Provision of insurance against fines is contrary to good insurance practice
The FIN-FSA is of the view that provision of insurance against administrative and criminal fines and penalty payments is contrary to good insurance practice and in conflict with generally accepted social values.
According to the interpretation of the Financial Supervisory Authority (FIN-FSA), it is contrary to good insurance practice to provide insurance against a risk where the insurance might encourage actors’ indifference to regulatory compliance and compromise actors’ obligation to comply with the respective regulations. Provision of insurance against such a risk is in conflict with generally accepted social values.
The FIN-FSA’s interpretation pertains equally to criminal fines as well as administrative fines and penalty payments. It is of no significance whether the fine or penalty payment is imposed on the basis of a deliberate act, omission or negligence. Moreover, it is also of no consequence whether it is imposed on a legal or natural person.
According to chapter 25, section 1, subsection 1 of the Insurance Companies Act, the FIN-FSA is responsible for supervising that insurance companies comply with insurance legislation and good insurance practice.
‘Good insurance practice’ is a concept from the Insurance Companies Act and an established principle in the insurance business. Insurance activity must not only be formally legal, but also ethically sound, fair and just, i.e. in line with good insurance practice.
The question of the insurability of fines has arisen particularly in the context of the EU’s new General Data Protection Regulation (GDPR).
For further information, please contact
- Teija Korpiaho, Head of Division, tel. +358 9 183 5528 or teija.korpiaho(at)fiva.fi
- Timo Peltonen, Head of Division, tel. +358 9 183 5551 or timo.peltonen(at)fiva.fi