Www.finansnorge.no



20.09.2005

2005/00505 – FJA/OV

ESA Sector Inquiry – Business Insurance (Case 57825)

Answers to the questionnaire

Part A General Questions

1. Organization

The Norwegian Financial Services Association (Finansnæringens Hovedorganisasjon (FNH)) is an independent legal entity subject to its own statutes (The statutes are attached as enclosure 1).

The association is a member organization for insurance companies, banks, mortgage institutions, investment firms, management companies for securities funds, as well as financial groups established in Norway. We have restricted our answers to the activities of FNH in the field of insurance.

The daily activities are carried out by a secretariat, which prepares issues for information and decision for committees and boards consisting of representatives elected by the member companies.

As a matter of form we mention that the secretariat is also servicing several bodies with separate statutes and separate boards, such as “Trafikkforsikringsforeningen” (Motor Insurers Bureau ), “Yrkesskadeforsikringsforeningen” (Occupational Injury Insureres Bureau), and “Naturskadepoolen” (Norwegian Natural Perils Pool) (See also item 6 below).

We also mention that the association, for tax purposes, is divided in two parts; FNH and FNS (“Finansnæringens Serviceorganisasjon”, The Norwegian Financial Services Bureau). The member fees of FNS are deductible in taxable income for the member companies. Below we use FNH as an abbreviation covering both FNH and FNS.

2. Decision making bodies

The main decision making bodies are:

• The general council (chapter 3 in the enclosed “Statutes” (enclosure 1))

• The executive board (chapter 4 (enclosure 1))

• The executive committees, especially the main committees (chapter 5 (enclosure 1))

We also enclose “Financial Year 2005” (enclosure 2), see the presentation of the management structure and the committees and boards on pages 44 and 45.

3. Financing

The association is financed by contributions from the member companies, with two main elements; basic financing and project financing (see chapter 7 in the statutes (enclosure 1)).

4. Mandates – terms of reference

The general mandate is specified in section 1-2 in the statutes (enclosure 1). We emphasize the goal of achieving good working conditions and opportunities for further development for the finance industry, providing a basis for profitable and sound operation and enabling the banks and insurance companies to offer their customers the best possible service.

5. Regulatory competence

FNH does not have any type of regulatory competence or authority in regulatory matters. We work by stating the position of the industry towards the regulators.

In some fields FNH will have some impact on practical matters in the market place through recommendations to our members (codes of conduct and similar matters). These are always non-binding and competition neutral. The recommendations are in general known either to the competition authority or the supervisory body.

6. Membership pre-requisite for carrying out insurance activities?

In general no. In specific areas FNH is business operator for mandatory schemes. This applies for instance motor insurers operating in Norway being obliged to membership of the “Motor Insurers Bureau”. This is in accord with the motor insurance directives in EU/EEA.

7. Eligibility for membership

Every insurance company with a licence to offer insurance in Norway is eligible for membership. See chapter 2 “Membership” in the enclosed statutes (enclosure 1) for various categories of membership of the association. In general FNH is based on the principal of free membership (see art 2-1 second paragraph in the statutes (enclosure 1)).

8. Obligations and benefits related to membership

The obligations of the members are mainly to comply with the statutes of the association and to pay the necessary contributions. The rights consist in – through the governing bodies of the association – deciding on matters handled by the association, and receiving information produced and gathered by the association.

9. List of members

A complete list of the members (without addresses) of FNH is found on page 46 in enclosure 2. This list contains the mother company of the financial group. We enclose also (enclosure 3) lists of each life and general insurance company (with postal address), which are members themselves or belonging to a member financial group.

FNH do not have, and is not in the position to give, information regarding activities carried out by each of the member companies (beyond the broad categories of life insurance and general insurance). We have no tradition for gathering information regarding the licences of the companies, confer “the classes of business” in the questionnaire. Such information can be obtained from “Kredittilsynet” (The Financial Supervisory Authority of Norway).

10. Other associations

To our knowledge there is only one other association in Norway representing the interests of insurance companies in Norway, which is:

The Central Union of Marine Underwriters Norway (CEFOR)

P.O.Box 2550 Solli

N-0202 Oslo

Website: cefor.no

There is, however, an association organizing pension funds (IORPs) in Norway. These pension funds are captive companies supplying the sponsoring company with old age pension schemes. The name and address of the association is:

Norske Pensjonskassers Forening

Postboks 2417 Solli

0201 Oslo

e-mail: post@pensjonskasser.no

11. Insurance intermediaries

The insurance brokers have their own association:

Norske Forsikringsmegleres Forening

Postboks 1644 Vika

0119 Oslo

E-mail: post@forsikringsmeglerne.no

Website: forsikringsmeglerne.no

Part B Questions relating to the association’s activities

12. Activities

|Activity |Basis |

|Administration |Statutes, |

| |Budget approved by the General Council |

|Matters presented for boards, committees and working parties |Statutes, |

| |Terms of reference (mandates) for all permanent committees and |

| |working parties, |

| |Commission from a board or committee for ad hoc (interim) working |

| |parties |

|Statistics |Terms of reference |

|Claims prevention |Terms of reference |

|Approval of safety equipment |Terms of reference |

|Damage valuation systems |Terms of reference |

|Information activities |No specific rules |

|General monitoring of developments of interest |No specific rules |

|Meetings, conferences, etc |No specific rules |

13. Committees

A complete list (in Norwegian) of boards, committees and working parties is attached as enclosure 4. All of these bodies are (in principle) governed either by statutes or by terms of reference (mandates). The topics covered by the various bodies can to some extent be understood from their names.

In addition there are a number of ad hoc working parties appointed to assist the administration in preparing matters for the various boards. There are also some “contact working parties” with the purpose either of taking part in meetings with bodies outside the association, like the insurance brokers’ association, and the association of the auto repair shops, or to exchange information regarding the international development on a certain field, like insurance cover for damages caused by terrorist actions. These working parties may have a somewhat less formal term of reference, but in any case they operate under the control of one of the governing bodies of the association.

14. Mandates

Enclosed please find (enclosure 5 (in Norwegian)) the mandates of most of the bodies listed in enclosure 4 (see paragraph 13 above), with activities in insurance. Some of these bodies are regulated by special legislation. Some of the mandates are rather old and are not written out in a separate document, but were embodied in the decisions when they were established. FNH is in the process of revising and updating all the mandates, with the intention to have written mandates, with electronic access, for every permanent board, committee or working party of the association. We thus expect to have the list of mandates complete within short. (As a matter of form; there may be a list of the members of the board or committee in question attached to some of the mandates. These lists are in general not updated.)

15. Information

We understand this question to concern regular information to the member companies. This information is given in the following manners:

• Circular letters to the companies

• Statistics

• ”Finansrett”

Please find in enclosure 6 (in Norwegian) a list of issues in each of these channels.

Some information is, of course, also given in other forms, but we do not think it is possible to give a complete overview. For instance there will be given some information from the secretariat regarding matters of current interest in almost every meeting of the committees and the boards in the association.

Our website: fnh.no presents an overview of the general information activities of FNH. This website contains written submissions from FNH regarding issues on public hearing, statistics, publications from FNH, press releases, and more.

The website also has a part with access only to members. The necessary password to get admission to this site, will be transferred to you, if the staff member in ESA working with this matter requests it by e-mail.

We also have a special ”committee website” that contains agendas for meetings, with reports and recommendations under each of the items, as well as minutes of the meetings.

16. and 17. Recommendations and guidance

Before going into detailed answers, we like to underline the principles governing all kind of cooperation between the member companies of FNH, as decided by the main board in 2002 (See enclosure 7 (in Norwegian)). This policy document clearly shows that there is a high level of attention on not to engage in any form of cooperation that could be harmful to the competition in the market. The principles are relevant for several of the items of the questionnaire, and we assume that they are of particular interest to ESA.

We would also like to remind ESA that the former Norges Forsikringsforbund (NFF) (Norwegian Insurance Association, now embodied in FNH) in letter to ESA of 13 April 1994 presented an extensive announcement of agreements operated by NFF.

In the further description below, we answer the questions 16 and 17 jointly, but separate life and general (non life) insurance.

Life insurance:

FNH have issued a number of recommendations and guidance’s (best practice) to the member life insurance companies. It is important to note that neither the recommendations nor the guidance’s are in any way legally binding for the insurers. FNH does not control if our member companies comply with the recommendations and guidance’s.

Furthermore it’s important to note the most of the recommendations and guidance’s are issued to secure equal treatment of the customers, and to safeguard the customer’s rights in different aspects of the contracts. All of the recommendations and agreements are presented on the member website under the heading “avtaler/regelverk”.

The web site also provides further information and the full text of the recommendations and guidance’s. See also item 15 for more information on the website. Other stakeholders or interested parties may, on request, have information about agreements or recommendations handled by FNH.

Attached you will find a list of recommendations and guidance’s given by FNH to life insurers regarding business life insurance and pensions (enclosure 8 in Norwegian) Enclosure 8 consists of two parts. One is a printout from the member section of our web site. The other is a short description of the agreements and recommendations that are most relevant for the business market.

General insurance:

As in life insurance, FNH has issued a number of recommendations regarding best practice, of the same general nature as the ones in life insurance. A printout of the website (in Norwegian) is enclosed (enclosure 9). The main goal of these recommendations is to avoid disagreements in claims handling which will have a negative effect on the customers or on the insurance market in general, for instance by giving the industry a bad reputation. Below is mentioned some of the types of recommendations.

Agreements regarding recourse

In many cases there are more than one insurance company with a liability to compensate losses relating to one incident. In general the main company pays out all in one settlement to the insured, and then claims the other companies for their obligations. In order to keep costs down, there are a number of agreements on the settlement of these cross companies obligations.

Loss of use compensations

There are a number of agreements on loss of use compensations especially regarding compensation to third parties under motor liability insurance.

Consumer oriented measures

These measures are part of a consumer political action plan some years back, with the intention to improve the practice of the insurance companies in fields where some friction had been experienced.

18. Other involvement in cooperation between insurers

Risk statistics

FNH organize collection and production of risk statistics for life insurance – risk statistics on mortality rates and disability rates (referred to as “RISK”). A description of the type of data that are collected, who has access to the statistics and the legal basis of this cooperation are attached (see enclosure 10 (in Norwegian)).

Net tariffs in life insurance (group pensions)

In accordance with article 81 of the EU Treaty and article 53 of the EEA Agreement, FNH has organized the development of common net tariffs in group pensions in Norway. With tariffs we understand mortality experience and marital status experience calculated on the basis of RISK, and analyzed in relation to the expected development. It is important to note that the common tariffs are calculated without safety margins, and that they are non-binding (they only give the insurers guidance).

The tariffs are primarily available to the companies that have contributed to the risk-cooperation (RISK), but they are also made available to other participants for a fixed price (NOK 295 000). This price is calculated on the basis of the contributing insurer’s costs relating to the production of risk statistics and costs relating to analysis in relation to the development of the tariffs.

The Committee for health risk assessment (Nevnden for helsebedømmelse)

The Nevnden for helsebedømmelse represents a co-operation between Norwegian insurers operated by FNH. This committee issues guidelines on health risk, and make suggestions in individual cases where the individual insurer does not have enough medical expertise. More information on this subject is given in enclosure 11 (in Norwegian). ESA has previously granted this committee exemption under Article 53(3) EEA.)

Insurance fraud

FNH has an advisory committee with representatives from its members. The aim is to support the secretariat in FNH to give advice to our members of preventive measures, produce insurance fraud statistics, detect and inform our members about new ways of fraud and money laundering, carry out fraud investigation, locate and bring forward stolen cars and boats.

Remaining Value Salvage

The Secretariat of FNH operates a number of specially equipped vans for taking care of remaining value of property damaged in fire and other incidents. The vans are located at the largest fire brigade stations.

Vehicle finders

FNH has three part-time workers searching the streets of Oslo for stolen cars.

Assessment of damages in motor insurance

FNH runs a data-assisted loss assessment system for vehicles. The system helps the member companies to make effective administration, loss statement and calculation of damaged vehicles to be repaired. A database with information of 17.500 car models helps the loss adjusters to calculate the repair costs giving estimated time of body repair, painting and spare part prices.

Loss prevention

When the FNH members agree that the purpose of a loss prevention project gains from cooperation, FNH carries out projects in question, primarily in the field of fire, water damages, road accidents and burglary. Many loss prevention projects are carried out in cooperation with other stake holders, like the Norwegian authorities or research institutes.

Bicycle register

On behalf of its members, FNH has an agreement with Falck Redning AS to run a bicycle register. According to letter of 9. October 2001, the Norwegian Competition Authority has granted FNH exemption according to § 3-9 in the Norwegian competition law, to have this agreement until 9. October 2006.

Certification arrangement for hot work

In cooperation with the non-life insurance companies, FNH have made certification requirements for all workers doing hot work (watertight roofs etc) on working places not designed for such work. Included in the certification requirements is a prohibition against open welding for roof-layers. The Norwegian Competition Authority has in letter of the 14. October 2002 stated that this measure does not invoke any actions on the side of the competition authority.

Insurance pools

There are three (still active) pooling arrangements operated by FNH. Those are “Norsk naturskadepool”, “Yrkesskadeforsikringspool for avslåtte risiki” and “Panthavergarantipoolen”. The statutes for these pools (in Norwegian) are part of enclosure 5. We also refer to enclosure 9 (see general insurance under item 16 and 17), which also shows pools in a winding up process.

19. Cooperation in case of insolvency

There is not foreseen any cooperation between the companies in the case of a bankruptcy.

We have in Norway since 1988 (the law has been revised this year) a compulsory guarantee scheme in general insurance. A bankrupt company will be put under public administration, and the board of the guarantee scheme will pay out to the policyholders (and other with insurance claims) according to the legal obligations of the scheme. There is no guarantee scheme in life insurance.

20. Activities concerning insurance distribution

FNH issued in 2003 a Code of Conduct regarding remuneration to insurance brokers. We have previously informed ESA about this. (se enclosure 12). We are happy to furnish ESA with an update if requested.

FNH has of course also had some activity regarding the implementation in Norway of the EU-directive on insurance mediation, by stating the position of the industry in the hearing process.

21. Liaison with insurance intermediaries

FNH has contact with the insurance brokers and their organization in relation with the code of conduct (see paragraph 20). The contact has been handled from the side of the insurance industry by a “contact working party” (see item 13). Besides this, there has only been occasional contact with the association of the insurance brokers.

22. Co-insurance

FNH has not been engaged in any co-insurance activity or arrangements for at least the last ten years.

23. Databases

General statistics

General statistics produced by FNH is presented on the website of the association. (See answer to question 15)

Registers and data bases

In enclosure 13 (in Norwegian) is given an overview of the registers and data bases that are operated by FNH or are under the responsibility of FNH.

24. Data bases outside FNH

Besides the data gathered by The Financial Supervisory Authority of Norway, and The Central Bureau of Statistics, and any statistical data gathered by the associations mentioned under items 10 and 11, FNH does not have knowledge of other insurance data bases outside FNH.

25. Standard clauses or policy terms

In general there are no co-operation between the companies regarding standard clauses or policy terms. There may, however, be some standard clauses and product harmonization imposed by law in compulsory insurance, and in insurance with special tax regulation.

In connection with the expected possible data problems relating to the anticipation that some data systems would not be able to handle the change over to the year 2000, the association agreed upon certain parameters in case of vast claims. It turned out, however, not to be any need to worry.

26. Standard clauses that contain a provisions for indexation

We do not think of this as a standard clause, but the insurance companies have a well-established standard procedure for valuing and indexing the value to be insured for houses and buildings. This system applies mostly to home insurance, but may also be used in relation to insurance of business properties. The basis for this is a special statistics delivered by the Central Bureau of Statistics. The system is approved by the Norwegian Competition Authority.

Please observe that this system is only used to calculate the insurance values (the premium basis). The risk involved must be assessed by each company separately. The individual insurance company evaluates the risk involved for its own part, and calculates the actual insurance premium.

27. Definitions and calculations

We have at this stage, nothing to add to what is said under item 26 above.

28. Activities in the field of security devices

These activities are handled by a special department in the secretariat and governed by the “Insurance Companies Approval Board”. Within the burglary section, the board puts up minimum requirements to burglary alarms and safes, mechanical burglary protection products as locks and lattice and gives safety regulations for handling and transport of cash.

Within the fire section, the board puts up minimum requirements to fire alarms and sprinkler installations and to those who design, install and control such installations.

Part C Questions relating to the insurance market

29. Market studies

We do not have any market studies concerning the provision of insurance to business entities. The closest we get in the recent past is a report produced by The Norwegian Competition Authority on the Norwegian financial markets in 2003. The report can be found on the website of “Konkurransetilsynet” at:



We like to add that FNH had rather comprehensive remarks to a draft of the report (see enclosure 14 (in Norwegian)).

30 Market information

In general FNH has only information about the member companies of the association, and not even for our members do we have access to all the information asked for in the questionnaire. FNH therefore suggests that ESA addresses The Financial Supervisory authority of Norway and The Central Bureau of Statistics to get a more complete picture of the situation.

We enclose however, some material that may be of use to ESA as a start. We also would like to point out that we have presented some data relevant for assessment of the competition situation in the Norwegian insurance market in our comments in enclosure 14.

Enclosure 15 (in Norwegian) gives an overview of the market shares between the member companies for the various segments of onshore non life insurance market in Norway (including insurance of local fishing boats). The marine market consisting roughly of insurance related to shipping oil, air and energy, is not included. The small and medium sized enterprises (“Mellom”), the larger enterprises (“Industri”), and occupational injury insurance (“Yrkesskade”), constitutes the main business parts of the markets in the tables in enclosure 15.

In general we do not know the size of the Norwegian market understood as cover for Norwegian risks (the volume of insurance bought of Norwegian inhabitants and enterprises domiciled in Norway). We do not know the part of this volume bought directly from foreign insurers, and we think that this is a flaw also in the official statistics. The leakage is probably small in most markets, but may be substantial in the industrial market.

For some of the obligatory insurance schemes we do, however, have good records. In enclosure 16 is given an overview of the latest settlement basis in the Norwegian Natural Perils Pool, the Motor Insurers Bureau, and the Occupation Injury Insurers Bureau. We believe this to be very close to total insurance risks in these fields in Norway. In these areas we also have the consolidated markets shares of the FNH member companies.

In enclosure 17 is given an overview of the market shares (in absolute figures) of the FNH member companies of the business segments of the Norwegian life and pension markets, and also for the market for group municipality pensions (which is now rather interesting from the point of view of market competition). It is important to be aware of the fact that “pensjonskasser” (IORPs) have quite a substantial part of the total pensions market, which is to a large extent a business market

Enclosures

1. Statutes of FNH

2. Financial Year 2005

3. Forsikringsselskaper i FNH

4. Styrer og utvalg i FNH

5. Mandater for styrer og utvalg i FNH

6. Lister over regulær informasjon fra FNH til medlemmene

7. FNHs holdning til bransjesamarbeid

8. Avtaler mv i livs- og pensjonsforsikring

9. Avtaler mv i skadeforsikring

10. Felles arbeid med risikostatistikk i livsforsikring

11. Nevnden for helsebedømmelse

12. E-post om informasjon til ESA om bransjenorm forsikringsmegling

13. Databaser i FNH

14. Merknader fra FNH til Konkurransetilsynet

15. Markedsandeler skadeforsikring

16. Markedsandeler i tre segmenter med lovpliktig forsikring

17. Markedsandeler i livs- og pensjonsforsikring

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