France - Strenghthening of the powers of the ACPR
The law n°2013-672 of 26 July 2013 on the separation and regulation of banking activities (Articles 24 and 26) establishes a regime of prevention and resolution of banking crisis, led by the Autorité de Contrôle Prudentiel which is now renamed Autorité de Contrôle Prudentiel et de Résolution ("ACPR"). This reform is reflected in particular by a substantial strengthening of its powers, in particular concerning the control of persons managing or administering companies under its control. These provisions are implemented under Articles L. 612-1, II-4 and L. 613-31-11 to L. 613-31-19 of the French Monetary and Financial Code. These provisions came into force on 28 July 2013, but the new system will be fully effective only upon adoption of the decrees. The Director General of the Treasury now also has access to information covered by professional secrecy held by the ACPR.
France - Unclaimed life insurances
The law n°2013-672 of 26 July 2013 on the separation and regulation of banking activities (Article 75) strengthens the mechanism imposing now on insurers to examine each year the file of deceased persons. They are also required to publish an annual report on the stock of life insurance policies (which meet certain criteria to be set by order) whose capital or annuity due have not been paid to beneficiaries. These provisions are now included in Articles L. 132-9-3, I and L. 132-9-4 of the French Insurance Code. Similar provisions were included in the French Code of Mutuality.
France - Payment protection insurance
The law n°2013-672 of 26 July 2013 on the separation and regulation of banking activities (Article 60) adopts provisions which actually allow competition in the sector of payment protection insurance. It now requires (Article L. 311-4-1 of the French Consumer Code) to include informative figures on the cost of insurance in any publicity relating to consumer credit contract accompanied by an application for insurance and (Article L. 312- 6-1 of the French Consumer Code) in any real estate loan offer and any document given to the borrower prior to the formulation of the loan offer. This provision comes into force on 26 January 2014. The law also requires the submission of a standardized information sheet (the format and content shall be defined by decree) to the borrower of a mortgage. The delivery of the information sheet must take place during the first simulation loan. The law also complements the provisions relating to the substitution of another insurance contract.
France - Credit insurance
The law n°2013-672 of 26 July 2013 on the separation and regulation of banking activities (Article 58 and 24) requires credit-insurers to provide the Banque de France with statistics on the amount of stock of guaranteed customer credit and number of risks underwritten under modalities to be defined by a decree. The Banque de France can provide credit-insurers with financial information about companies.
France - Anti-money Laundering
The law n°2013-672 of 26 July 2013 on the separation and regulation of banking activities (Article 9 and 12. II) amends Article L. 561-29 of the French Monetary and Financial Code and expands the rights granted to TRACFIN to oppose a suspicious transaction and to be informed of certain transactions without any declaration of suspicion.
France - Financial canvassing
The law n°2013-672 of 26 July 2013 on the separation and regulation of banking activities (Article 62) amends Article L. 341-2 of the French Monetary and Financial Code and now specifies that the dissemination towards natural or legal persons of a mere advertising information, excluding any contractual or pre-contractual documents, regardless of the medium does not fall within the scope of financial canvassing.
France - Improvement of business practices for funeral payment plans
The law n°2013-672 of 26 July 2013 on the separation and regulation of banking activities (Article 62) provides for the allocation to the funeral of the subscriber or adherent, up to their cost, of the capital paid to the beneficiary. Professionals must also now detail the funeral services defined in the funeral contracts and customize the services. The law requires that contracts which provide funeral services in advance should include clauses specifying the conditions of allocation of technical and financial benefits. The contract must also be subject to the annual information obligation when the mathematical provision exceeds 2,000 Euros.
France - Guarantee fund
Decree n°2013-526 dated 20 June 2013 sets at 0.8% the rate of contribution to the Guarantee fund of compulsory property insurance of policyholders who enter into automobile liability insurance contracts. It applies to contracts entered into or renewed on or after 1st July 2013. The Decree dated 11 September 2013 sets for the year 2014 at 3.30 Euros the amount of the contribution provided to the Guarantee fund for the victims of terrorist acts and other offenses.
France - Modification of investment rules of insurance companies
Decree n°2013-717 dated 2 August 2013 amends the lists of assets that insurance companies can invest in representation of their regulated commitments. The list now includes various investment mechanisms in loans granted to unlisted companies and public authorities namely investments made directly or through loan fund. Under the Decree, all of these values are taken into account in the limit of a ratio of 5% of the dispersion base of insurance undertakings and each individual exposure may not represent more than 1% of that base. The Decree also adds provisions to ensure sound and prudent management of the risks involved in such investments and a level of transparency for the monitoring of risks by insurance companies. These provisions came into force on 8 August 2013.
European Law - EIOPA – Publication of the final guidelines
On 27 September 2013, the European Insurance and Occupational Pensions Authority ("EIOPA") issued final consultation for the preparation of Solvency II. The Guidelines aim to ensure that National Competent Authorities ("NCAs"), insurance companies and groups take active steps towards implementing certain key elements of Solvency II in a consistent and convergent way. They cover a number of key areas of Solvency II such as system of governance (including risk management), forward looking assessment of the undertaking’s own risk (based on the ORSA principles), submission of information to NCAs (Please refer to the Legal and regulatory update – March 2013).
International - Systemic insurers
On 18 July 2013, the Financial Stability Board ("FSB") published the initial list of so-called systemic insurers. These must comply with new requirements, including enhanced supervision at group level, the establishment of a management crisis group, the development of a recovery and resolution plan, as well as new capital requirements. The implementation of these new measures is scaled up to 2019. The FSB has also launched on 12 August 2013 a consultation on its proposals on resolution regimes for non-banking financial institutions which are considered systemic (which include insurance companies). The consultation is open until 15 October 2013.