Eight European Union countries will face a court challenge for failure to enforce an EU-wide bill that improves consumer protection when an insurer goes bankrupt, the EU executive said on Thursday.
The European Commission sued Britain, France, Belgium, Greece, the Netherlands, Finland, Sweden and Luxembourg.
"This directive is designed to ensure policyholders are given a preferential treatment when...an insurance company goes under," Commission spokesman Jonathan Todd said. EU governments endorsed in February 2001 a bill harmonising bankruptcy laws for the insurance sector and had until April 2003 to transpose the EU rules into their national legislation.
Bankruptcies in the insurance sector tend to be rare. Independent Insurance, a British non-life insurer with branches in Ireland, France and Spain collapsed in June 2001.
Under the new law, insurers with branches in different EU states would be subject to the insolvency regime of their home country. The law was designed to avoid proceedings being filed in different EU countries, avoiding conflicts of jurisdiction.
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