The law of 18 April 2017 containing various provisions on Economy contains provisions modifying the Code of Economic Law and some laws of an economic nature, including the 2 August 2002 Act on the supervision of the financial sector and on financial services and the 4 April 2014 Insurance Act.
The amendments to the 2 August 2002 Act aim to implement in Belgian law certain provisions of the so-called PRIIPS Regulation, including adjustment of the (penalty) powers of the supervisory authority, the FSMA, in light of certain requirements of the PRIIPS Regulation.
In addition, the Law abolishes Article 20 of the Insurance Act.
This provision was related to the investment policy of life insurance contracts connected to investment funds(the so-called class 23 insurance contracts).
The intention of the legislator in 2014 was, in terms of consumer protection, to set up a level playing field regarding the kind of assets or reference values in the Belgian legislation for similar products like, for example, public undertakings for collective investment and class 23 life insurance. Article 20 of the Insurance Act therefore restricted the kind of underlying assets which could be connected to class 23 life insurance. This provision was applied to all life insurance policies offered on the Belgian territory, regardless of whether the insurer was a Belgian company, or was located in another EEA Member State.
This provision was then roundly criticized by the Council of State, but also by the legal doctrine. The legislator now recognizes that this provision was related to the prudential supervision of insurance undertakings. This means that investment restrictions fall within the scope of the Solvency II Directive, and therefore fall under the jurisdiction of the ‘home country’ and not the ‘risk country’.
The Belgian legislator therefore chose to completely abolish Article 20. In this context, maintaining this regime only for Belgian companies would have distorted fair competition between Belgian and foreign operators.
Regarding the abolition of Article 20, the law containing various provisions relating to economics does not contain any specific provision regarding its entry into force or a potential transitional period. This means that it will enter into force ten days after publication in the Belgian Official Gazette, i.e. 4 May 2017, and will be immediately applicable to ongoing insurance contracts.