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Reorganisation and winding-up of insurance undertakings (until November 2012)

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Reorganisation and winding-up of insurance undertakings (until November 2012)

This Directive aims to guarantee, in the case of an insurance company with branches in other Member States failing, the application of a single winding-up procedure for the insured persons, policy holders, beneficiaries and creditors.


European Parliament and Council Directive 2001/17/EC on the reorganisation and winding-up of insurance undertakings.



The measure forms an integral part of the Financial Services Action Plan (FSAP) and fills a major gap in the financial services legislation. Its adoption comes at a time when financial services and personal investment are booming. The Directive was first proposed in 1987 but has involved a considerable amount of work, in particular owing to the complexity of Member States' insolvency rules.


As matters stand, if an insurance undertaking with branches in other Member States has to be wound up, the authorities of each Member State in which the undertaking is represented may open separate winding-up proceedings. This can lead to conflicts of jurisdiction, and policyholders are not always treated equally. Similarly, if an undertaking has to be reorganised, the approaches can differ from one Member State to another. The Directive is designed to guarantee consumer protection, irrespective of the place of residence.

Principle of home country control

If an undertaking with branches in other Member States fails, the winding-up will be subject to a single bankruptcy proceeding initiated in the Member State where the insurance undertaking has its registered office (known as the home State). The proceedings will thus be governed by a single bankruptcy law. This approach is consistent with the home country control principle that is the basis for the European insurance directives (life and non-life insurance).

The home country's legislation will assess the definition of branch and the way in which the assets and liabilities held by independent persons who have a permanent authority to act as agent for an insurance undertaking should be treated.


The Directive applies to undertakings having their head office inside the EU, European branches of insurance undertakings having their head office in a third country and creditors residing in the EU.

It will also apply to winding-up proceedings, whether or not they are founded on insolvency or are voluntary or compulsory, and collective proceedings as defined in the laws of the home Member State.

Principles of unity and universality

Only the competent authorities of the home Member State are empowered to take decisions on winding-up proceedings (principle of unity). These proceedings will produce their effects and be recognised by all Member States. All the assets and liabilities of the insurance undertaking should as a general rule be taken into consideration in such proceedings (principle of universality).

Principle of coordination

The supervisory authorities of the home Member State and those of all the Member States must be informed as a matter of urgency of the opening of winding-up proceedings.


The decision to open winding-up proceedings must have appropriate publicity within the EU. In addition to publication of the decision, known creditors residing in the European Union must be individually informed of the decision and kept regularly informed of the progress of proceedings.

Protection of creditors and equal treatment

The Directive provides for the protection of insured persons, policyholders, beneficiaries and any injured party having a direct right of action against the undertaking on an insurance claim. Member States may choose between two methods of protection: either granting insurance claims absolute precedence, or granting insurance claims a special rank which may be preceded by only claims on salaries, social security and rights in rem. Nothing impedes a Member State from establishing a ranking between different categories of insurance claims. In any event, creditors must be treated in the same way without any discrimination on the grounds of nationality or residence.

Withdrawal of authorisation

The opening of winding-up proceedings entails withdrawal of the authorisation to conduct business granted to the insurance undertaking.


The Directive provides for exceptions to the principle of the home country as regards the effects of the winding-up on certain contracts and rights (e.g. those of staff), third parties' rights in rem, reservations of title, set-off, regulated markets, detrimental acts, third party purchasers and lawsuits pending.

Professional secrecy

All persons required to receive or divulge information connected with procedures of communication are bound by professional secrecy.

Third countries

The host Member State of a branch of an insurance undertaking whose head office is located in a third country is regarded as the home Member State. If the parent undertaking has branches in several Member States, each branch must be treated independently (coordination between competent authorities, supervisory authorities, administrators and liquidators).

This directive is repealed by the Directive on the taking-up of the business of insurance and reinsurance from 1° November 2012.



Entry into force

Deadline for transposition in the Member States

Official Journal

Directive 2001/17/EC



OJ L 110 of 20.04.2001

Last updated: 26.10.2011