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Last Update: 22.11.2010

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Glossary

Actuary
Term used for an actuarial expert; Pensionskassen have to appoint at least one actuary, who has to prepare the business plan or head its preparation and monitor compliance with it (Article 20a Pensionskassengesetz (PKG; Pensionskasse Act)).

Ad hoc disclosure requirements
The issuers of financial instruments which are admitted to trading on a regulated market or for which a request for admission to trading on such market has been made have to inform the public without delay of inside information which directly concerns said issuers.

Assistance
Assistance provided for persons who get into difficulties while travelling or while away from home or their permanent residence. Assistance means that the beneficiary of an assistance contract pays a premium in return for which a commitment is made to provide immediate assistance in the contractually agreed circumstances and under the agreed terms, if s/he faces difficulties after the occurrence of a coincidental event. Material aid can be effected in the form of money or benefits in kind; for the latter, the provider’s own personnel or materials may also be used. Assistance includes neither maintenance work and customer service nor simple tips on how to receive aid nor a simple intervention to arrange aid without in fact providing it.

Auditing actuary
Pursuant to Article 21 of the Pensionskassengesetz (PKG; Pensionskasse Act), the Pensionskasse has to appoint an independent actuarial expert (auditing actuary) for actuarial auditing. The auditing actuary has to examine in particular whether the business plan is being complied with, whether changes to the existing regulations for contributions and benefits are necessary, whether and to what extent and by what deadline the employer has to make up for any shortfalls that have arisen and whether the insurance requirements have been adequately taken into account.

Betriebspensionsgesetz (BPG; Company Pension Act)
The BPG governs the safeguarding of benefits and pension expectancies arising from commitments to old-age, invalidity and survivor’s pensions guarantees which complement statutory pension insurance and which are made to the employees by their employers in an employment contract under private law. It contains provisions specifying that claims cannot be forfeited and pension expectancies can be transferred. The BPG itself does not create a claim to a company pension for employees. It applies only if the employer makes a voluntary commitment to the employee.

Combined endowment and death insurance
Combined endowment and death insurance is the best known form of life assurance. On the one hand, it provides for the event of death by usually rendering the same benefit as term insurance; on the other hand, it serves the purpose of accumulating capital for the event of survival.

Combined insurance
The insurance of several risks in one policy with uniform General Insurance Terms and Conditions on the basis of one application. From a legal point of view, combined insurance is a single policy and therefore it is not possible to terminate individual parts (without a modification of the policy by common consent). An example for combined insurance is household insurance, which combines different property damage insurance forms with personal liability insurance.

Compliance
Compliance means acting in line with the applicable law. The Börsegesetz (BörseG; Stock Exchange Act) and the Wertpapieraufsichtsgesetz (WAG; Securities Supervision Act) obligate commercial providers of certain services related to securities or other investments of customers’ assets (in particular credit institutions and investment services providers) as well as insurance undertakings, Pensionskassen and issuers to define compliance provisions. These are internal provisions intended to control the dissemination of information, in particular by creating areas of confidentiality, and to prevent the misuse or communication of inside information as well as possible conflicts of interest between the institutions, customers and employees. Compliance provisions are intended to put the relevant statutory provisions into more concrete terms, control work flows and ensure internal adherence.

Contractual insurance (as opposed to social security)
Neither the Versicherungsaufsichtsgesetz (VAG; Insurance Supervision Act) nor the Versicherungsvertragsgesetz (VersVG; Insurance Policy Act) define the term “contractual insurance”. The latter act only defines the obligations of the parties to the contract: the premium payments of the policyholder and the payment of the insurance benefit by the insurer once the event insured against occurs. The major features of the term “insurance” as defined by the supervisory authority include the uncertainty of the occurrence or the time of occurrence of the event insured against, the scheduled assumption of a financial risk, the payments involved, the legal claim to a monetary benefit or benefit in kind from the insurer and the independent nature of the assumption of risk.

Contribution
The contribution is the membership and insurance fee paid to mutual associations as opposed to the premium paid to insurance joint stock companies.

Deckungsstock
Deckungsstock refers to special funds of an insurance undertaking which are to be managed separately from the untertaking’s other assets. The level of the Deckungsstock has to amount to the cover requirement of the direct overall business. Cover requirement is defined as the technical provisions for life assurance as well as health and accident insurance according to the technical principles of life assurance that need to be covered. The insurance undertakings have to ensure that the cover requirement is always fully met by assets dedicated to the Deckungsstock. A Deckungsstock ensures that the legal claims of the policyholders can be met.
The FMA has to appoint a Treuhänder (trustee) and a deputy for the task of supervising the Deckungsstock.
The Deckungsstock constitutes a special fund (Sondermasse) in an insurance undertaking’s bankruptcy proceedings.

Deposit guarantee institutions
Credit institutions which accept deposits requiring collateral or execute investment services requiring collateral must be members of a deposit guarantee institution within their professional association. If a credit institution is not a member of a deposit guarantee institution it loses its licence to accept deposits requiring collateral or to execute investment services requiring collateral.
Deposit guarantee institutions have to ensure that in the event of one of its member institutions going bankrupt, the deposits up to a maximum amount of EUR 20,000 or an equivalent amount in a foreign currency per depositor have to be paid out within three months upon his/her request and following identification.

Directors' dealings
Persons discharging managerial responsibilities within an issuer of financial instruments with its head office situated in Austria and, where applicable, persons closely associated with them, shall notify the FMA of the existence of any transactions conducted on their own account relating to shares or securities equivalent to shares of said issuer admitted to trading on regulated markets , or to derivatives linked to them, or to undertakings affiliated to it (Article 228 para 3 of the Unternehmensgesetzbuch (UGB; Commercial Code).

Disability
The permanent impairment of a person’s ability to work due to illness, bodily injury or loss of strength. Disability insurance can be taken out in the form of supplementary insurance to pure endowment insurance, pension insurance or term life assurance or by means of a separate contract (Selbständige Berufsunfähigkeitsversicherung). In general, the insurance becomes effective at a level of disability of at least 50%. If so contractually agreed, an annuity is paid also with supplementary insurance. No more contributions need to be paid.

Disability insurance
Financial loss insurance covers liability claims from purely financial losses, i.e. they are not caused by personal injury or damage to property. An example is any type of professional liability insurance.

Dynamic life assurance
With this type of insurance the premium and the sum insured are increased at regular intervals. In most cases, the development of the maximum contribution to statutory pension insurance is used as a benchmark. Some insurance undertakings also recommend fixed interest rates for the dynamisation. By now, the combination of both adjustment versions has become common practice.

EU passport for investment services providers
Investment services providers who do not avail themselves of the exemption provision stipulated under Article 20 para 4 of the Wertpapieraufsichtsgesetz (WAG; Securities Supervision Act), and thus have a licence without exemption, may provide financial services in other EEA Member States under the freedom to provide services or through a branch. The authorisation to provide financial services on a cross-border basis in the EEA is granted by the FMA after the completion of a notification procedure and is also called "European Passport".

Financial loss insurance
Financial loss insurance covers liability claims from purely financial losses, i.e. they are not caused by personal injury or damage to property. An example is any type of professional liability insurance.

Freelancers working for investment services providers
Investment services providers with a licence pursuant to the Wertpapieraufsichtsgesetz (WAG; Securities Supervision Act) can employee freelancers for the provision of financial services that require a licence, provided that this option has been approved in the form of an administrative decision (Bescheid). Usually they are not employed by the companies and are also not required to have their own licence under the WAG, as long as they operate exclusively in the name and for the account of the financial services provider, which also assumes full liability for them. Only natural persons can operate as freelancers; companies require their own WAG licence.

Funded basis
Form of financing used by insurance companies. Each policyholder accumulates savings which form the benefits due at a later date. In contrast to the pay-as-you-go method used by the social security institutions, each generation provides for itself by accumulating capital. Therefore, individual insurance remains unaffected by demographic changes, in particular in the fields of combined capital life assurance, private pension insurance, private nursing care insurance, private health insurance and accident insurance with premium refunds. Damage incurred in the past cannot be insured under the funded-basis method.

General Insurance Terms and Conditions
In a legal sense, General Insurance Terms and Conditions are terms and conditions applied by insurance undertakings to their customers when concluding insurance policies, without taking individual differences into consideration. The General Insurance Terms and Conditions specify the rights and obligations of the contracting parties as well as, in particular, the extent of the insurance coverage in standardised terms. The terms and conditions of mass-market operations become the subject matter of the contract even if the other contracting party is not aware of their contents. The General Insurance Terms and Conditions are part of the insurer’s business plan. As of 1994, they no longer require the insurance supervisory authority’s approval.    

Government commissioner (Regierungskommissär)
If there is a danger of a Pensionskasse not being able to perform its obligations, the FMA may appoint an expert adviser (government commissioner). The government commissioner has the same rights to obtain information as the FMA and has to follow the FMA’s instructions.

Insider
Any person who by virtue of his/her membership of the administrative, management or supervisory bodies of the issuer or through the exercise of his/her employment, profession or duties or his/her holding in the capital of the issuer has access to inside information. An insider is also any person who has gained information by committing criminal offences. If a legal person is concerned, those natural persons are considered insiders who participated in the decision-making process to execute the transaction for the account of the legal person.

Insider information
Inside information is any information of a precise nature which has not been made public, relating, directly or indirectly, to one or more issuers of financial instruments or to one or more financial instruments and which, if it were made public, would be likely to have a significant effect on the price of those financial instruments or on the price of related derivative financial instruments as an informed investor would probably make use of it, partly basing his/her investment decisions on it.

Insurance benefit
A benefit that the insurer has to pay in the occurrence of the event insured against in accordance with its contractual agreement to or on behalf of the policyholder.

Insurance classes
Each of the numerous insurance classes is a collective term for insurance that provides coverage against certain dangers for similar risks.

Investment fund
An investment fund is a special fund managed by an investment fund management company and kept at a custodian bank which is independent of the investment fund management company. In an investment fund, an investment fund management company pools the funds of a large number of investors in order to invest them in different assets for profit, following the principle of risk diversification.
The special fund has to be kept separate from the investment fund management company’s assets and is not liable for the investment fund management company’s debts.
As at the end of December 2005, 2,124 funds offered by domestic companies and 3,522 funds offered by foreign investment fund management companies were licensed for sale in Austria.

Investment fund management companies
An investment fund management company is a credit institution whose business is geared towards investing funds deposited with it in its own name for joint account of investors according to the principle of diversification of risk and separately from its own assets. This banking business is defined in Article 1 para 1 no. 13 of the Bankwesengesetz (BWG; Austrian Banking Act).
Investment fund management companies are subject to the provisions of the Investmentfondsgesetz (InvFG; Investment Funds Act).
The investment fund management company draws up a document (unit certificate) concerning the rights of the shareholders. The funds can be invested in securities, participating interests or real estate.
At present, 27 Austrian investment fund management companies hold a licence issued by the supervisory authority.

Investment serives providers - licence without exemption
An investment services provider which has a so-called licence without exemption is not only entitled to provide investment advice concerning client funds and broker business opportunities for the acquisition or sale of one or several instruments mentioned under Article 1 para 1 no. 7 lit. b to f of the Bankwesengesetz (BWG; Austrian Banking Act) but also to manage client portfolios in accordance with mandates given by investors on a commercial basis. Moreover, these investment services providers may receive a so-called EU passport. In order to be awarded a licence without exemption, investment services providers have to fulfil a number of special licensing requirements (in particular the legal form of a stock corporation, the permanent appointment of two managers, higher capital requirements).

Investment service providers - limited licence
Investment services providers which have a so-called limited licence are investment services providers that availed themselves of the exemption provision as stipulated under Article 20 para 4 of the Wertpapieraufsichtsgesetz (WAG; Securities Supervision Act). The (possible) scope of the licence held by these investment services providers is limited in that they are not entitled to manage client portfolios in accordance with mandates given by investors and their brokerage of business opportunities is limited to activities within the scope of the boundaries cited in Art. 2(2) lit. g of the Investment Service Directive (ISD, 93/22/EEC), i.e. to the brokerage of securities (individual securities) and securitised units of investment funds.

Investment services providers
An investment services provider is a company which holds a licence issued by the FMA for providing the following financial services on a commercial basis: advising clients on investing funds, managing client portfolios in accordance with mandates given by investors or brokering business opportunities for the acquisition or sale of certain financial instruments, to the extent that these services do not encompass the holding of the client's money, securities or other instruments so that the provider of these services at no time places itself in debt with its clients.

Investment services providers' duty to observe secrecy
Investment services providers are bound to secrecy regarding confidential information they have come to know exclusively from their customers’ securities transactions which they manage based on their clients’ mandates or carry out for them within the scope of their authorisation, unless the duty to observe secrecy conflicts with a statutory duty of disclosure or the customer agrees to disclose the secret. The duty to observe secrecy does not apply if the disclosure of the secret is required for the purpose of clarifying legal matters arising from the relationship between the investment services provider and customers (Article 21a of the Wertpapieraufsichtsgesetz (WAG; Securities Supervision Act). Moreover, investment services providers are obliged to provide to the FMA and its bodies as well as to the statutory auditors all required information concerning any business matter and grant them access to all books, documents and data carriers. The duty of disclosure also extends to freelancers working for investment services providers (Article 24 para 2 WAG).

Issuers
The issuer of a security offers securities for sale on the market. Legal persons under private law or institutions under public law may enter the capital market with their issues.

Liability insurance
Insurance where the insurer is obligated to compensate the policyholder for the performance s/he has to effect vis-à-vis a third party on grounds of his/her responsibility for an event occurring during the insurance period. The insurance includes in-court and out-of-court fees incurred from the defence against a claim raised by a third party, provided that the costs are justified by the circumstances. The insurer is not liable if the policyholder has intentionally and wrongfully caused the occurrence of the event for which s/he is liable to the third party.

Licensing database
Pursuant to the amendment to the Bankwesengesetz (BWG; Austrian Banking Act) Federal Law Gazette 97/2001, the FMA was obliged to establish a licensing database containing information on the scope of the existing licences of the credit institutions and to provide for the possibility of data queries to be made by way of the Internet by January 1, 2004.

Life assurance
Life assurance aims to provide insurance against various financial risks connected to human life and is offered in different variants. Depending on the characteristics of the product, the policy focuses on the provision for risks, the accumulation of capital or on old-age provision. The policyholder has to pay an insurance premium, either on a regular basis, e.g. every month, or in the form of a one-off premium. In return, the insurance undertaking grants insurance coverage and pays the contractually agreed insurance benefits plus a possible participation in profits upon occurrence of the insured event (e.g. death before the insurance policy has expired, survival at retirement age, etc.) By way of this participation in profits or in the annual surplus, the policyholder can participate to a great extent in the insurance undertaking’s yield from the invested funds. Various supplementary insurance policies can be taken out to complement life assurance. These include, for example, disability insurance, under which no further premiums must be paid upon the occurrence of disability, or supplementary accident insurance, under which an additional insurance benefit falls due in the event of death or invalidity as a consequence of an accident.

Location (of risk)
The location of a risk determines the applicable law of the insurance contract. Vehicles, for example, are deemed located at their place of registration; intangible assets are deemed located at their current location. With natural persons, their habitual place of abode determines the location of risk. Legal persons are deemed located at the place of their establishment referred to in the insurance contract.

Misuse of insider information
Misuse of inside information is committed by anyone who is an insider and deliberately takes advantage of inside information with the intent to gain pecuniary benefit for themselves or a third party by
  1. buying or selling the financial instruments concerned, or offering or recommending them to a third party for acquisition or sale, or
  2. making this information accessible to a third party without being encouraged to do so,
anyone who is no insider and takes advantage in the aforementioned manner of inside information he or she receives or somehow gains knowledge of with the intent to gain pecuniary benefit for themselves or a third party,
anyone else who is an insider or not and takes advantage of information  knowing or, grossly negligently, not knowing that it constitutes inside information, in the aforementioned manner, but without the intent to gain pecuniary benefit for themselves or a third party.

Motor insurance
The Kraftfahrzeug-Haftpflichtversicherungsgesetz (KHVG, Motor Insurance Act) 1994 stipulates that motor insurance has to be taken out for every registered vehicle. The policy comprises the settlement of justified claims and the defence against unjustified claims for damages which are raised against the policyholder or persons included in the policy on grounds of statutory liability provisions if the use of the insured vehicle results in the injury or death of persons, the damage, destruction or loss of assets or a financial loss which is neither a personal injury nor damage to property (but a purely financial loss). 

Mutual associations
A mutual association is an association which bases the insurance of its members on the principle of reciprocity. It requires a licence pursuant to Article 4 para 1 of the Versicherungsaufsichtsgesetz (VAG; Insurance Supervision Act) in order to commence business activities in Austria.

Natural hazard insurance
Collective term for insurance against the effects of natural disasters such as floods, earthquakes, landslides, snow pressure, avalanches and volcanic eruptions. In addition to storm and hail insurance, many insurance undertakings offer an enhanced natural hazard policy for household effects, residential buildings, commercial and industrial risks.

Package policy
A package policy combines several legally independent policies in a single insurance policy, including the General Insurance Terms and Conditions that apply to the individual contracts. As the policies are independent of each other, package policies can be entered into or cancelled independently. Package policies are frequently employed in the fields of motor vehicle, homeowners, commercial and workers insurance. The legal independence of the individual policies may pose a problem in the event of termination, if all policies are to be terminated at the same time.

Participation report
Shareholders of companies whose shares are listed on the official market or traded on the semi-official market of the Wiener Börse (Vienna Stock Exchange) have to notify the company, the FMA and Wiener Börse AG if the share of voting rights reaches, exceeds or falls below certain thresholds. Joint stock companies are obliged to inform the public of major changes in the proportions of voting rights.

Pensionskasse (pension company)
A Pensionskasse is an enterprise which is entitled to carry out Pensionskasse business in accordance with the Pensionskassengesetz (PKG; Pensionskasse Act). Pursuant to Article 2 of the PKG, the Pensionskasse business comprises the legally binding pension commitment to beneficiaries (recipients) and surviving dependents as well as the related taking in and investment of Pensionskasse contributions. Every Pensionskasse is obliged to make commitments to old-age and survivors’ pensions; commitments to invalidity pensions can also be made. Old-age pensions are paid for life, invalidity pensions for the duration of invalidity and survivors’ pensions according to the Pensionskasse contract. Pensionskassen must not operate any business that is not related to managing Pensionskassen.

Pensionskassengesetz (PKG; Pensionskasse Act)
On May 17, 1990, the Austrian National Assembly adopted the Pensionskassengesetz (PKG; Pensionskasse Act) for the establishment, administration and supervision of Pensionskassen. This Act aims to improve the legal protection of beneficiaries within the scope of single-employer and multi-employer provision for old age, surviving dependents and, if necessary, invalidity. 

Personal insurance
The Versicherungsvertragsgesetz (VersVG; Insurance Policy Act) introduces a distinction between personal and non-life insurance. In the case of personal insurance, the insured risk relates directly to the physical sphere of a natural person. Personal insurance particularly includes health insurance, life assurance, pension insurance and accident insurance. 

Policy
The insurance policy, i.e. the document containing the contract between the insurance undertaking and the policyholder, also called policy. According to Article 3 of the Versicherungsvertragsgesetz (VersVG; Insurance Policy Act), the insurer is obliged to issue an insurance policy.

Property damage insurance
This refers to insurance that is not personal insurance and where material assets are the subject matter of the policy or where the insurer is committed to pay benefits if damage to property occurs (e.g. fire insurance).

Provisional coverage
As a rule, policyholders wish to have insurance coverage already at the time of making the application. This interest can be taken into account by providing provisional coverage, which is a declaration by the insurance undertaking on the provision of insurance coverage for a limited period within the scope of a legally independent but provisional insurance contract. This provisional contract exists independently of the conclusion of a definite contract and the payment of the first contribution. Provisional coverage is usually provided if the parties to the contract have basically agreed to conclude the contract but have yet to negotiate the contract terms in detail. In this context, it should be mentioned that the insurer is under a legal obligation to point out to the policyholder that no insurance coverage exists prior to the conclusion of the contract (i.e. as a rule, the receipt of the insurance policy by the policyholder), unless provisional insurance coverage has been provided anyway. If the insurer fails to comply with this duty to warn the policyholder, the risk-taking duty will immediately commence as a sanction. The statutory risk-taking duty corresponds to the scope of the contract applied for and starts with the commencement of insurance coverage as indicated in the application, but not before the receipt of the application by the insurer.

Reference data
The cost share allocated to each individual investment services provider or undertaking operating a contractual insurance business is calculated on the basis of the so-called reference data, which is the turnover from financial services business generated by the respective company in the preceding financial year.

Regular disclosure of information
The normal standard disclosure requirements for companies. Comprises the regular publication of annual accounts and management reports as well as of regular interim reports (quarterly reports).

Reporting Obligation
Pursuant to the Wertpapieraufsichtsgesetz (WAG; Securities Supervision Act), all Austrian banks and domestic branches of EEA banks and investment firms must report their transactions with certain securities listed in the Act (shares, debt securities, etc.) to the FMA on a daily basis in a data-processed form. These reports have to include all specific features of an individual transaction such as quantity, price, time of deal and designation whether the transaction was for own account or for account of a customer. The purpose of the reporting obligation is to constantly provide the FMA with information about the market to enable it to carry out its supervisory obligations and to give it a basis for further investigations if necessary (e.g. if insider dealings are suspected).

Right to the insurance benefit
The right to the insurance benefit is the right to dispose of the benefit due from life assurance. At the due date the beneficiary receives the money from the insurance undertaking. In case of survival, most of the time this is the policyholder himself/herself. For the event of premature death, a second beneficiary should be named in the insurance policy. The right to the insurance benefit can be entered as a revocable or irrevocable right.

Risk
Insurance textbooks define risk as the possibility of loss as an insured risk materialises, and at the same time, as a chance to generate profits through the insurance of a risk. Risk coverage is the main obligation an insurance undertaking assumes when it concludes an insurance contract. The assumption of risk follows a corresponding contractual agreement that more or less accurately describes the insured risk; it is only this delimitation from risks not covered that makes the insured risk sufficiently calculable.

Separate supervisory report
Every year investment services providers have to appoint chartered accountants for an audit to determine whether the provisions of the Wertpapieraufsichtsgesetz (WAG; Securities Supervision Act) have been adhered to. In the case of financial services providers holding a licence without exemption, the audit also has to comprise a check of the substantive correctness of the evaluation of the annual accounts including whether the required write-offs, value adjustments and provisions have been effected. The result of this audit shall be presented in a separate supervisory report which must be submitted to the FMA no later than six months after completion of the financial year.

Staff provision funds
In 2002, the provisions for severance pay were fundamentally modified (New severance pay). The provisions which created the basis of the staff provision funds constitute a significant component of the Bundesgesetz über die Betriebliche Mitarbeitervorsorge (BMVG; Federal Act on Corporate Staff Provision), which entered into force on July 1, 2002. In accordance with legislative intent, staff provision funds are credit institutions within the meaning of the Bankwesengesetz (BWG; Austrian Banking Act), which means that the FMA is responsible for their supervision. The special feature of the statutory provisions which govern the new severance pay scheme and are relevant to the staff provision funds and the financial market supervision is their strong resemblance to the existing provisions stipulated by the Pensionskassengesetz (PKG; Pensionskasse Act), the Investmentfondsgesetz (InvFG; Investment Funds Act) and the Versicherungsaufsichtsgesetz (VAG; Insurance Supervision Act). In 2002, the FMA issued a licence for operating a banking business pursuant to Article 1 para 1 no. 21 BWG, i.e. taking in and investing severance pay funds, to a total of nine staff provision funds. Pursuant to Article 19 para 2 of the BMVG, staff provision funds are entitled to carry out only this type of banking business.

State commissioner (Staatskommissär)
For the purpose of exercising his right of supervision, the Federal Minister of Finance has to appoint a state commissioner and a deputy at every Pensionskasse (Article 34 of the Pensionskassengesetz (PKG; Pensionskasse Act)). The state commissioner and his/her deputy have to be invited to the annual general meetings, general meetings and other meetings of members, the supervisory board meetings as well as to the committees of the supervisory board that have the power to make decisions in good time. The state commissioners have to immediately object to any resolutions which they believe violate statutory or other provisions or administrative decisions (Bescheide) of the Federal Minister of Finance or the FMA and have to report on this to the FMA. The effectiveness of the resolution will be suspended by the objection until a decision has been made by the supervisory authority (Article 76 paras 2 to 8 of the Bankwesengesetz (BWG; Austrian Banking Act). 

State-sponsored retirement provision
For the purpose of exercising his right of supervision, the Federal Minister of Finance has to appoint a state commissioner and a deputy at every Pensionskasse (Article 34 of the Pensionskassengesetz (PKG; Pensionskasse Act)). The state commissioner and his/her deputy have to be invited to the annual general meetings, general meetings and other meetings of members, the supervisory board meetings as well as to the committees of the supervisory board that have the power to make decisions in good time. The state commissioners have to immediately object to any resolutions which they believe violate statutory or other provisions or administrative decisions (Bescheide) of the Federal Minister of Finance or the FMA and have to report on this to the FMA. The effectiveness of the resolution will be suspended by the objection until a decision has been made by the supervisory authority (Article 76 paras 2 to 8 of the Bankwesengesetz (BWG; Austrian Banking Act).

Statutory auditor
The statutory auditor reviews the annual accounts and the reports on activities of the investment and risk sharing groups and the Pensionskassen AG as to their compliance with the law.

Survival
This refers to a situation where the insured person is alive at the time the insurance policy expires. Generally, insurance undertakings remind their customers of the policy’s expiration in due time. In order to receive the insurance benefit, the insurance policy has to be sent to the undertaking, proof of payment of the last contribution has to be given and it has to be specified where the benefit should be transferred to.

Technical provisions
The total of contribution carryforwards, loss reserves as well as of premium reserves and other technical provisions. In the case of life assurance, the cover of assurance and the provisions for surpluses for the insured are especially important.

Term insurance
In the case of term insurance, the sum insured falls due upon death of the insured person. This type of insurance helps make provisions for the financial risk upon death at comparably low premiums. However, in the case of simple term insurance, no insurance benefit will fall due if the insured survives the stated period.

The Einkommenssteuergesetz (EStG; Income Tax Law) was amended together with the Hochwasserentschädigungs-Gesetz (Law on Flood Damage Compensation) 2002 (Federal Law Gazette I no. 155/2002). As a consequence (so-called state-sponsored retirement provision
With regard to retirement provision, taxpayers enjoy a number of benefits (Article 108g EStG). If a person who is subject to unlimited tax liability pursuant to Article 1 para 2 EStG makes contributions to a retirement provision institution, s/he will be reimbursed for income tax paid upon application. The reimbursement is effected by payment of a lump sum (state premium). The prerequisite being that the taxpayer does not draw a statutory old-age pension and that the taxpayer makes a statement in which s/he irrevocably undertakes to waive the claim to repayment resulting from the contributions made for a period of at least 10 years from payment of the first contribution. However, if the taxpayer has reached his/her 50th birthday at the time of application, s/he can irrevocably undertake either to waive the claim to repayment resulting from the contributions made up to the time at which s/he draws a statutory old-age pension or waive the right to a disposition pursuant to Article 108i para 1 no. 1 EStG, which requires payment of the amounts, if s/he draws a statutory old-age pension prior to the expiry of the ten-year period. In addition, if the state-sponsored contributions are paid out on a monthly basis, they will be tax exempt both during the investment phase and the period of payment of the annuity. The legislator’s main idea is that the state premium as well as the capital guarantee on the paid-in contributions including the state premium can only be claimed if the capital is not paid out as a single payment at the end of duration but in monthly payments. In this context, it should be noted that the statutory minimum duration for this product is 10 years.

Unit-linked life assurance
The principle of unit-linked life assurance is very similar to that of endowment and death insurance. The difference lies in the investment of the premiums for the purpose of capital formation. In this case, the savings proportion of the premiums is invested in portfolios which have different risk levels according to their composition. The customer can decide him-/herself on the risk level of his investment. This decision also influences the earnings propects. As a rule of thumb it can be said that the lower the risk of the portfolio composition, the lower the prospective earnings. As a rule, the risk can be lowered further by spreading the risk of the units within the portfolio. This means that the policyholder controls the full investment risk and, consequently, the chance of higher prospective earnings.

Vehicle damage insurance
Collective term for various forms of insurance for land, sea, air and space vehicles. Motor insurance against natural forces and collision damage:
Motor insurance against natural forces compensates for damaged or lost vehicles as a consequence of fire, explosion, theft, storm, hail, lightning, flood, collisions with furred game, breakage of glass and cabling short circuits; many insurance undertakings also include damage caused by marten bites. Collision damage insurance also compensates for damage incurred by accident or vandalism.