taxud/2414/08 - European Commission - Europa

These are services supplying a financial contract whose payoffs over a period of time are
derived from the performance of insurance commitments. This performance can
determine both, the amount and the timing of the payoffs; these payoffs can be in cash or
in the delivery of the underlying insurance commitment/(s).
2. Damage assessment shall not be considered to be a service having the specific
and essential character of "insurance and reinsurance" as defined in point (1) of
Article 135a of Directive 2006/112/EC.
These services consist of estimating the damage of an event and compiling a report
containing a description of the total expenses involved in repairing the damage and/ or
the amount to be paid as indemnification.
Article 15
The following shall be considered to be services having the specific and essential
character of "granting of credit" as defined in point (2) of Article 135a of Directive
2006/112/EC:
(1) the measurement, the prediction and the control of credit risks and losses due to
credit risk, including credit strategy;
These are services required for assessing whether it is possible to enter into a credit
contract and under which conditions; during the period of application of the contract
these services allow the tracking of the constantly changing financial situation and
possibly also the legal situation with the instalments being paid or not being paid as
provided for by the contract. These services are often referred to as consumer/retail credit
risk management; A common method for predicting credit risk is through the credit
scorecard. The scorecard is a statistically based model for attributing a number (score) to
a customer (or an account) which indicates the predicted probability that the customer
will exhibit a certain behaviour. In calculating the score, a range of data sources may be
used, including data from an application form, from credit reference agencies or from
products the customer already holds with the lender. Credit strategy is concerned with
turning predictions of customer behaviour (as provided by scorecards) into decisions. To
turn an application score into a Yes/No decision "cut-offs" are generally used. A cut-off
is a score at and above which customers have their application accepted and below which
applications are declined;
(2) underwriting of credits;
These are services for taking decisions on credit applications on behalf of the grantor
along pre-agreed lines. Not all decisions can be made easily. This may be for a number of
reasons; insufficient data, regulatory requirements, or a borderline decision. In such cases
highly trained professionals called underwriters manually review the case and make a
decision. This is more common in highly regulated products such as mortgages,
especially when large sums are involved. Such services also have a direct impact on
whether a supplier can accept the risk of granting credit;
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