Recital 42

(42) When resolution actions are taken, policy holders could retain some or all of the benefits provided in their contracts and would not necessarily have to conclude a new insurance contract. In cases where an undertaking is wound up under normal insolvency proceedings, a change of contract could entail replacement costs for policy holders. Especially for long term insurance contracts, market conditions and the policy holders’ own characteristics as well as additional costs such as brokerage and closing fees could lead to significant costs for policy holders having to replace their contracts. When estimating such replacement costs in the context of the ‘no creditor worse off’ principle, one has to assume that the conclusion of a new insurance contract with comparable cover available in the market against prevailing market rates takes place within a reasonable time from the date of resolution action.

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Source: EUR-Lex (Cellar) · retrieved 2026-10-14 · Text as adopted (Official Journal); later amendments are not incorporated in this text.