AUSTRIA Law and Practice Contributed by: Philipp Scheuba, BLS Rechtsanwälte GmbH
1. Basis of Insurance and Reinsurance Law 1.1 Sources of Insurance and Reinsurance Law The key source of private insurance law is the Austrian Insurance Contract Act (VersVG), which is based on general civil law provisions, in particular the General Civil Code Book (ABGB), and supplements these, but in some cases also supersedes them. The Austrian Insurance Contracts Act mainly focuses on the insur- ance contract itself and defines obligations for the insurer and the policyholder. Nevertheless, certain insurance contracts are excluded from the scope of application of the VersVG. This particularly applies to reinsurance contracts to which – in the absence of special statutory provisions – only general civil law applies. The provisions of the VersVG are in turn supplement- ed – depending on the type of contract – by further regulations. For example, the provisions of the UGB (Commercial Code) apply to insurance contracts con- cluded by commercial enterprises. The provisions of the KSchG (Consumer Protection Act) apply to con- tracts with consumers. In addition to contractual provisions, Austrian insur- ance law is significantly influenced by the Insurance Supervision Act 2016 (VAG 2016). The VAG primar- ily defines (re)insurance companies as well as their organisational and regulatory framework, governance as well as capital and liquidity requirements. In addi- tion, European Union legal acts such as the Solvency II Directive (Directive 2009/138/EC on the taking-up and pursuit of the business of Insurance and Reinsur- ance) or the IDD Directive (Directive EU 2016/97 on Insurance Distribution) have recently played a signifi- cant role in Austrian insurance law. Although precedents are not legally binding, Austria’s Supreme Court decisions have an essential purpose in giving specific content to the law and determining the meaning of provisions. Decisions of lower courts are regularly also set aside by the Supreme Court if they are not in accordance with its jurisdiction.
2. Regulation of Insurance and Reinsurance 2.1 Insurance and Reinsurance Regulatory Bodies and Legislative Guidance The Austrian insurance regulatory framework is essen- tially determined by the Insurance Supervision Act 2016 (VAG 2016), which implements the Solvency II Directive of the European Union. The provisions of the VAG are supervised by the Aus- trian Financial Market Authority (FMA) and primarily aim to protect the insured person. Operation of an insurance company requires a licence from the FMA. Furthermore, the insurer is also obliged to disclose certain data. In this regard, IDD stipulates most disclo- sure and information obligations EU-wide. Neverthe- less, insurance companies are only subject to formal monitoring, which means the supervisory authority cannot intervene in actual business activity. According to the Austrian Industrial Code, insurance and reinsur- ance intermediaries need a special business licence from the competent district administrative authority. Worth mentioning in this context is the European Insur- ance and Occupational Pensions Authority (EIOPA), which ensures a common supervisory practice and uniform application of European rules. Although EIOPA has no direct legislative competence, it has a considerable influence on European standards as it draws up drafts of technical standards to which the European Commission subsequently gives binding legal effect in the form of resolutions or regulations. 2.2 Writing of Insurance and Reinsurance The operation of a (re)insurance company requires licensing or authorisation by the FMA in the form of a concession. If an Austrian company is granted a licence to operate an insurance company, this licence in principle applies to all EU member states. A separate concession must be applied for each class of insurance, whereby the operation of certain forms of insurance excludes other classes of insurance. Therefore, the parallel operation of a life insurance policy and a property insurance policy is excluded (under the principle of separation of lines of business).
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