Please note! You may be unaware that your insurance contracts are subject to the French Public Procurement Code !

Publié le 28/11/2024 par Jérôme Goy

INSURANCE LAW

In principle, companies, as legal entities under private law, are exempt from the provisions of the French Public Procurement Code (Code de la commande publique), which stipulates that insurance contracts must be put out to tender. However, you could be one of the exceptions… European legislation has extended the scope of application of the aforementioned code by laying down certain conditions.

The question we need to ask ourselves is: which organizations are concerned by this obligation to put insurance contracts out to tender, and what rules apply to them?

1) Qualifying as a contracting authority

The transposition of several European directives has led to the introduction of the concept of “contracting authorities” in French law. These are private bodies which, by virtue of meeting certain conditions, are subject to the Public Procurement Code and, in particular, to the principles of advertising and competitive tendering prior to the conclusion of certain contracts. Traditionally, the status of contracting authority is derived from “financial and functional dependence” on another contracting authority.

French law provides for three situations in which a contracting authority can be identified. These are :

While the first two hypotheses are (relatively) clear, the third requires the most clarification. The Court of Justice of the European Union has issued a number of rulings in response to this need for clarification.

First of all, to qualify as a contracting authority, the body must have been set up specifically to meet needs in the general interest which are not of an industrial or commercial nature.

According to the Court of Justice of the European Union, a need in the general interest is defined as the essential tasks assigned to public authorities, which benefit the members of a community or a group of people and are governed by economic, social and/or environmental considerations (ECJ, January 15 1998, case C-44/96, Mannesmann Anlagenbau Austria).

Secondly, of the three alternative “sub-conditions”, the one concerning management control by a contracting authority seems to be the most open to discussion.

On this point, the Court of Justice of the European Union has stated that management control “is based on the finding of active control of the management of the body concerned such as to create a dependence on the part of that body on the part of the public authorities equivalent to that which exists when one of the other two alternative criteria is met, which is likely to enable the public authorities to influence the decisions of that body in relation to public contracts” (CJEU February 3, 2021, Federazione Italiana Giuoco Calcio).

In reality, management control is assessed casuistically: the analysis concerns the concrete power that the administration can exercise over the organization’s management choices. In the case of insurance, the public authority’s action must have a direct impact on the organization’s insurance contracts, or at least on its procurement policy.

If your company, organization or association meets these criteria, it is automatically subject to the obligation to advertise and put its insurance contracts out to tender.

2) The consequences of qualifying as a contracting authority on the award of insurance contracts

As mentioned above, EU intervention in the field of insurance contract qualification has obliged not only public bodies, but also certain private groups, to comply with a prior advertising and competitive tendering procedure for insurance contracts.

It should be noted that the first threshold for competitive bidding is set at 40,000 euros excluding VAT, so that any contract of lesser value can be concluded by mutual agreement.

This legislation, which originated in Europe, is designed in principle to guarantee the transparency of contracts, free competition between players and efficient use of the contracting authority’s resources.

When a contracting authority is designated as such, the rules governing the award of contracts set out in the French Public Procurement Code apply. The following three specific rules seem to us to be the most important.

First of all, the purchaser cannot favor a specific distribution technique for the insurance contract, nor give preference to certain participants: the rule is competition. For this reason, the purchaser may decide to call on the services of a consultant to draw up, negotiate and conclude the insurance contract. Remuneration of the consultant must be borne by the purchaser (circular dated December 24, 2007 on the award of public insurance contracts).

Tenderers (insurance companies and intermediaries) must also provide certain documents, in accordance with the French Public Procurement Code. The latter stipulates that there must be as many documents as there are players involved in the bid: for example, with regard to information, the information documents of the insurance company and its potential insurance intermediary will be required.

Finally, the duration of the contract also diverges from ordinary law. In fact, the duration of the contract must be fixed according to the nature of the services, for a reasonable length of time and satisfying the requirement for periodic re-competition. Contract renewal must be in writing, and the French Public Procurement Code stipulates that the contract holder may not refuse renewal, unless otherwise stipulated.

It is therefore essential to take an interest in the quality of your organization, in order to comply with the applicable legal regime and practices. This is all the more true as there are many other specific features that widen the gap between ordinary law and the requirements of public procurement law (applicable procedure, thresholds, negotiated procedure or call for tenders, etc.).