Insurance 2020: The Belgian perspective

The Belgian insurance market in 2020 will be Brexit-focused. UK insurers and brokers who moved their European operations to Belgium have been waiting for exit day before pulling the trigger and switching their Brexit planning to live and finalising their Brexit implementation plans.

The Belgian regulators, the National Bank of Belgium and the Financial Services and Markets Authority, have welcomed UK insurers and brokers to Belgium and shown flexibility and understanding about their need to transfer their activities to Belgium gradually in order to maintain operational continuity. They have also promised to apply the proportionality principle in their supervision of firms. That said, the regulators have made clear that they want to see viable standalone Belgian operations and the operations set up initially will not suffice. Given how many times exit day has been postponed now, they are bound to think that the UK insurance industry has had plenty of time to finalise its Brexit plans and we have no doubt that they will scrutinise the Brexit plans of UK insurers and brokers on a case-by-case basis as the year progresses.

In the local market, the new regime for managing general agents (MGAs) will fully enter into force on 10 April 2020. This new regime applies to Belgian MGAs only, including any new Belgian subsidiaries of UK brokers who intend to operate as MGAs. MGA activities will have to be separated from insurance brokerage/agency activities, and a separate licence obtained. Accordingly, by 10 April 2020, existing Belgian insurance intermediaries (active under a status of broker or insurance agent) and also carrying out MGA activities must consider either: (i) stopping their MGA activities and operating under their current single licence; or (ii) transferring their insurance underwriting activities into a separate entity, which will need to apply to the Financial Services and Markets Authority for a specific MGA licence. We expect a number of brokers to review their business models and/or transfer their MGA activities into a newly dedicated vehicle by then. The Belgian MGA regulation is seen as attractive by some MGAs established in other EU jurisdictions and they might therefore transfer their place of business to Belgium in the coming months.

2020 will also shake-up the organisational structure of insurers and brokers. Following implementation of the Insurance Distribution Directive, Belgian law requires all insurance distributors and their employees to have the appropriate knowledge and ability to perform their roles. This must be supported by a minimum of 15 hours continuing professional training or development each year. Client-facing employees will need to have at least six months’ relevant experience and pass a new exam on insurance topics.

Belgian Insurtechs are continuing to develop their digital and user-friendly solutions, while historic carriers and brokers are increasingly investing in digital solutions, including via partnership arrangements with new entrants. Innovative products will continue to enter the market, with cyber-risk policies expected to boom and maybe we will also see some products based on the IoT (internet of things) technology. No specific additional regulation is expected in the short term, but the Belgian regulators could have a closer look as technology develops.