Norsk
In Norway, as of 1 January 2006, a policy holder may in principle during the duration of the agreed insurance period, cancel an insurance policy in order to take out insurance with another insurer. This is a consequence of the Insurance Agreement Act of 16 June 1989 No 69 (FAL 1989).
However, if certain conditions are met, the insurance companies can make exceptions from this for industrial clients. This article summarises the former legal situation, the current legislation, and the exceptions of the right for corporate customers to move their insurance policies.
The right to cancel current insurance – now and then
In the previous Insurance Agreements Act of 6 June 1930 (FAL 1930) the policy holder could cancel a life insurance policy at any time. For P&C insurance the Act contained no regulations neither in respect of renewal nor for termination during the insurance period. The main rule was however that the insurance agreement was binding for both parties during the insurance period. The insured was thus obliged to establish specific legal grounds to be able to cancel an insurance agreement during the insurance period.
When FAL 1930 was revised, the Legislative Committee in the Parliament argued that the insured should be given an opportunity to cancel the insurance at any time. This was, however, not adapted by the Ministry of Justice Department in FAL 1989. The main reason was that this could cause hasty decisions and/or be open to adverse pressure from others. As also pointed out, such permissions could lead to increased costs for the insurance companies, which eventually would be passed on to the insured. For consumer reasons, however, termination was permitted in cases where the need for insurance no longer existed, or where there were other special reasons where present, such as the occurrence of a claim.
As time has passed, several new insurance companies have entered the market. Legislators therefore chose, due to concerns of market competition and with respect to consumers, to look into whether insured parties should be given further opportunities to terminate insurance policies. As a result policy holders were given the opportunity to move their current policy from one company to another as of 1 January 2006.
The aim is to benefit the policy holder
The statutory provisions is to be found in FAL 1989 § 3-6, which regulates termination of insurance agreements and the opportunity for policy holders in moving policies to other insurance companies. The reason for the amendment in the legislation was, as previously noted, to increase competition between insurance companies and hence also achieve lower premiums. The individual consumer’s need to place several policies within the same insurance company was also a part of the reasoning.
The legislation contains rules on notice of cancellation from the policy holder, and also on economic settlement between the parties in connection with moving.
Industrial clients are exempted for their own gain
The main rule in FAL (1989) is that deviation from the legislation is not allowed, i.e. a company cannot enter into an agreement with insured with lower protection than given by FAL 1989. However, as stated in FAL 1989 § 1-3, 2, the insurer has the freedom to agree to something other than that stated in FAL 1989.
The characteristics of these exceptions are that they are linked to businesses and insurance subject with strong international elements and/or large and strong insured parties within the commercial scene. These are assumed to have such an extensive organisation or sufficient access to financial resources that they have, or will be able to gain access to, the necessary insurance expertise. It is therefore assumed that there is no need for protection by mandatory legislation.
If has chosen to make use of the Act’s permission to make exceptions from the ‘cancellation due do to moving’-clause. In practice this means that all our industrial and some of our commercial clients’ policies will not have access to move the insurance cover freely. The restrictions will be stated in each insurance policy. Clients involved are large clients - often with complex global programmes.
If`s practice in this area improves predictability for all parties, and also contributes to keeping costs down for our clients, while maintaining a high level of service.
Further information
