EIOPA · 1326

1326

Regulation
Guidelines on contract boundaries
Article
18
Submitted
2018-03-28
Answered
2019-10-16

Question

We have a question on contract boundaries which is related to Guideline 2. This guideline states that in context of a conditional right to terminate the contract ion case of a damage event this extraordinary right should not be considered as a unilateral right to terminate the contract. In the current case we consider a 10 year non-life contract. According to national law the undertaking has the unilateral right to terminate the contract after five years. And in addition to that according to national law the undertaking has the unilateral right to terminate the contract in case the due premiums are not paid within a given time period. We assume that the contract boundary for this contract is five years. Is this correct?

Answer

The right of an insurance or reinsurance undertaking to terminate an insurance or reinsurance contract in case the due premiums are not paid within a given time period should not be considered a unilateral right as referred to in Article 18 of Commission Delegated Regulation (EU) 2015/35 because the right is conditional on the behaviour of the policyholder.

This Q&A is published by European Insurance and Occupational Pensions Authority and is non-binding. It does not constitute legal advice. Updated weekly from official ESA sources.

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