The Belgian regulator has published a draft law amending the law of 4 April 2014 on insurances, which will create a new regulatory framework for managing general agents (“MGAs”) in Belgium (“Proposal”).
A legal framework for MGAs already existed in the United Kingdom and the Netherlands but not in Belgium. The Proposal indicates that this new legislation is in response to a consequence of Brexit in Belgium, which is that an increasing number of UK insurance companies have been applying for a Belgian licence, which could see insurance underwriters activities developing in Belgium.
The Belgian government therefore wants to create a legal framework for “insurance underwriters” (souscripteurs mandatés/gevolmachtigde onderschrijvers). An insurance underwriter will be defined as “the insurance intermediary who, as attorney of one or more insurance undertakings, has the power to accept to cover risks and to conclude and manage insurance contracts in the name and on behalf of the latter” and will form a new category of insurance intermediary.
In addition to the rules applicable to insurance brokers, the new legal framework (i) states that insurance underwriters must demonstrate an adequate organization and (ii) contains stricter rules on conflicts of interest.
Below are some practical points for existing MGAs in Belgium:
- the same entity cannot simultaneously be broker/agent and insurance underwriter. These activities should be separated into different legal entities;
- within three months from the entry into force of the law, entities already performing insurance underwriting activities in Belgium under an insurance intermediary licence must notify the FSMA; and
- within 12 months from the entry into force of the law, these entities must either stop/transfer their insurance underwriting activities or apply to the FSMA for a licence as insurance underwriter.
The aim is to pass the law prior to Brexit.