Designation clause (industry-wide protection schemes)
A clause in an industry-wide agreement that required every company in the sector to use the same insurer; France's Constitutional Council struck it down in 2013 and only non-binding recommendation remains.
The designation clause allowed the social partners of an industry to choose a single insurer, often a provident institution, that every company in the industry had to join for its health or protection scheme. It ensured broad pooling, useful for small firms and heavy risks, but denied employers the free choice of their insurer. The Constitutional Council ruled it contrary to freedom of enterprise and freedom of contract, and struck down Article L. 912-1 of the French Social Security Code on which it rested. Lawmakers then introduced recommendation: the industry may recommend one or more insurers, after a competitive process, and entrust them with a high degree of solidarity, without companies being required to join. The change reopened to competition industry markets that had until then been captive.
In decision No. 2013-672 DC of June 13, 2013, issued on the job security act, the Constitutional Council struck down designation clauses, just as the generalization of supplementary health cover was about to open a market of several million employees.
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