Since the passing of the “Large Risks” directive on l July 1990, insurance policies have been able to be underwritten from an “establishment” in one member state of the European Union into another without the need for the insurer to have a presence in that state or to be authorised. The type of insurance, however, has been limited to “large risks” calculated by reference to the type of risk and the nature of the policyholder. The Directive covers fire and natural forces (all damage to or loss of property due to fire, explosion, storm, natural forces other than storm, nuclear energy and land subsidence and other damage).
The policyholder must satisfy two of three criteria, namely:
– a balance sheet total of ECU6.2m;
– a net turnover of ECU12.8m; and
– an average of 250 employees during the financial year.
Transitional measures are in place in Greece, Ireland, Spain and Portugal. Ireland has chosen not to take advantage of the transitional measures but the other three countries have until the end of 1994 to fix their own thresholds.
Therefore, most larger corporations purchasing ARPI are covered by the Directive.
After the implementation of the Third Non-Life Insurance Directive (N092/49) by the amendment to the Insurance Companies Act 1982 via the Insurance Companies (Third Insurance Directive) Regulations 1994 (1 July 1994), these thresholds are still relevant but are not as important. Under the new framework regime, mass risks (as against large risks) may also be written on a services basis but there are certain extra policyholder protection matters which do not apply to large risks as defined above. For example, there is a wider choice of law available for large risk policyholders than for mass risks under the framework Directive. The bottom line, however, is that insurance companies with head offices in a European Union member state authorised to underwrite a class of insurance business in that state are able to underwrite ARPI business throughout Europe including the UK.
Therefore, in theory, the EURO ARPI is now possible, enabling an insurer incorporated in one country in the European Union to provide ARPI to a corporation and its subsidiaries throughout Europe under one policy