On 1 March 2012 the Court of Justice of the European Union (the “CJEU”) delivered its decision in the case of Angel Lorenzo Gonzalez Alonso v Nationale Nederlanden Vida Cia De Seguros y Reaseguros SAE. In that decision, the CJEU confirmed that unit-linked life-assurance contracts are insurance contracts.
Mr González Alonso was sold a financial product at his workplace by an employee of Nationale Nederlanden Vida Cia De Seguros y Reaseguros SAE (the “Company”). The Company’s employee indicated to Mr González Alonso that the product was a high-return account which allowed the depositor to retrieve the capital invested at any time. The product included a life assurance policy. Some time later Mr González Alonso informed the Company that he wished to recover the sums he had invested. When the Company refused to repay him, Mr González Alonso applied to the Spanish courts seeking the cancellation of the contract and the repayment of the premiums. His claim was made under the Spanish national law which gave effect to an EU Directive on the conclusion of contracts away from a business premises (the “Directive”).
This Directive provides certain protections to consumers (including a right of cancellation) where there was a failure to provide information in writing to the consumer on their right of cancellation. The Directive does not, however, apply to insurance contracts. The Spanish court was of the view that the contract Mr González Alonso had with the Company was a unit-linked life-assurance product and therefore an insurance product. Nonetheless, the Spanish court felt it was appropriate to ask the CJEU to confirm that the contract fell outside of the scope of the Directive.
The term “insurance contract” is not defined in the Directive. The CJEU noted that it was necessary to interpret the scope of this term having regard to the context of the Directive. The CJEU also noted that the term must be given an autonomous and uniform interpretation throughout the European Union. Additionally, the CJEU noted that derogations from provisions of European law which provide for the protection of consumers must be strictly interpreted.
The CJEU concluded that the contract at issue in this case was a life-assurance contract within the strict meaning of that term. It noted that contracts which are unit-linked or linked to investment funds are common in insurance law. The CJEU also noted that such contracts are included in the classes of life assurance set out in the Life Assurance Directives. The Directive did not restrict the notion of an insurance contract so as to exclude insurance linked to investment funds. Consequently, unit-linked insurance contracts are excluded from the scope of the Directive.
This decision may be a useful precedent in future cases where similar queries arise both on the scope of the term “insurance contract” and the nature of a unit-linked life-assurance product.
For further information, please contact John Larkin or Grant Murtagh of our Insurance and Reinsurance unit.
Contributed by Aoife Farrelly
