The EU legal and regulatory framework provides for a classification of the classes of insurance, but it does not provide for a harmonized definition of insurance contracts and specifically unit-linked insurance. The lack of clarity around the minimum key features for unit-linked policies (ULIPs) to validly qualify as insurance products generates arbitrage opportunities in the design of such products, provided the legal, regulatory and tax asymmetries existing between the frameworks of EU Member States. Such lack of definition can expose ULIPs to a recharacterization risk when the minimum legal, regulatory and tax requirements are not met in the relevant jurisdiction. An enhanced level of legal, regulatory and tax harmonization between EU Member States would promote a single market for ULIPs in Europe, significantly reducing arbitrage opportunities and the current target market.
Business Law Review