The Impact of the Principles of European Insurance Contract Law on the Single Market

The harmonisation of insurance contract law and Principles of European Insurance Contract Law as the proposal for harmonisation of European insurance contract law would enhance insurance cross-border activity and thus contribute to the integration of European insurance market. Because of the lack of harmonisation in European insurance contract law, cross-border insurance activities are regulated by private international laws. Within that the main problem is the regulation of mass risks and life risks by private international rules. Free choice of the law governing insurance contract is limited and mostly subject to the substantive national insurance contract law of the insured’s state of habitual residence. The application of different national contract laws raises additional costs, legal uncertainty and complexity and both the insurers and the insured are reluctant to engage in cross-border insurance activity. It is undisputable that harmonisation of European insurance contract law is needed in order to overcome obstacles in insurance cross-border activity. As an instrument with comprehensive regime of mandatory and semi-mandatory rules it provides high enough protection of the weaker party and so application of national mandatory and protective rules would not be necessary. Also the regime of “either-or” would prevent parties to opt in for only particular provisions that would give them an advantage and avoid the application of the provisions that protect the other party. Moreover, the option to apply it not only on contracts with international elements but also on domestic contracts would expand its application. The PEICL as an proposal to harmonise European insurance contract law is created in the way that is capable to achieve its aim. As an optional instrument it would not replace national laws, but just provide an alternative for insurance parties, thus Member States would more easily give their consensus more easily for its application and would not be imposed to insurance parties that still want to apply national laws. By prescribing set of rules that can be applied to every cross-border insurance contract and by successfully harmonising European insurance contract law PEICL definitely contributes to creation of integrated European insurance market. It further develops the spirit of the European Union and imposes the European view on insurance law