It has been quite a wait, but the new Belgian Insurance Law has finally arrived and will enter into force on 1 November 2014.
In part, the new Insurance Law of 4 April 2014 incorporates, without changing their substance, the existing rules which were spread across four different laws: the Law of 11 June 1874, most articles of the Law of 25 June 1992 on land insurance contracts, the Law of 27 March 1995 on insurance intermediaries, and those parts of the law of 9 July 1975 which pertain to the control by the Financial Services and Markets Authority of the relationship between insurer and insured.
However, the new Law also aims at strengthening the protection of consumers, inter alia, by transposing most of the rules of the Solvency II Directive, and also by providing some new consumer protection rules in addition to those provided in the European directive (e.g. in relation to the drafting and interpretation of contractual documentation and advertising materials, segmentation and profit sharing).
The new Law applies (subject to a few exceptions) regardless of whether the insurer operates from Belgium or from abroad. The Law is applicable with immediate effect (as from 1 November) to existing policies. Insurers on the other hand have up to 1 June 2015 to update their policies and documentation.
In terms of policy drafting, the Law provides that documents must be drafted in clear and precise terms and must respect an equivalence between the insurer’s and the policyholder’s obligations. In the event of doubt, contractual wording is to be interpreted in favour of the insured. This is not an entirely new principle (it was already included in the 2010 Market Practices Act as well as to a certain extent in the Civil Code), but its inclusion as a specific rule in the new Insurance Law is bound to reinforce its application. Likewise, advertising material must not be misleading or inaccurate, must contain certain mandatory information and must be recognizable as advertising material. The Law also provides that these policy drafting rules and advertising material rules may be fine-tuned by royal decree at a later stage.
All documents relating to signed contracts are to be stored without any time limitation (electronic copies are deemed to be correct reproductions of the original counterparts). This only applies to Belgian insurers, or insurers outside the EEA (i.e. not to insurers operating in Belgium from an EEA country). As for marketing material, all insurers (also those operating in Belgium from another EEA country) are to store this until the later of (i) two years after the end of the last contract to which it relates and (ii) the expiry of the statute of limitation for any claims related thereto.
Certain new rules apply to the information to be provided (in Dutch, French or German) by the insurer prior to the signing of a policy, and again these rules are to be fine-tuned by royal decree.
Finally, the Belgian legislator took the opportunity of ending a controversy which existed under the 1992 Law, whereby damages indemnified by an insurer but for which such insurer would want to exercise a recourse action against its insured result not only from the fault of the insured but also from the fault of a third party. Under the 1992 Law, case law was divided as to whether the insurer’s right of recourse was limited to only a portion of such damages (pro rata the portion of liability of the insured), or whether the insurer could claim all damages and leave it up to the insured to, in turn, exercise a recourse against the third parties (thus leaving the insured with the possible insolvency risk of such third parties). The 2014 Law now clearly favours the first solution – i.e. it is up to the insurer to go after the insured and the liable third party, each in proportion to their liability, and hence to bear the risk of insolvency.