Significant Changes to the Norwegian Insurance Contracts Act

On 1 July 2022, the amendments to the Norwegian Insurance Contracts Act (ICA) and the new regulation on Insurance Contracts entered into force. The Insurance Distribution Directive (2016/97/EU) (IDD) is now implemented in Norwegian law. Some of the most important amendments are:

Giving advice and assessing an insured’s needs:
Insurers will have to comply with stricter duties when giving advice and recommendations in the underwriting process. If an insurer gives a “personal recommendation” – essentially advice as defined in the IDD – in connection with the distribution of an insurance product, it must also give the insured a written explanation of how the product recommended best meets the insured’s wishes and needs. Further, when distributing insurance-based investment products (eg unit-linked insurance products), the insurer must always provide a personal recommendation.

Professional conduct and an insurer’s liability for breach of duty:
Insurers will have a general duty to act in an honest, proper and professional manner. A failure to act in accordance with good business practice will entitle the insured to damages for any loss suffered, although an insurer’s liability will be limited to reasonably foreseeable losses. The amendments to the ICA also impose a duty on insurers to identify possible conflicts of interest and to explain which measures will be introduced to reduce the risk of such conflicts.

Increased information and disclosure obligations:
For non-life insurance, a standard “insurance product information document” (IPID) will need to be given to an insured before a policy is issued. In addition, the insurer must provide the insured with a number of specific details before a policy is issued. These include information about the insurance company, any conflicts of interest, remuneration received in connection with the policy and any other costs – in addition to premium and planned payments – that will be charged to the customer.

System for complaints:
Insurers will have a duty by law to maintain an appropriate and effective complaints handling system. Complaints and claims regarding an alleged breach of an insurer’s duties, must be answered in writing within a reasonable period of time depending on the extent and complexity of the complaint and whether there has been any previous correspondence between the parties. If insurers are unable to provide the insured with a conclusive answer within 15 business days, a preliminary answer must be given explaining why a final answer has not been given.

New rules on the burden of proof:
The insurance company will have the burden of proving that it has complied with statutory and regulatory duties owed to the insured.

Use of electronic communication:
Electronic communications will be the default choice, and the insured must reserve itself against the use of electronic communications when the insurance is obtained.