Article: O.-J. Luik, "Do the Principles of European Insurance Contract Law Go Too Far in Protecting the Policyholder?", Juridica International 2011 (18), pp. 73–83. Full text on Juridica International (published 2011)
Background and research question
The European Commission's 2010 Green Paper discussed an optional European contract law instrument, part of which could be the Principles of European Insurance Contract Law (PEICL). For the insurance sector the central question was not whether to support an optional instrument but whether PEICL protects policyholders too radically. The article examines this by comparing PEICL with the insurance contract rules of the Estonian Law of Obligations Act (võlaõigusseadus, VÕS).
Main conclusion
The author finds that PEICL, as a European ius commune, is considerably more consumer-oriented and flexible than the VÕS and limits the insurer's release from performance. This is not excessive: it balances the parties' interests reasonably. A win-win cannot consist only in cutting insurers' costs through a pan-European product; the policyholder, who is not the insurer's equal in knowledge or economic strength, must also gain. Cost savings and simpler cross-border business should be reasons for insurers to choose PEICL even where national law is more favourable to them.
What has changed
No optional European insurance contract law instrument was created, and PEICL remains an academic model. Estonian law has, however, moved closer to PEICL through Supreme Court practice, especially on proportionality.