Update of Belgian proposal for MGA regulatory framework

On 21 November 2018, we issued a newsletter (accessible here) regarding a draft law amending the law of 4 April 2014 on insurance, which will create a new regulatory framework for managing general agents (“MGAs”) in Belgium (“Proposal”).

However, the proposed definition of “insurance underwriter” provoked reaction from the industry and further clarification was required. The Proposal has therefore recently been updated and the preparatory work of the update clarifies the scope of application of the legal framework for “insurance underwriters” (souscripteurs mandatés/gevolmachtigde onderschrijvers) (“Updated Proposal”).

The preparatory work of the Updated Proposal indicates that insurance intermediaries sometimes have powers to carry out certain tasks relating to the management of the policy on behalf of the insurance undertaking (e.g. premium collection, claims handling, document delivery, etc.). These management activities do not fall within the scope of the activity of an insurance underwriter.

It is further stated that an intermediary who only has the power to conclude an insurance policy in certain specific circumstances, and who thereby limits himself to checking for certain specified elements, does not have the discretion powers of an insurance underwriter. This intermediary is therefore not in the same situation as an insurance company that accepts a risk alone. In other words, if the insurer makes a pre-acceptance and undertakes in advance to insure risks that meet certain criteria for a certain premium, the intermediary's role is other than that of an insurance underwriter. Such a situation therefore falls outside the scope of the draft law.

An insurance intermediary with such mandates, but without the competence to accept risks and conclude insurance contracts, will not fall within the definition of “insurance underwriter”.

The adoption of this legislation is, however, uncertain, given the current Belgian political context and the approaching general elections.