26 April 2024
by Martijn Schoonewille , Wendy Pronk , Anne Remmers and Rosalie Tielens
Loyens & Loeff
To print this article, all you need is to be registered or login on Mondaq.com.
Policyholders of group insurance policies may require a licencefrom the Netherlands Authority for the Financial Markets(AFM) as an intermediary from 1 October 2025.Thislicensing requirement is relevant for a wide range of companiesincluding, for example, companies in the transport and movingsector that offer insurance to their customers where the companiesconcerned are themselves policyholders. According to the AFM, ifthe policyholder of a group insurance policy offers its customers achoice of joining the insurance policy and the policyholderreceives a fee for this in return, this qualifies as providingintermediary services for which, in principle, a licence isrequired. If a licence is required, it must be obtained before 1October 2025.
Background and the interpretation
The AFM's interpretation is a consequence of a judgment ofthe Court of Justice of the European Union (CJEU 29 September 2022,C-633/20, ECLI:EU:C:2022:733). With the interpretation, the AFMprovides further guidance for practice. According to theparliamentary history of the concept of the provision ofintermediary services, the term "intermediary" expressesthat the intermediary does not become a party to the insurancecontract. However, the CJEU does not consider it decisive whetherthe intermediary is itself a party to the insurance contract, whatis relevant is whether a party performs similar activities for afee.
Licensing requirement for group insurances
A group insurance is an insurance contract entered into betweena policyholder and insurer under which one or more third personsmay be included as insured person(s) on the policy. According tothe AFM's interpretation, if the following two conditions aremet for group insurance, there is a licensing obligation for theprovision of intermediary services:
- There is an optional element; and
- A fee is paid.
Optional element - automatic or non-automaticinclusion
If the insured is automatically added to a group insurancepolicy and does not have an option to do so, this does notconstitute intermediary activities for which a licence is required.This could include the situation where a child is enrolled by itsparents at a school, where the child is automatically added as aninsured in the school's accident insurance.
It is different when the insured has the choice to join theinsurance contract, which allows the insured to decide whether totake up the offer of insurance. This is non-automatic entry. Theoffering of certain options or the possibility of dropping certainoptions within the offered insurance is also seen by the AFM as anoptional element. By way of illustration, this includes thesituation where a moving company offers the option of taking outinsurance against damage to the goods on the moving day.
Remuneration
In addition to the fact that there must be a non-automatic entryinto a group insurance policy, the policyholder must receiveremuneration for the service provided in order to trigger thelicence requirement. The concept of remuneration should beinterpreted broadly. Any (economic) benefit of any kind qualifiesas a remuneration.
The AFM clarifies in its interpretation that there must be afinancial benefit for the policyholder - passing on premiums and(administrative) costs is not considered as a fee by the AFM. Thismeans that if the group insurance is offered to the customer as a'service' without providing any financial benefit to thepolicyholder, there are no intermediary service provided for whicha licence is required.
Secondary insurance intermediary: exception from Section7 Exemption regulation Wft
In the situation where there is (i) freedom of choice for thecustomer and (ii) a remuneration for the policyholder, inprinciple, a licensing obligation as intermediary applies. In thosecases, the exemption regulation is still relevant. Section 7 of theExemption regulation Wft (Vrijstellingsregeling Wft)regulates that persons who mediate in insurance in addition to thesupply of an item or the provision of a service are largely exemptfrom the Dutch Act on Financial Supervision (Wet op hetfinancieel toezicht) under certain conditions. To qualify forthis exemption, certain conditions must be met. This means that ifthe policyholder of a group insurance policy can demonstrate thatthe insurance product being offered meets the conditions set out inSection 7 of the Exemption regulation Wft, the policyholder canmake use of this exemption and the licensing obligation does notapply after all. The foregoing can be depicted as follows:
Based on the interpretation of the AFM.
Next step
The AFM's interpretation may have a significant impact onmarket parties who currently do not have a licence for(intermediary) activities in group insurance. For each groupinsurance policy, it will have to be determined whether there areintermediary activities that requires a licence. The decision treeas depicted above can be helpful in this respect. If a licensingobligation arises, we recommend taking action on this quickly, asthe relevant companies must have a licence no later than 1 October2025.
The content of this article is intended to provide a generalguide to the subject matter. Specialist advice should be soughtabout your specific circ*mstances.
POPULAR ARTICLES ON: Insurance from Netherlands
Insurance – What's Next?
Herbert Smith Freehills
M&A activity in the insurance sector held up reasonably well in 2023. This is despite the sector being impacted by many of the trends outlined in our global M&A outlook for 2024...
MFSA Circular And Feedback Statement Re Amendments To PCC Regulations
Ganado Advocates
On 28th March 2024 the Malta Financial Services Authority (the "MFSA") issued a Circular and Feedback Statement on the amendments to the Companies Act (Cell Companies Carrying on Business of Insurance)...
Extension Of Interest Income For Insurers And Distributed Ledger Technology (DLT) Firms
ISOLAS
The Income Tax (Amendment) Act 2024 ("the Amending Act") was passed last week and establishes amendments to the Income Tax Act 2010 ("the Old Act"), in particular...
FIG Top 5 At 5 - 21/03/2024
Matheson
On 8 March 2024, the Deputy Governor of the Central Bank of Ireland ("Central Bank"), Vasileios Madouros, respondedOpens in new window to a request for a submission...
Outsourcing In The Insurance Sector: Evolution Of Luxembourg's Legal Framework
ELVINGER HOSS PRUSSEN, société anonyme
On 19 March 2024, the Luxembourg Chamber of Deputies adopted bill of law 8184 transposing Directive 2021/2118 into national law related to motor vehicle liability insurance1 (the "Bill of Law").
Insurance Newsletter Q1 2024 – Central Bank Of Ireland Highlights Two Key Issues
William Fry
On 26 March 2024, the Central Bank of Ireland (CBI) published its first quarterly Insurance Newsletter for 2024 covering several topics of note for Irish (re)insurers (Newsletter).
