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Brexit - Belgium Brexit law - Insurance

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1. Transitional arrangement for insurance business

As of the end of the Brexit transition period, on 1 January 2021, UK insurance undertakings and intermediaries can no longer rely on the European passport to provide activities of insurance (distribution) throughout the European Economic Area (EEA). Likewise, EEA regulated entities have lost, in principle, access to the UK market (unless they can rely, for example, on the UK temporary permissions regime).

The EU-UK Trade and Cooperation Agreement does not establish a transitional arrangement for insurance. Therefore, UK regulated entities must either establish a subsidiary in the EEA or rely on national transitional Brexit arrangements in each Member State where they carry out regulated activities (if any). 

In Belgium, the King has made use of his powers under Article 20, first paragraph of the Brexit Law and has put in place a transitional arrangement for insurance undertakings and intermediaries. However, the transitional arrangement only provides authorisation to manage insurance contracts concluded before 1 January 2021. 

Furthermore, regulated entities intending to rely on the transitional arrangement must comply with strict conditions, such as the submission of a comprehensive notification dossier to the Belgian competent authority, i.e. the National Bank of Belgium (NBB) for insurance undertakings and the Financial Services and Markets Authority (FSMA) for insurance and reinsurance distributors.

The Brexit Law assigns additional authority to the King to establish a broader transitional arrangement that is not limited to run-off business but also comprises the conclusion of new contracts during the process of application with the competent authority. However, the King has not yet published a Royal Decree implementing this broader transitional arrangement.

2. The new category of ‘mandated underwriter’

The Brexit law introduces a new category of insurance intermediary: the mandated underwriter. 

The purpose of the introduction of this category is to:

  • create transparency on the activities of underwriting agents, both for customers as for other insurance intermediaries collaborating with mandated underwriters. According to the legislator, there is a risk of confusion between mandated underwriter and the insurance company itself;
  • avoid non-regulated activities carried out by ‘ghost underwriters’ or the collaboration of underwriters with non-licensed insurance companies; and to
  • ensure that mandated underwriter have an adequate organisation.

Mandated underwriters must register as insurance intermediaries in the FSMA’s register of insurance intermediaries. They will be subject to similar registration conditions as insurance brokers as well as to IDD rules of conduct. 

A number of specific conditions apply to mandated underwriters :

  • The mandated underwriters must have an adequate organisation, allowing them to comply with legal requirements;
  • Conflicts of interest receive particular attention. Consequently, the activity of mandated underwriters cannot be combined with traditional distribution activities of other categories of insurance intermediaries . Such cumulation would lead to confusion as to the quality in which the intermediary acts both towards the consumer and other regulated entities. The mandated underwriter must therefore separate its activities from other distribution activities, i.e.  within an apart legal entity; and
  • The mandated underwriter must publish on its website the names of the insurance undertakings he represents.

Finally, like other insurance intermediaries, mandated underwriters are subject to the FSMA’s supervision. Breach of the Insurance Law may lead to administrative and criminal sanctions.

Our dedicated Lydian team is ready to assist you with any questions you might have regarding Brexit. 

Contact us with all your questions on brexit@lydian.be

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