EC Legal Regulation of the Insurance Market; Challenges of Integration
Over the last decade, the private insurance market has undergone a stable growth in turnover and growing demand for insurance products in all Member States of the European Union. Therefore, the creation of a single market in insurance will enable consumers to have access to wider choice of insurance products, and insurance companies to gain access to markets in various Member States and compete effectively. The EU legal framework for the insurance industry embraces the Treaty freedoms of services, establishment and capital, the EC Directives and the ECJ case-law. The present thesis identifies numerous factors that hinder the Community insurance market integration and offers possible remedies. The summary of the market obstacles is all-inclusive and reflects the responses to the questionnaires and the Commission surveys. The major obstacles impeding the EC insurance market integration are: national legal requirements and taxation rules applicable to insurance, ?general good? consideration that might justify a discriminatory treatment of the foreign undertakings, different levels of consumer protection and labour laws in each Member State. Other barriers to market integration are of attitudinal or cultural nature. These are: language, varying consumer needs and preferences, mistrust in foreign insurers, etc. The latter category of problems can be solved by the market penetration efforts of the companies, but not by the EU legislation. Business analysis part of the thesis presents marketing strategies that can be utilised by the insurance undertakings in order to expand in new markets throughout the Community. The legal category of problems is acknowledged by the stakeholders and is addressed in the ongoing EC legislative initiatives and proposals. Current welfare state trends in most of the Member States, namely increasing healthcare costs, declining birth rates and aging population, as well as unfavourable employment rates may lead to the situation whereby the state statutory insurance systems cannot afford to fully subsidise the social benefits for the entire population. This explains the significance of the proper functioning of the European Community private insurance market. The EU legislative activities in the financial services sector are aimed to alleviate some of the serious challenges related to the market integration process. Barriers of legal and attitudinal nature impede the creation of the genuine single European insurance market. Some of these can be solved at the level of private insurance market players and others are under the competence of the EC legislature. This thesis supports the legal initiatives assumed by the Commission. The research also presents the overview of the European insurance industry and offers relevant marketing tools to the companies willing to expand their activities on the Community insurance market. *Supervisor: Henrik Norinder