Life Insurance and the European Union: A Survey of the Literature. Kerry E. Howell. Bournemouth University

Transcription

1 School of Finance & Law Working Paper Series Life Insurance and the European Union: A Survey of the Literature By Kerry E. Howell Bournemouth University No Bournemouth University, School of Finance & Law (Department of Accounting & Finance), Talbot Campus, Fern Barrow, Poole, Dorset. BH12 5BB 1

2 Published 1998 by the School of Finance and Law, Bournemouth University, Talbot Campus, Fern Barrow, Poole, Dorset, BH12 5BB. For further details contact: Kerry Howell School of Finance & Law Bournemouth University Fern Barrow Poole, BH12 5BB United Kingdom Tel: (00) Fax: (00) ISBN Copyright is held by the individual author. A catalogue record for this publication is available from the British Library. Acknowledgements The usual disclaimer applies. For further information on the series, contact K. Howell, School of Finance & Law, Bournemouth University. 2

3 Life Insurance and the European Union: A Survey of the Literature By Kerry E. Howell Research Fellow and Senior Lecturer 3

4 Abstract In 1988 the discussions about a Single European Market (SEM) in life insurance intensified. Because of the impetus the Single European Act (SEA) gave to the construction of the internal market in general, there was a greater emphasis on creating a single market in financial services. Indeed, this was accompanied by streamlined decision-making process and the enhancement of compromise and interaction between the Member States on increasing and expanding issues. To identify these processes the paper surveys the literature regarding the European treaties, European decision-making procedures, and the use of European interest groups in the formulation of the third life assurance directive. Fundamentally, the paper argues that through economic and political incentives, there was a more concerted effort in the creation of a SEM in life insurance. 4

5 Behaviour is ultimately a social matter... and thinking in terms of what 'we' should do, or what should be our strategy, may reflect a sense of identity involving recognition of other people's goals and the mutual interdependencies involved (Sen, 1992; p 85). INTRODUCTION This paper provides an overview of the discussions relating to life insurance and the Single European Market (SEM). Indeed, it surveys and reviews the literature relating to European harmonisation and gives an insight into the procedures and difficulties at work in the pursuit of a single market in life insurance. An understanding of the European life insurance industry was particularly assisted by information supplied by the Financial Times (1992) Munich Re (1988; 1992) Sigma ( ) British Insurers International Committee (BIIC) Comité Européen Des Assurances (CEA) and the Association of British Insurers (ABI) working papers. Carter and Greenway (1991), Dickinson (1990; 1994), Ellis (1990; 1994; 1995) and Pool (1992) provided a general survey of the insurance industry in the Europe Union (EU). Cechinni (1988) gave an analysis of the benefits insurance may gain from the SEM. However, the creation of a SEM in insurance and especially life insurance has not easily been achieved. Shapiro (1997) Anon (1997) Howard (1997) Unsworth (1997) and Wormuth (1997) consider that barriers have only been partially removed and the EU life insurance market is still in the process of rapid change. Indeed the benefits identified by Cecchini have not been fully realised to date. Yet,... the creation of a single market continues to be the central aim of the EU and hence the need for harmonisation of insurance law throughout the Member States (Fine, 1997; p 125). Fundamentally, life insurance products are less straight forward than other 5

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