The European insurance market stages
The single market in insurance was achieved through three generations of European directives which aimed to establish the freedom to provide services and expand it geographically.
The freedom to provide services is defined as the activity whereby an EEA insurance undertaking covers risks or makes commitments in another Member State, from its head office or from a branch located in another Member State (cf. article 5, 28 ° of the law of April 4, 2014).
The european parliament and the european union’s council have published the Insurance Distribution Directive (EU) 2016/97 on the 20th of January 2016.
What are the rules of the freedom to provide services
The single insurance market and the freedom to provide services are characterized by the following basic principles:
- Principle of the single license for cross-border activities. The approval of an insurer or the registration of the insurance intermediary in the country of origin acts as a “European passport” in all EEA countries. A license is therefore sufficient to offer insurance in any other EEA country, from the country of origin;
- Principle of “home country control”. The distributor (insurer or intermediary) is only subject to prudential supervision by the competent authorities of the country of origin.
The distributor must first notify the competent authorities of the country of origin that he wishes to carry out activities there under the freedom to provide services.
The authority of the country of origin notifies the authority of the host country. After notification of the competent authorities, the insurer can operate in other EEA countries from:
- The head office located in the country of origin;
- Subsidiaries located in other EEA countries.
The law applicable to insurance contracts
Foreign insurers must take into account the law applicable to insurance contracts (see article 7 of Regulation 593/2008 of June 17, 2008). The applicable law depends on the insurance activity (life or non-life), the compulsory nature of the insurance and the possible choice of the parties.
Free choice of applicable law (contractual autonomy)
The parties can determine which law is applicable to the contract, but they can only opt for the law:
- The Member State where the risk is located;
- The country in which the policyholder has his habitual residence.
In the case of life insurance, the policyholder can also opt for the law of the country of which he is a national.
In the absence of an express choice by the parties, the contract is governed by the law of the member country where the risk is located at the time of its conclusion. In principle, this is the law of the Member State where the contract is concluded.
Respect for national provisions of general interest
The state of the risk situation may require compliance with national provisions of general interest. In Belgium, all insurance legislation:
- Are of general interest (= public order or mandatory legislation that protects consumers);
- Must therefore be respected by foreign insurers for risks located in Belgium.
A list of laws and regulations of general interest is published on the website of the Belgian supervisory authorities (BNB and FSMA). This list is not limited to insurance laws.
Legally compulsory insurance under Belgian law
Contracts intended to satisfy an insurance obligation imposed by Belgian law are governed by Belgian law. These compulsory insurances are mainly aimed at the protection of public order and are therefore of general interest.