Baker & McKenzie
11 June 2014
For more information, please
Isabelle Van Biesen
Baker & McKenzie CVBA/SCRL
Tel.: +32 3 213 40 40
The new Insurance Act
The Act of 4 April 2014 on insurances, as published on 30 April 2014
in the Belgian Official Gazette (hereinafter the Insurance Act),
introduces several new rules with respect to insurances and codifies
certain existing insurance regulations.
1. Purpose of the Insurance Act
According to the explanatory memorandum, the Insurance Act
pursues the following fourfold objective:
- Implementation of the Solvency II Directive into
- Simplification of the existing legislation on the
protection of the insurance consumer by codifying the
existing regulation in one act.
- Clarification of the division of powers between the
Financial Services and Markets Authority (FSMA) and
the National Bank of Belgium (NBB) with regard to
- Extension of the protection of insurance consumers in
2. Codification of existing regulations
An important objective of the Insurance Act is the codification
of existing legislation on insurances in one act. The following
(existing) acts are largely codified:
- Certain provisions of the Act of 9 July 1975 on the
control of insurance undertakings (hereinafter the
Insurance Undertakings Act).
- Most of the provisions of the Act of 25 June 1992 on
non-marine insurances (hereinafter the Non-Marine
- All provisions of the Act of 11 June 1874 holding
titles X and XI of the first book of the commercial code
‘Insurances in general’ – Some Insurances in
particular (hereinafter the 1874 Act).
- All provisions of the Act of 27 March 1995 on
insurance and reinsurance mediation and the
distribution of insurances (hereinafter the Insurance
As a result of this codification, certain provisions of the
Insurance Undertakings Act, most provisions of the Non-
Marine Insurance Act, the entire Insurance Mediation Act and
the 1874 Act are abolished.
The existing implementing decrees, including the Royal
Decree of 22 February 1991 on the general regulation
2 The new Insurance Act
regarding the control of insurance companies (hereinafter the
Control Royal Decree) and the Royal Decree of 14
November 2003 on life insurance activities (hereinafter the
Life Insurance Royal Decree), will remain applicable as long
as they are not modified or dissolved. In case of conflict
between the provisions of these implementing decrees and
the new Insurance Act, the latter will prevail.
3. Scope of application
The scope of application of the new Insurance Act is very
broad. Unless it explicitly states otherwise, the Insurance Act
- Belgian insurers.
- Foreign insurers who are established in Belgium or
exercise insurance activities in Belgium without
- The insurance and reinsurance intermediaries with
Belgium as country of origin or who exercise their
activities in Belgium.
The scope of application of the Insurance Act is further
determined per title, chapter, section and/or provision.
It is remarkable that the Insurance Act uses the concept of
“insurer” to define its scope of application, and not the
concept of “insurance undertaking”, as used in the Insurance
Undertakings Act. This can be explained by the broad scope
of application of the Insurance Act, which is not limited to
“insurance undertakings”, i.e., undertakings that are subject to
prudential supervision (of the NBB).
The concept “insurer” is defined as each person or
undertaking offering insurance agreement(s) as a contract
party, irrespective of the professional capacity of this person
and whether or not actuarial techniques were used at the
conclusion of the agreement.
Consequently, whether a person or undertaking falls within
the scope of application of the Insurance Act depends on the
exercised activity itself and not on whether or not a license
was obtained in order to exercise such activity.
The Insurance Act does not apply to undertakings that only
exercise reinsurance activities without providing directly, or
through an establishment, insurance activities elsewhere
(thus not only in Belgium).
The prudential matters concerning insurance undertakings
that fall within the power of the NBB do not fall within the
scope of the Insurance Act. Consequently, the application of
and the compliance with the provisions of the Insurance Act
do not prejudice the application of the remaining provisions of
the Insurance Undertakings Act.
3 The new Insurance Act
4. Substantive modifications
Most provisions of the Non-Marine Insurance Act, the 1874
Act and the Insurance Mediation Act have generally been
adopted unaltered by the new Insurance Act.
Since the Insurance Undertakings Act contains prudential
provisions regarding the control of the insurance undertaking
(which falls under the authority of the NBB), as well as
provisions on the protection of the insurance consumer, the
legislator has isolated the provisions on the protection of the
insurance consumer falling under the authority of the FSMA
from the Insurance Undertakings Act and included them in the
new Insurance Act.
New provisions cover the implementation of the (pre-)
contractual information requirements included in the Solvency
Furthermore, several new provisions regarding life insurances
linked to investment funds were introduced, as well as some
legal restrictions on segmentation and transparency
requirements in respect of profit sharing.
Last but not least, the powers of the FSMA in relation to the
supervision of the insurance industry and the protection of the
insurance consumer were broadened.
4.2 Review of the most important substantive
Certain definitions are copied unaltered from existing
legislation. Other definitions were modified in order to ensure
the coherence between the different regulations that have
been merged. Furthermore, certain new definitions are
introduced, such as “insurer”, “Belgian insurer”, “Belgian
insurance undertaking”, “EEA insurer”, “EEA insurance
undertaking”, “foreign insurer”, “foreign insurance
undertaking”, “insurer of a third country”, “insurance
undertaking of a third country”, “license” and “principal office”.
The Insurance Act also clarifies that, for the application of the
Insurance Act, capitalization transactions must be considered
as personal insurances. Given the special features of a
capitalisation transaction, i.e., the absence of an insured risk
sensu stricto, certain provisions will not be relevant for or will
not be applicable to capitalisation transactions. The Insurance
Act contains a list of provisions that are not applicable to
Article 6, section 1 of the Insurance Act describes the
circumstances under which the risk (for non-life insurances),
or the obligation (for life insurances) is considered to be
located in Belgium for the purpose of the Insurance Act.
(b) Nullity – Non-rebuttable presumption of causality
Article 8 of the Insurance Act replicates the civil sanction of
nullity as already foreseen in article 3, section 3 of the
4 The new Insurance Act
Insurance Undertakings Act in case of unlawful offering of
insurances. For foreign insurers, such nullity is limited to
those agreements relating to risks or obligations located in
In light of article 86ter, section 1, clause 2 of the Act of 2
August 2002 on the supervision of the financial sector and the
financial services (hereinafter the Financial Supervision
Act), the legislator clarified that the insurer, despite any
provision to the contrary to the detriment of the policy holder,
the insured and/or beneficiary, is also liable to compensate
the damages caused by the nullity of the agreement at hand
to the policy holder, the insured and/or the beneficiary. There
is a non-rebuttable presumption that the damages are caused
by the illicit conclusion of the insurance agreement by an
insurer not authorised to exercise insurance activities in
(c) Special rules regarding life insurances linked to
The legislator deemed it necessary to create a level playing
field between investments in UCITs on the one hand, and life
insurances linked to investment funds on the other, as to the
type of assets or reference values to which the cash benefits
resulting from insurance agreements may be linked.
Therefore, article 19 of the Insurance Act states in a general
manner that the policy holder must be informed in a
comprehensive way about his investment risk. Furthermore,
the insurance benefits may only be linked to assets and
instruments of which the risk can be adequately assessed by
the insurer, if the investment risks are directly or indirectly
borne by the policy holder.
Article 20, section 1 of the Insurance Act further provides that
if the policy holder is a non-professional client and the
obligation is located in Belgium, the insurance performance
may only be, directly or indirectly, linked to:
- units in undertakings for collective investment that are
registered in accordance with article 33 or article 149
of the Act of 3 August 2012 on certain forms of
collective portfolio management;
- units in undertakings for collective investment in
transferable securities under Belgian law or under the
law of a member state of the European Economic
- the assets of the categories of investments available
to Belgian public undertakings for collective
investment in transferable securities, as long as the
provisions of chapter VII and X of the Directive
2009/65/EC are respected;
- the assets belonging to the categories of investments
available to Belgian public undertakings for collective
investment, as long as the provisions regarding the
investment policy of the funds to which the benefits
are linked do not deviate from the current provisions
regarding the conforming investment category
5 The new Insurance Act
available to these Belgian public undertakings for
Any deviation of these rules on investment restrictions is only
allowed under certain conditions as defined in article 20,
sections 2, 3, 4 and 5 of the Insurance Act.
With the implementation of investment restrictions that are
applicable as soon as the obligation is located in Belgium -
which might therefore also apply to foreign insurers - the
legislator decided not to follow the advice of the Council of
State. The Council of State was of the opinion that the
adoption of restrictions to the investment policy, as allowed by
article 133, section 3 of the Solvency II directive, forms part of
the prudential statute of insurance undertakings, so that the
Belgian legislator could only introduce such investment
restrictions for insurance undertakings with Belgium as home
The legislator concurred with the opinion of the Council of
State that the competence regarding investment restrictions
belongs to the authority of the home country of the insurance
undertaking. However, since the member states only have to
implement the relevant provisions of the Solvency II directive
before 31 March 2015, and given the fact that this date has
already been postponed several times since the publication of
the directive, the legislator deemed it desirable not to limit the
scope of application of the provisions of the Insurance Act
depending on the home country of the insurer.
It is important to note that these rules only apply to insurance
agreements that are closed after the entry into force of the
Insurance agreements that have been closed prior to the
entry into force of the new Insurance Act are in general not
subject to the new investment restrictions, unless:
- the existing insurance agreement is linked to one or
more new investment funds or the management rules
are modified; or
- the conditions in respect of (minimum) return are
(d) Interpretation of the contractual provisions
Article 23 of the Insurance Act was introduced to strengthen
the protection of the insurance consumer in case of
discussion about the interpretation of contractual provisions.
In case of doubt about the meaning of a provision in the
insurance agreement, the most favourable interpretation for
the policy holder will prevail. Insurers are also not allowed to
implement clauses in the insurance agreement that prejudice
the equivalence between the obligations of the insurer and
those of the policy holder.
(e) Information duties regarding advertisements and
other documents and notices
Article 28 contains general rules on the distribution of
advertisements and other documents and notices on Belgian
territory. Particularly, it provides that the information may not
6 The new Insurance Act
be false or misleading, the data must be compliant with other
information that should be legally communicated and
advertisements must be recognizable as such. The
connecting factor for this rule is the commercialisation on
Belgian territory, irrespective of the insurer’s origin and the
location of the obligation or risk.
The King has been granted power to further clarify the
fundamental requirements with which advertisements must
comply. In this respect, we refer to, amongst others, Royal
Decree of 25 April 2014 on certain information duties in case
of commercialisation of financial products to non-professional
clients, which will, among others, be applicable to insurance
Articles 32 until 38 of the Insurance Act contain general
obligations regarding (pre-) contractual information that
should be communicated to the policy holder, insured or
beneficiary. These rules are largely copied from Control Royal
Decree and are different depending on whether it concerns
life insurances or non-life insurances.
Segmentation is peculiar to the insurance technique, but may
not be applied in an arbitrary or discriminatory way.
Therefore, articles 42 until 48 of the Insurance Act provide a
legal framework in respect of segmentation of insurances.
Insurers are currently already bound by the prohibition of
discrimination as implemented in anti-discrimination
legislation. As such, an insurer is not allowed to discriminate
based on any of the criteria listed in this anti-discrimination
legislation (religion, sex, colour of skin, etc.) when taking a
decision regarding acceptation, pricing and coverage.
The Insurance Act supplements these rules by imposing a
special transparency and motivation obligation in case of
segmentation in respect of insurances listed in the Insurance
Act. This special transparency and motivation obligation is
only applicable in case the policy holder is a consumer as
defined in the Act of 6 April 2010 on market practices and
The new rules on segmentation are applicable to all insurers
who exercise their activities in Belgium and to insurance
agreements of which the risk or obligation is located in
Belgium, to the extent one of the insurances listed in article
43 is concerned (including civil private liability insurances,
legal expenses insurances and individual life insurances).
Since these rules are considered to be in the interest of the
general good, they are also applicable to foreign insurers
active in Belgium.
Each distinction (based on any criteria, so not only based on
the criteria listed in the anti-discrimination legislation) in
respect of acceptation, pricing and/or the scope of the
coverage has to be justified objectively by a legitimate
purpose, and the means to achieve such purpose must be
adequate and necessary. This rule is immediately applicable
7 The new Insurance Act
to agreements that are offered or closed after the entry into
force of the Insurance Act. Agreements already existing prior
to the entry into force of this Act and which are modified or
extended are grandfathered until 1 June 2015. After this date,
both the agreements existing prior to the entry into force of
the Insurance Act as well as new agreements must comply
with these legal requirements.
Moreover, insurers are obliged to publish the segmentation
criteria used by them on their website, together with an
Finally, an insurer must explain the used segmentation criteria
when making an offer, refusing an offer, as well as when
modifying or cancelling the insurance agreement in case of a
change of the risk.
(g) Profit sharing
The provisions on profit sharing are applicable to all insurance
agreements of which the risk or obligation is located in
According to article 48 of the Insurance Act, the disclosure of
profit sharing in an advertisement is only allowed if a
contractual or legal obligation to share profit in the future
under certain legal or contractual conditions exists. If the right
to profit sharing only depends on the discretion of the insurer,
neither the profit shares granted in the past nor future
forecasts may be published in advertisements.
The policy holder must be informed at least annually on the
profit sharing situation and, during the entire life cycle of the
insurance agreement, on every change in the profit sharing
If the profit sharing is mentioned in an advertisement, insurers
must also draft a profit sharing plan that complies with the
fundamental requirements of article 51 of the Insurance Act.
The obligation to draft a profit sharing plan is immediately
applicable to agreements offered or closed after the entry into
force of the Insurance Act.
Existing agreements closed prior to the entry into force of the
Insurance Act and which are modified or extended, are
grandfathered until 1 June 2015.
The King has been empowered to impose a mandatory
system of profit sharing.
(h) The Non-Marine Insurance Act – various modifications
Article 57 of the Insurance Act provides that the right of
withdrawal in respect of life insurance agreement and
capitalisation transactions applies to all such insurance
agreements and not only to those that have been entered into
by means of an “insurance proposal form” or a "policy signed
in advance", as was the case in the past.
Following the conviction of Belgium by the European Court of
Human Rights in its judgement of 7 July 2009 (“the Stagno
case”), article 89, section 1 of the Insurance Act was
8 The new Insurance Act
amended in such a way that the prescription of a claim
resulting from an insurance agreement does not commence
vis-à-vis minors, legally incompetent persons and other
persons lacking capacity until the day they become adults or
the declaration of incompetence is revoked.
Other modifications to the Non-Marine Insurance Act concern
the communication of medical information (article 61); the
amounts paid to minors, legally incompetent persons or other
persons lacking capacity (article 68); consequences of nonpayment
of the premium (article 71); and the dissolution of the
agreement after the occurrence of an accident (article 86).
(i) Supervision by the FSMA
Understandably, the FSMA must have sufficient powers to
ensure compliance with the provisions of the Insurance Act.
Currently, article 71 of the Insurance Undertakings Act only
provides for an independent power for the FSMA with regard
to insurance undertakings located in the EEA.
Article 288 of the Insurance Act therefore introduces an
independent power for the FSMA to act against Belgian
insurers and foreign insurers that are non-EEA insurance
The provisions regarding the supervision of the FSMA and the
measures at its disposal were largely copied unaltered from
the Insurance Undertakings Act and the Insurance Mediation
If an insurance intermediary does not remedy the violations of
the conditions for registration within the period imposed by the
FSMA, this will result in an automatic cancellation of the
registration. The rules were not changed in this respect.
However, in case of a violation of the rules of conduct on precontractual
information duties or non-compliance with the
insurance MiFID rules by an insurance intermediary, the
FSMA has a discretionary margin with regard to the measures
to be taken. Therefore, the FSMA does not need to
automatically cancel the registration of the insurance
Furthermore, the FSMA can also prohibit the
commercialisation of insurance agreements in certain cases
(e.g., if the insurer does not comply with the provisions of the
However, the prudential control on insurance undertakings
remains under the NBB's competence.
5. Implementing decrees
Given the complex and technical character of the insurance
regulations, the Insurance Act entitles the King to further
implement several provisions of the Insurance Act, upon
advice of the FSMA (e.g., the King is entitled to exempt
foreign insurers or insurance intermediaries of all or part of
the obligations under the Insurance Act, and he can modify or
increase the information duties in respect of advertisements
and other documents and notices).
9 The new Insurance Act
6. Entry into force and transitional provisions
With some exceptions, the Insurance Act enters into force on
the first day of the month after the end of a period of six
months, starting as of the day following the publication of the
Insurance Act in the Belgian Official Gazette, i.e., 1 November
The Insurance Act also provides a range of different
transitional provisions, some of which have already been
mentioned above under item 4 (Substantive modifications).
In general and unless explicitly stated otherwise, article 311,
section 6 of the Insurance Act provides that insurers must
formally adapt their insurance agreements and other
insurance documents to comply with the provisions by 1 June
2015. Until that date, existing and new insurance agreements
must not formally comply with the provisions of the Insurance
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