The new provisions of the Act on Insurance Companies (ICA) and the Act on Foreign Insurance Companies (FICA) have expanded the business opportunities of Finnish insurance companies and insurance companies located outside the EEA. New rules on the marketing of insurance products and services were introduced concurrently. The objective of the amendments is to expand the possibilities of insurance companies to operate in the financial markets and to harmonize the marketing rules and requirements applicable to credit institutions and insurance companies. The amendments of the ICA and FICA became effective on May 15 2001.
According to the new provisions of the ICA and FICA, a Finnish or a non-EEA insurance company may, in addition to its regular insurance business, act as a representative to and market the products and services of companies engaged in a business other than insurance. Such companies include banks or other credit or financial institutions, investment services companies, fund management companies or mutual funds located and subject to official supervision in a state belonging to the EEA. According to the government bill, recent developments show that insurance companies look to expand their operations typically into other fields of the financial markets. In addition, the above defined insurance companies may also act as representatives to companies engaged in business activities relating to the products, services or business operations of the respective insurance company. These activities may include, for example, risk management or damage inspection.
The acting by an insurance company as a representative of another company is subject to the requirements of the new provisions and the supervision of the Finnish Insurance Supervision Authority (FISA). An insurance company must provide the FISA with a business plan containing a sufficient description of the acting by the insurance company as a representative to other companies. The business plan must be filed with the FISA prior to commencing any such activities. In case the activities of an insurance company do not comply with the law, the FISA may forbid or restrict the business of the respective insurance company. A third country insurance company or an EEA insurance company is required, when acting as a representative to other companies, clearly indicate to the client its position as a representative and the name and status of the actual service provider.
According to the new marketing provisions, an insurance company must provide the client with all information on the service or product, which may have an effect on the decision making of the client. Furthermore, no false or misleading information or improper conduct may be used in the marketing of insurance products and services. The marketing activities of insurance companies are subject to the supervision of the FISA. With respect to consumer protection aspects, the Consumer Protection Ombudsman has a parallel competence. The FISA may forbid the marketing or the use of contract terms that are not complying with the requirements of law.