying holding’ is a holding that represents 10% or more of the capital or voting rights in a financial enterprise, or that allows for the exercise of significant influence on the management of the enterprise and its business. The provisions apply to the acquisition of holdings in (re)insurers by both foreign and Norwegian entities and persons. Approval may be granted only if the acquirer is considered appropriate according to specific non-discriminatory criteria as further described in the Financial Enterprises Act (the so-called ‘fit and proper’ test). Further, requirements of new approvals are triggered when a holding reaches or exceeds certain thresholds (20%, 30% and 50%). In practice, the Norwegian regulators have refused to approve ownership in excess of 20% to 25% by owners that are not regulated financial enterprises themselves. This is being challenged in a pending court case where the plaintiffs claim, among other things, that the Norwegian regulators breached Articles 31, 36 and 40 of the European Economic Area Agreement by not approving a sale.
Conditions may be set in relation to any approval needed from the NFSA to acquire a holding in a (re)insurer, including a deadline for carrying out the acquisition.
What regulations, procedures and eligibility criteria govern the transfer of control of/acquisition of a stake in a (re)insurer?
The procedure and eligibility criteria are set out in the Financial Enterprises Act and the Regulation on Financial Enterprises and Financial Groups. A detailed notification must be sent to the NFSA stating the size of the holding that the applicant shall transfer to or acquire in a (re)insurer, as well as the total holding in the (re)insurer following the transaction. The notification shall also include details that are of relevance to the calculation of the applicant's overall holding – for instance, any consolidation or agreements to exercise voting rights in the (re)insurer if the acquirer is a legal entity. The notification shall include information that is of significance to the assessment of whether approval to acquire the holding in question shall be granted. The NFSA holds a discretionary power to request any information that it finds necessary for that purpose. The NFSA has 60 working days from the date that it has confirmed receipt of the notification to grant or refuse approval.
The ‘fit and proper’ test is run on the basis of several criteria, including:
- the need to ensure proper and adequate management of the (re)insurer;
- the (re)insurer's activities and the level of influence that the acquirer will be able to exercise following the proposed transaction;
- the acquirer's fitness and propriety as owner of its overall holding; and
- whether the acquisition of the holding is adequate in relation to the (re)insurer's present and future activities.
Must (re)insurers adopt a certain legal structure in order to operate? If no mandatory company organisation applies, what are the common structures used?
Under the Financial Enterprises Act, (re)insurers shall be organised either as public limited liability companies or mutual organisations. Some minor exceptions apply.
Do any particular corporate governance requirements apply to (re)insurers, including any eligibility criteria for directors and officers?
(Re)insurers established in Norway are subject to a number of corporate governance requirements under the Financial Enterprises Act and related regulations, including – but not limited to – requirements relating to the following:
- The board's composition – the board must be made of at least five members and unless the entity is a subsidiary in a financial group, the chairman and at least two-thirds of the board members must be external – that is, they cannot be employed by the insurer or other companies in the same group. In addition, employees have a right to require representation in the board if certain thresholds are exceeded.
- The creation of board subcommittees – (re)insurers that have issued securities listed on a regulated market (subject to certain exceptions) and those with assets exceeding Nkr10 billion must establish an audit committee. Further, (re)insurers that have over 50 employees and assets exceeding Nkr5 billion must establish a remuneration committee.
- The issuance of various guidelines and policies – including a remuneration policy, guidelines on internal risk control/risk management, guidelines on asset management and risk classification of exposures, guidelines on professional secrecy, as well as a policy that shall ensure compliance with relevant information requirements and the design of insurance contracts.
- Detailed instructions for the chief executive officer.
Which (re)insurers must obtain authorisation from the regulator before operating on the market and what is the procedure for doing so?
(Re)insurers that seek establishment in Norway must apply for a licence in accordance with the procedure described in Chapter 3 of the Financial Enterprises Act. The key steps are as follows:
- An application to obtain a licence as a (re)insurer must be sent to the Norwegian Financial Supervisory Authority (NFSA). The application must include the articles of association and a business plan that shall describe the proposed operational activities for the next three years. The plan shall further include information on ownership structure, members of management, control systems, a description on how the entity will gain sufficient capital in order to comply with applicable capital requirements for (re)insurers, various budgets and the description of how the entity will comply with requirements regarding anti-money laundering and combating the financing of terrorism. Further, the application must include information on the suitability of each board member, chief executive officer (CEO) and other persons who will participate in the management of the entity.
- The NFSA will consider whether the application might entail follow-up questions. The NFSA usually takes approximately six months from receipt of the application to making a decision as to whether to grant a licence. The NFSA may also set conditions for the licence, including that the business be operated in a particular manner or within certain limits, or other terms in accordance with the purposes of the Financial Enterprises Act.
Insurers established outside the European Union may not offer their services in Norway, unless invited to do so.
Insurers established in the European Union may passport their rights to offer insurance on a cross-border basis in Norway.
Reinsurers established in a non-EU country may provide reinsurance in Norway without any need to meet any licence and registration requirements in Norway. Reinsurers established in an EU-country need to have passported their rights to offer insurance on a cross-border basis in Norway.
What are the minimum capital and solvency requirements for (re)insurers operating in your jurisdiction?
In general, (re)insurers are required to hold a solvency margin or buffer to cover the risk of their assets being insufficient to cover their liabilities. Under the Financial Enterprises Act, the main capital requirement is the solvency capital requirement (SCR). (Re)insurers are required to hold a lower minimum capital requirement (MCR).
The SCR shall correspond to the value-at-risk of the basic own funds of an insurer or reinsurer subject to a confidence level of 99.5 % over a one-year period.
The MCR shall be calibrated to the value-at-risk of the basic own funds of an insurer or reinsurer subject to a confidence level of 85 % over a one-year period. The MCR shall not be less than 25% or more than 45% of the enterprise's SCR, including any supplemental capital requirements imposed by the NFSA under Sections 13 and 14 of the Financial Enterprises Act.
These requirements do not apply to (re)insurers established outside Norway.
Do any other financial requirements apply?
The NFSA may impose other capital requirements on (re)insurers established in Norway.
Are personnel of (re)insurers subject to any professional qualification requirements?
The management of the (re)insurer (eg, CEO) or persons who hold key functions in the (re)insurer (eg, compliance officer and risk management officer) established in Norway are subject to professional qualification requirements under the Financial Enterprises Act – namely, they must:
- have the necessary qualifications and professional experience to execute the post or office;
- not have been convicted of a criminal offence where the offence gives reason to assume that he or she will not be able to carry out their duties in a proper manner; and
- not have conducted other offices or post in a manner that gives reason to assume that he or she will not be able to carry out their duties in a proper manner.
What rules and requirements govern the business plans of (re)insurers?
In general, (re)insurers established in Norway are required to adopt guidelines and policies regarding several business aspects, including guidelines for internal control and risk management. The business plan must comply with the regulatory framework under the Financial Enterprises Act and related regulations. However, no specific provisions exist as to the content of such business plans.
What risk management systems and procedures must (re)insurers adopt?
The board of directors is required to adopt guidelines and procedures in order to identify, monitor and manage any risks that the (re)insurer is or may be exposed to. Further, the (re)insurer is required to establish independent control functions – namely, a compliance function, a risk management function and an actuarial function.
Reporting and disclosure
What ongoing regulatory reporting and disclosure requirements apply to (re)insurers?
(Re)insurers are subject to a number of regulatory and disclosure requirements, including:
- reporting obligations to the NFSA relating to the capital requirements set out in the Solvency II Directive (2009/138/EC);
- reporting certain key figures to the NFSA;
- reporting the number of complaints received from customers; and
- submitting their annual reports to the authority.
Do any other operating requirements apply in your jurisdiction?
(Re)insurers are also subject to general Norwegian law applicable to Norwegian companies, including company law and legislation covering data protection, employment, health and safety, money laundering and terrorist financing, auditing and taxation.
What are the consequences of non-compliance with the operating requirements applicable to (re)insurers?
Non-compliance with operating requirements is punishable by corrective orders and fines. Theoretically, imprisonment of up to one year may also be imposed where the breaches are carried out wilfully or through negligence. The latter sanctions are however rarely seen.
If the breach is severe or a number of various breaches are deemed severe, the NFSA may withdraw the (re)insurer’s licence.
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.
What consumer protection regulations are in place to safeguard the rights of purchasers of insurance products and services?
Numerous pre-sale information duties in connection with marketing and sales of insurance products are set out in the Act on Right of Withdrawal for Distance and Off-premises Contracts 27/2014 (the Act on Right of Withdrawal), the Financial Enterprises Act and the Insurance Contracts Act, along with related regulations. The information duties in the Act on Right of Withdrawal apply to consumer sales only, while most of the information duties in the Financial Enterprises Act and the Insurance Contracts Act apply to both consumer and non-consumer sales. In addition, specific rules exist concerning information related to unit-linked insurance products.
What general rules, requirements and procedures govern the filing of insurance claims?
The Insurance Contracts Act governs the rules, requirements and procedures for filing insurance claims.
The insured must notify any insurance events without undue delay. The insurer may, however, invoke remedies only if a late notification can be deemed grossly negligent and the late reporting has resulted in a higher loss for the insurer than would have been the case with a timely notification.
Further, the insured must file its claim at the latest one year after the insurance event in order to maintain its rights under the insurance. The claim can be made orally, in writing and on any readable media. If a claim has not been made within the one-year period, the insured loses all rights under the insurance. The one-year deadline to make claims does not apply to personal insurances that are not sole risk-based accident and illness insurances.
If a claim is made within the one-year period, the claim is not time-barred until the end of the calendar year 10 years after the insurance event occurred, unless the insurer denies the claim in a formal letter. If so, legal steps must be taken before the courts within six months of the insured receiving the claim denial letter in order for the claim not to be time-barred at the end of the period.
If the grounds for reducing or denying a claim are based upon criticism of the insured or anyone that the insured is identified with in connection with the insurance event or making of a claim, the insurer must send a formal letter invoking its rights without undue delay or else the insurer's rights are forfeited. This also applies in fraud cases. ‘Without undue delay’ is interpreted as two to three months after the insurer obtains all relevant information in order for it to invoke its rights, or no more than two months after the conclusion of a police investigation if that is necessary. The insurer also has a duty to ensure due process of investigation while the police investigates the circumstances relevant for the insurance cover.
What is the time bar for filing claims?
Please see the section titled “General” above.
Denial of claim
On what grounds can the (re)insurer deny coverage?
An insurer may deny a claim based on a number of grounds related to the conditions used in the contract – for instance, that the insurance event occurred or a claim was made outside of the policy period, that the insurance event itself is not covered under the insurance, and even that the insurance event is specifically excluded.
In addition, the Insurance Contracts Act has established the right for the insurer to terminate, or reduce or deny, an insurance claim in the following circumstances:
- Misrepresentation or non-disclosure at the time of entering into the contract or making a claim;
- Change of risk during the insurance period;
- Breach of security regulations highlighted in the insurance policy;
- Intentional and gross negligent causations of the insurance event. In liability insurance, the insurer is obliged to cover gross negligent behaviour without any reductions or reactions towards the assured; or
- Lack of mitigation of risk.
Demonstrating a mere breach of the above obligations is insufficient in order for the insurer to invoke any reactions. In addition, there must be causation between the breach and the loss. In relation to misrepresentation and non-disclosure, the causation must be between the breach and the insurer's decision to provide the insurance to the policyholder. Also in all the situations above, the breach must have been made with a degree of negligence or intent.
In personal insurances, a number of specific formalistic rules apply in addition to the above in order to ensure consumer protection and to avoid misuse of personal data.
For reinsurance contracts and insurance contracts not governed by the mandatory provisions of the Insurance Contracts Act, general contract law applies, which in most cases means that the remedies available for the parties must be agreed in the insurance contract in advance in order to be used – except in extreme situations.
What rules and procedures govern the insured’s challenge of the denial of a claim?
A denial of a claim can be challenged in many ways, but in order to ensure that the claim is not time-barred, the insured must either send a complaint to the Financial Complaint Board or to the regular courts (the Conciliation Board or the city court where applicable).
On what grounds can a third party file a claim directly with the (re)insurer?
Under the Insurance Contracts Act, third parties have a right of direct action against the liability insurer of the insured. The insurer is free to invoke all provisions and exclusions in the insurance contract against the third party, with the exception of any provisions entitling the insurer to invoke remedies due to actions or omission by the insured after the insurance event has arisen. The insurer is also free to invoke all defences that the insured would have had against the claim from the third party – for example, that the conditions for liability are not met or that the claim is time-barred.
In practice, the direct action possibility is used in almost all cases where liability insurance is known to have been taken out.
There is no right for direct action against a reinsurer.
Are punitive damages insurable?
Insurers operating in the Norwegian market are barred from marketing insurance for, or pay claims, loss or expenses with, punitive elements.
What regime governs (re)insurers’ subrogation rights?
The (re)insurers’ subrogation rights are not governed by the Insurance Contracts Act, but rather by the Norwegian Act on Torts 1969 and case law. In general, the insurer subrogates automatically in the rights of its insured at the time of payment of the insurance claim, without any need for subrogation receipts or otherwise. If the recourse claim is made in consumer-related insurance matters, the insurer needs to demonstrate that the tortfeasor acted with gross negligence, which is a higher threshold of proof than simple negligence, which will suffice in all other matters.
How are the services of insurance intermediaries regulated in your jurisdiction?
Insurance mediation is regulated in the Act on Insurance Mediation 41/2005 (Insurance Mediation Act) and subsequent regulations including, among others, requirements for suitability and qualification for insurance agents, and specific information requirements that insurance agents must provide customers in relation to offering insurance products. Further, insurance intermediaries are subject to information requirements under the Insurance Contracts Act in relation to the conclusion of insurance contracts.
The Insurance Mediation Act is expected to be repealed and replaced by a new act in 2019 in connection with the implementation of the EU Insurance Distribution Directive (2016/97/EC).
What tax liabilities arise in the conduct of (re)insurance business?
Insurers that are tax residents in Norway or performing business activities that take place in or are managed from Norway (ie, permanent establishments) are subject to Norwegian corporate taxation. The current ordinary corporate tax rate is 24 % (which may be reduced to 23 % in 2018). Insurance companies may, however, be subject to a special financial tax regime in Norway under which the corporate tax rate is 25 % instead of the current ordinary corporate tax rate of 24%. The financial tax regime applies to insurers where more than 30 % of the employer's salary costs are connected to employees performing ‘financial activities’ (eg, sale or negotiation of insurance policies, or conducting risk assessments). If the insurer is subject to the financial tax regime, salary payments to employees are also subject to an additional 5 % gross withholding tax. The financial tax on salary payments is part of the employer's social security contribution, provided however that the employee is subject to Norwegian national social security.
General insurance premiums are usually taxable income for the insurer, in opposition to life insurance premiums, which are usually not subject to income tax. Whether life insurance premiums are taxable income for the insurer depends on the type of life insurance in question. General reinsurance premiums should be deductible for the insured and taxable for the insurer.
Insurance services are in general exempt from Norwegian value-added tax, as are commission payments to brokers and insurance agents. Payments to other contractors or suppliers are subject to a separate assessment.
Whether insurance payments are taxable for the receiver depends on the nature of the insurance. Life insurance premiums may be taxed as capital gains or salary income, depending on the insurance policy. Life insurance policies are under certain conditions exempt from wealth tax.
Mutual insurance companies are covered by the Norwegian participation exemption with the consequence that dividends/capital gains from realisation of shares in corporations for instance should be tax-exempt, provided that the capital gain arises from the insurer’s portfolio and not the customer’s portfolio. Three percent of any dividends received are however taxable at a rate of 24% (possibly 23 % in 2018) if not the insurer's ownership and voting rights in the distributing company exceeds 90 %. Distributions from a mutual insurance company to an insured are subject to dividend tax for the receiver.
What regime governs the insolvency of (re)insurers?
Insolvency of (re)insurers is governed by Chapter 21 of the Financial Enterprises Act. Under that provision, the board of directors and the chief executive officer of a (re)insurer each have a duty to notify the Norwegian Financial Supervisory Authority (NFSA) if there is reason to fear that:
- the enterprise will not be able to fulfil its obligations as they fall due;
- the enterprise will not be able to satisfy the minimum requirements for own funds or other solidity and security requirements specified by an act or regulation; or
- circumstances have occurred that can result in serious loss of confidence or loss that will significantly weaken or threaten the solidity of the enterprise.
In such instances (regardless of whether notification has been given or not), the NFSA has relatively broad powers to enforce promptly any measures deemed necessary.
Effect on insureds
How does a (re)insurer’s insolvency affect insureds and the (re)insurer’s obligations to insureds?
In such an instance, the (re)insurer will have been placed under public administration. The obligations will be affected as follows:
- Claims arising from the insurance contracts shall be given priority in relation to other claims;
- Non-life insurance contracts and certain life insurance contracts shall be terminated three months following the resolution to place the (re)insurer under public administration; and
- Life insurance contracts shall, as far as possible, be transferred to another (re)insurer. If this attempt is unsuccessful, the insurances will be written down in accordance with the settlement undertaken. Further, the administrative board shall summon a general meeting of insureds and establish a mutual organisation.
Further, the Financial Enterprises Act and the Regulation on Financial Enterprises and Financial Groups provide for a guarantee scheme in the event that an insurer is unable to meet its commitments. The guarantee scheme is applicable only in regards to insurance contracts that provide for direct casualty insurance, as long as the object of the insurance is based in Norway. The guarantee scheme covers both claims from the insureds and third parties. The following insurers are obliged to be members of the guarantee scheme:
- Insurers based in Norway (holding a licence from the NFSA);
- Insurers that offer liability insurance that is mandatory under Norwegian law; and
- Branches of insurers based in another member state of the European Economic Area if the insurer is not a member of a similar guarantee scheme in its home state.
The guarantee scheme covers up to 90% of any claim relating to each event insured against, and in some cases up to 100%, should the insurer be unable to meet its commitments. Nonetheless, the maximum amount payable under the guarantee scheme is Nkr20 million.
Are there any compulsory or preferred venues for insurance litigation in your jurisdiction?
There are no compulsory or preferred venues for insurance litigation in Norway.
It is however possible for any person or company to resolve its dispute with an insurer through the use of the complaint system of the Financial Complaints Board. This is an ombudsman system that is free of charge for the person/company complaining, while the insurers will have to pay a yearly fee based on the number of complaints against them. The board renders non-binding opinions on insurance disputes. Both the insurer and the person/company complaining are entitled to take the case to court if they disagree with the opinion.
How are insurance disputes with a cross-border element handled in your jurisdiction?
A Norwegian court handling an insurance dispute must resolve the dispute, regardless of the law applicable to the dispute itself. Several decisions have been rendered over the years in insurance disputes subject to English law and practice. In such cases, the Norwegian judge normally requires the opinion of an expert in the relevant foreign law, but the parties' Norwegian lawyers may present their arguments based on the foreign law and/or use expert evidence on foreign law.
What issues are commonly the subject of insurance litigation?
The most common insurance-related litigation in Norway involves fraud cases. There is also a large number of cases each year concerning coverage disputes on sales of real property insurance.
What is the typical timeframe for insurance litigation?
It usually takes one year between sending a writ of summons to the court and receiving a judgment. It usually takes another 18 to 24 months to receive a decision from the appeal court, and another seven to nine months to receive a decision from the Supreme Court, if such an appeal is accepted.
What regime governs the arbitrability of insurance disputes?
No specific acts govern the arbitration of insurance disputes in Norway. None of the provisions of the general act on arbitration are mandatory, these provisions may be deviated in the arbitration clause or in a subsequent agreement between the parties.
Arbitration is rarely used to resolve insurance disputes in Norway.