Thursday, 1 March 2012

Insurance contract linked to investment funds is just an insurance contract - CJEU in González Alonso case C-166/11

1 March 2012: CJEU judgment in the case C-166/11 (González Alonso)

The dispute in this case concerned a consumer concluding a life insurance contract outside the premises of the insurance company. The contract concluded provided consumer with life assurance offered in return for payment of a monthly premium. That monthly premium was to be invested, in varying proportions, in fixed-rate investments, variable-rate investments and financial investment products. The question asked to the CJEU was whether such a contract falls under the scope of the Doorstep Selling Directive. If it did, then the consumer could withdraw from a contract. If it didn't, then the consumer was bound by the contract he had concluded.

Insurance contracts are excluded from the scope of the application of the Doorstep Selling Directive (art. 3(2)(d)). However, the consumer claimed that in this case he had concluded a "unit-linked" contract (of contract linked to investment funds) that is not excluded from the scope of the application of the Directive. The CJEU decided, however, that:

"(...) contracts which are ‘unit-linked’ or ‘linked to investment funds’, such as that concluded by Mr González Alonso, are common in insurance law. Thus, the European Union legislature took the view that that type of contract falls within a class of life assurance, as is clear from Annex I, point III to the Life Assurance Directive, read in conjunction with Article 2(1)(a) of that directive." (Par. 29)

As a result, insurance contracts linked to investment funds should be seen as insurance contracts that are excluded from the scope of the application of the Doorstep Selling Directive. (Par. 31-32)

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