The Belgian insurance market is mainly characterized by:
- The internationalization of the market;
- The presence of integrated financial groups (banking and insurance);
- Market sharing between multi-line and specialized insurance companies;
- The distribution of insurance products through various forms of distribution.
Internationalization of the market
The insurance market is an international market. This phenomenon of internationalization is stimulated within the European market by the freedom of establishment and the freedom to provide services.
The internationalization of the insurance market appears in particular on the basis of the following figures, the National Bank of Belgium (BNB) controls:
- nearly 70 insurance companies (67 in 2018) belonging to 11 national insurance groups and 4 international groups (cf. 2018 BNB Report). A large number of insurance companies governed by Belgian law have been created by foreign insurance companies;
- 12 branches of foreign insurance companies governed by the law of another EEA member state (supervision limited to the application of anti-money laundering legislation);
- More than one thousand EEA insurers can offer insurance in Belgium under the freedom to provide services. However, the cross-border insurance offer remains very limited, mainly due to legal constraints.
Integrated financial groups and bancassurance
Integrated financial groups (financial conglomerates) are groups of companies that offer both insurance products and banking products and / or other financial products from the same financial group.
These integrated financial groups have a strong presence in Belgium. Since the beginning of the 1990s, several large Belgian banks have set up their own insurance business or have taken over an existing insurance business.
These banks are generally exclusive distributors of insurance products from the insurance company that is part of their financial group.
This bancassurance phenomenon decreased with the 2008 crisis, but still characterizes the insurance market in Belgium.
Multi-line insurers and specialized insurers
Approval is given by the National Bank of Belgium by branch or by group of branches.
About half of insurance companies governed by Belgian law are multi-line insurers. Multi-line insurance companies are approved to practice most or all branches of insurance in life and / or non-life activities. Specialized insurance companies have authorization to practice one branch of insurance (single-branch insurer) or a few branches that are consistent with one another.
With regard to the non-life insurance business, there are in particular insurers specializing in legal protection, assistance, credit-surety, sickness and work-related accident insurance.
Among the specialized insurers, there are niche insurers. They only offer insurance branches linked to a specific activity, such as transport, notarial work, construction, etc.
As with insurance companies, there are multi-line insurance intermediaries and specialist intermediaries.
Different channels of distribution
Insurance is distributed in Belgium through various distribution channels.
Assuralia, the professional organization of insurance companies, regularly publishes a comparative study of insurance distribution channels in Belgium. Their purpose is to determine the relative market share of the various insurance distribution channels in the main branches of insurance and its evolution over time. On the basis of these comparative studies, the following distribution modes can be distinguished in Belgium.
Non-exclusive distribution channels, with or without banking activities.
The following professionals are part of it:
- The big brokers (the most important brokers);
- Classic brokerage (apart from large brokers and insurfinance);
- Insurance: brokers with a bank branch that are part of the same financial group, except mega brokers.
The exclusive network, with or without banking activities
The following professionals in part:
- Independent exclusive insurance agents and tied agents;
- The exclusive salaried insurance agents (endangered!);
- “Bancassurance”, ie the exclusive insurance network with banking activities. Bancassurance is considered by the Assuralia study as a specific distribution network.
In this context, insurance products are offered directly by the insurance company to consumers. This includes the distribution of insurance products, without intermediaries:
- By mutuals and cooperatives;
- Directly to businesses and the self-employed or to consumers;
- By electronic commerce (via interactive website).
The most representative part of the collection of insurance premiums in Belgium is:
- In non-life insurance: Produced by brokerage;
- In life insurance: Produced by bancassurance.
Supervision of the Belgian insurance market
In Belgium, supervision of the insurance market is entrusted to two supervisory authorities:
- The BNB (National Bank of Belgium);
- The FSMA (Financial Services and Markets Authority).
They jointly exercise control over the entire Belgian financial sector.
The National Bank of Belgium (BNB)
Administrative control of the BNB
It is forbidden for any company to subscribe as an insurer, or to offer to take out insurance contracts, without being approved in advance. In Belgium, the administrative control of insurance companies is entrusted to the National Bank of Belgium. Administrative control concerns prior approval for any insurance activity as an insurance company under Belgian law. Authorization is granted by the BNB by branch of insurance.
Example: branch 01a: accidents, branch 02: illness, ect…
The conditions of approval relate in particular to:
- The technical and financial means to protect consumers against the insolvency of the insurer in the execution of the contract, including the solvency margin;
- The composition of the shareholders and management;
- The form of company;
- The social object.
The conditions of approval must be maintained throughout the duration of the activities. Failing that, the authorization can be revoked.
Contracts relating to risks located in Belgium taken out with an unauthorized company are void. If the lessee has subscribed in good faith, the company is nevertheless required to fulfill its obligations (see article 8 of the law of April 4, 2014).
Financial control by the BNB
The purpose of financial supervision is to protect insurance consumers and third parties against the insolvency of the insurer. This control is exercised on a permanent basis by the BNB, after the insurance company has been approved.
This control is also called “prudential control”.
Financial or prudential control mainly concerns:
- The solvency margin;
- The technical provisions or reserves required for the proper operation of the branches practiced;
- The representative values of these provisions (investments).
The Financial Services and Markets Authority (FSMA)
The FSMA is an autonomous body with legal personality established in the administrative district of Brussels-Capital. In terms of the distribution of insurance products, the FSMA has several control missions, mainly:
- Material control relating to the conditions of the contract and the prices (the products). This control is carried out “a posteriori”, that is to say after publication of the contracts and prices, for example following a complaint;
- Supervision of insurance intermediaries;
- The application of the rules of conduct.
The a posteriori control of contracts is reinforced by various legal measures (see part 3 of the law of April 4, 2014 on insurance, mainly article 23).
- The conditions of the insurance contracts:
- must be written in clear and precise terms;
- not contain clauses likely to affect the equivalence of reciprocal commitments;
- which do not comply with the provisions of parts 2 and 3 of the law are considered void. They are deemed to have been established in accordance with these provisions of the law since the subscription of the contract.
- In case of doubt about the meaning of a clause, the interpretation most favorable to the policyholder or the insured prevails (except for major risks).