1. Member States in which contracts covering the risks under class 2 in Part A of Annex I may serve as a partial or complete alternative to health cover provided by the statutory social security system may require that:

(a) those contracts comply with the specific legal provisions adopted by that Member State to protect the general good in that class of insurance;

(b) the general and special conditions of that insurance be communicated to the supervisory authorities of that Member State before use.

2. Member States may require that the health insurance system referred to in paragraph 1 be operated on a technical basis similar to that of life insurance where all the following conditions are fulfilled:

(a) the premiums paid are calculated on the basis of sickness tables and other statistical data relevant to the Member State in which the risk is situated in accordance with the mathematical methods used in insurance;

(b) a reserve is set up for increasing age;

(c) the insurer may cancel the contract only within a fixed period determined by the Member State in which the risk is situated;

(d) the contract provides that premiums may be increased or payments reduced, even for current contracts;