The re/insurance sector has been applying the Solvency II Directive since January 1, 2016. All EU Member States were required to adopt legislation to implement its terms before that date.
This briefing summarizes Belgium’s (late) implementation of the Directive through the Law of March 13, 2016 “relating to the status and supervision of insurance and reinsurance undertakings” (the 2016 Law). The Belgian Official Gazette of March 23, 2016 published the text of the 2016 Law. It is mainly relevant for Belgian insurers, though it also consolidates rules and practice for the supervision of cross-border operations into Belgium. It complements another major text, the Law of April 4, 2014, which addresses conduct of business and re/insurance contract matters.
The 2016 Law is Belgium’s main prudential and insurance supervisory implementation of the Solvency II Directive; it embodies rules which the Belgian insurance sector has already been applying for many months, in particular since full application of the Solvency II Directive on January 1, 2016.
The 2016 Law is a significant text – 759 Articles set out in nine “Books” as follows:
- General Provisions: subject matter; scope; definitions; and protected terms, such as "insurer"
- Re/insurance undertakings subject to Belgian law: access to re/insurance activity; conditions governing business; specific provisions for certain categories of insurance undertakings; supervision of undertakings; supervision of re/insurance groups and supplementary supervision of financial conglomerates; re/insurance undertakings in difficulty or in an irregular situation; termination of authorization
- Re/insurance undertakings subject to foreign law: Belgian activities of European Economic Area undertakings; third-country undertakings
- Fines and other enforcement measures
- Sanctions: administrative fines; criminal sanctions
- Rules of private international law in relation to reorganization and winding-up of insurance undertakings; reorganization measures; insolvency and other winding-up proceedings; voluntary winding-up of third-country undertakings; winding-up of protected assets; rules for reorganization measures and winding-up proceedings
- Substantive law aspects of winding-up proceedings: specific rules on insolvency and on winding-up under the Companies Code; common rules for the various proceedings
- Final, amending, transitional and repealing provisions: the 2016 Law repeals two key texts, i.e. the Law of July 9, 1975 “relating to the supervision of insurance undertakings” and the Law of February 16, 2009 “relating to reinsurance”
- Entry into force: 23 March, 2016
The 2016 Law also includes five annexes, namely: classes of non-life insurance; classes of life insurance; standard formula for Solvency Capital Requirement; groups of non-life insurance; and solvency at the level of a financial conglomerate.
At first sight, the 2016 Law represents a comprehensive implementation of the Solvency II Directive into Belgian law, for example it reflects the “three pillars and a roof” approach of Solvency II (quantitative and qualitative requirements, reporting and disclosure, and group supervision). It also implements (in part) certain other EU directives regarding financial conglomerates, the European Supervisory Authorities, etc. Numerous provisions are straightforward, while others reflect specific Belgian law concerns, e.g. rules on private international law in insolvency and winding-up proceedings.