In a recent case against Swiss Life (Liechtenstein) AG , a court for the European Free Trade Area was asked to clarify the requirements under the Consolidated Life Directive (the “Directive”) to provide certain minimum information (i.e. information about the insurer and the commitment) to a policyholder before a life-assurance contract is concluded.
The Court highlighted that the aim of the Directive is to protect consumers by providing them with whatever information is necessary to enable them to choose the contract that best suits their needs. The question as to whether the Directive requires life insurers to provide advice to policyholders was raised. While the Court ruled that no such obligation exists, national laws may require that a consumer be given advice before the insurance contract is concluded (provided that the effect of the Directive is not limited by such a requirement).
For unit-linked policies, certain pre-contractual information must be provided. Under the Directive a policyholder must receive:
- A definition of the units to which the benefits are linked and
- An indication of the nature of the underlying assets
This information must be clearly and accurately communicated in writing to a policyholder. The Court clarified that it would not be sufficient for an insurer to ask a policyholder to search the internet for the information.
Finally, the Court was asked to consider whether it is sufficient for the required information to be communicated to a policyholder by a third party (e.g. an insurance intermediary). The Court ruled that it is the responsibility of the life insurer to provide the information required under the Directive. However, as long as the information is complete and communicated to a policyholder in accordance with the Directive (and with other rules applicable to policyholder communications), it is sufficient that it be communicated to a policyholder by a third party.
Contributed by: Niall Campbell