How is the writing of insurance contracts regulated in the jurisdiction?

Insurance & Reinsurance

Portugal Small Flag Portugal

Insurance is a regulated activity which is only accessible to duly authorized insurers. The activity’s main regulation is that approved by Law 147/2015 of 9 September (the “Portuguese Insurance Regulatory Law” or “PIRL”). This statute contains the legal framework for the taking up and pursuit of insurance and reinsurance activities in Portugal and for the most part it is the direct result of the implementation of relevant European directives, most notably the Solvency II Directive.

The writing of insurance contracts is governed by a different regulation: that approved by Decree-Law 72/2008 of 16 April, as amended by Law 147/2015 of 9 September (the “Portuguese Insurance Contract Law” or “PICL”). PICL sets forth general provisions, applicable to all types of insurance contracts, such as (i) contract formation, (ii) information duties of the insurer and the policyholder/insured, (iii) execution of the contract, (iv) payment of insurance premium, (v) coinsurance, (vi) reinsurance, (vii) group insurance, (viii) claims handling, and (ix) termination.

However, the main source of contract law in Portugal is the Portuguese Civil Code, which sets forth many general contractual provisions also applicable to insurance contracts.

The Portuguese insurance regulator is Autoridade de Supervisão de Seguros e Fundos de Pensões, also known by its acronym “ASF”.

Japan Small Flag Japan

Writing of insurance contracts is regulated by the Insurance Business Act and the Financial Services Agency (the “FSA”) supervises insurance companies. Offering new insurance products requires approval from the FSA, (“Insurance Product Approval” – regular processing takes 90 days, standardised 45 days). However, regarding certain types of insurance where there is little fear of insufficient policyholder protection, such as fire insurance, a notification system to the regulatory authorities has been adopted, although notification may not be required in cases where insurance companies state in the statement of business procedures that special provisions related to business insurance are to be established or modified without notifications. (“Flexible Provision System”).

Australia Small Flag Australia

Insurance contracts in Australia are regulated by various Commonwealth Acts which deal with both the activity of insurers and reinsurers and the writing of the contracts. The activity of insurers is regulated by (i) the Insurance Act 1973 (Cth) (IA) for general insurers, (ii) the Life Insurance Act 1995 (Cth) (LIA) for life insurers, and (iii) the Private Health Insurance (Prudential Supervision) Act 2015 (Cth) for private health insurers. The writing of insurance contracts is separately regulated by (i) the Insurance Contracts Act 1984 (Cth) (ICA) which regulates contracts of general insurance and life insurance, (ii) the Marine Insurance Act 1909 (Cth) which regulates contracts of marine insurance and (iii) the Private Health Insurance Act 2007 (Cth) which regulates contracts of health insurance.

Denmark Small Flag Denmark

The main source of law specifically relevant for insurance contracts is the Danish Insurance Contracts Act, which sets out certain rights and obligations of the parties to an insurance contract. The Act applies unless the parties to the contract agree otherwise. However, a number of the provisions in the Act are mandatory and hence cannot validly be derogated from. The Act holds a number of general provisions that apply to all insurance contracts, and a number of special provisions that only apply to certain types of insurances, e.g. life insurance, accident insurance and health insurance.

Apart from the mandatory provisions in the Danish Insurance Contracts Act, insurance contracts are subject to the general principles of Danish contract law, according to which the parties to a great extent enjoy the freedom of contract, allowing the parties to agree on the terms and conditions governing their relationship.

As the Danish Insurance Contract Act does not hold any provisions concerning the formation of insurance contracts, the Danish Contracts Act, which is the general statute governing the formation of contracts, applies. In brief, contracts, including insurance contracts, are formed under Danish contract law on the basis of an offer and an acceptance. The insurance policy constitutes the contract, which holds the terms and conditions that the parties have agreed upon. It is worth noting that the fact that the policyholder does not react to an offer from the insurance company will not in itself substantiate a contractual obligation. However, after the insurance period has started, insurers may have an interest in changing the policy terms, and in such instances Danish courts have accepted that under certain circumstances, the revised policy terms are binding on the policyholder even in the absence of an explicit acceptance.

Poland Small Flag Poland

The writing of insurance contracts in Poland is regulated by the Polish Civil Code of 23 April 1964 (the “Civil Code”) and by the Polish Act of 11 September 2015 on Insurance and Reinsurance Activity (the “Insurance Law”). Additional rules are also laid down in the Commission Delegated Regulation (EU) 2015/35 (the “Delegated Regulation”), which applies directly in Poland.

The Civil Law regulates the scope, content, rules of conclusion and termination of insurance contracts.

The Insurance Law implements Directive 2009/138/EC on the taking-up and pursuit of the business of insurance and reinsurance (the “Solvency II Directive”). It regulates, among other things, the licensing of insurance and reinsurance companies, supervision over insurance and reinsurance activity, insurance secrecy, outsourcing, solvency capital requirements and other obligations and requirements for insurance and reinsurance undertakings. It also contains some provisions regulating insurance contracts (in addition to those provided for in the Civil Code).

The Insurance Law sets out the rules for the conduct of activity by (a) insurance and reinsurance undertakings established in Poland, (b) the Polish branches (the so-called “main branches”) of insurance or reinsurance undertakings established in non-EU countries (third countries) as well as (c) the insurance or reinsurance undertakings established in the EU or EEA Member States, which conduct activity in Poland on the basis of the freedom of establishment (in the form of branches) or on the basis of the freedom of services (on a cross-border basis).

In addition to the above regulations, there are also a number of recommendations and guidelines which are issued for insurance and reinsurance companies by the Polish Financial Supervision Authority (Komisja Nadzoru Finansowego – “KNF”).

Turkey Small Flag Turkey

In Turkish law, parties can freely form insurance contracts subject to the rules and restrictions of, inter alia, Turkish Commercial Code (“TCC”), Insurance Act (“IA”) and Turkish Code of Obligations (TCO).

According to Article 1408 of TCC, insurable interest shall exist at every stage of the contract, failing which shall result in invalidity of contract. Retroactive insurance is allowed only when the parties of the contract or the policyholder who is informed of the existence of the contract, at the time when the contract is concluded, are not aware that the risk had already occurred or the possibility of such occurrence had ceased. According to the Article 1425/2 of the TCC, the content of the policy shall be parallel to the proposal and the insurance contract; in the contrary case provisions against the interests of insured, insurant or beneficiary shall be invalid.

Insurance contracts in Turkey must refer to general terms approved by the Undersecretariat of Treasury (the “Undersecretariat”) thus the relevant general terms are parts of the insurance contracts. Parties can freely agree on special terms provided that same shall comply with the standard general terms.

Where there is no regulation applicable, general provisions of TCO shall be applicable to insurance contracts.

United Kingdom Small Flag United Kingdom

The regulation of insurers and reinsurers (collectively, "(re)insurers") in the United Kingdom ("UK") has undergone a period of substantial change following the 2007-2008 financial crises and the implementation of the Solvency II directive.

The Financial Services and Markets Act 2000 ("FSMA") established a system for the regulation of various “regulated activities”, as set out in the Financial Services and Markets Act 2000 (Regulated Activities Order) 2001 ("RAO"). Whilst the UK's regulatory framework derives mainly from FSMA and its related implementing legislation and rules, it is also substantially influenced by and, where required, implements various European laws, including the Solvency II Directive.

Under FSMA no person may carry on a "regulated activity" in the UK unless they are an "authorised person" or an "exempt person". Authorisation to carry on (re)insurance business in the UK may be obtained directly from the relevant UK regulator, or for a European head quartered (re)insurer firm, by passporting into the UK from that European head office's jurisdiction.

A review by the UK government in the wake of the crisis led in 2013 to the then single financial services regulator, the Financial Services Authority ("FSA"), being replaced by, and its functions distributed between, two new regulatory authorities, the Prudential Regulation Authority ("PRA") and the Financial Conduct Authority ("FCA") (together "the Regulators").

(Re)insurers are regulated by both the Regulators (and are therefore described as being "dual-regulated"), although the PRA acts as the "lead regulator" and therefore is the main point of contact for supervisory decisions. Insurance intermediaries are regulated by the FCA only (see further paragraph 4 below).

The UK's regulatory system also applies to Lloyd's of London ("Lloyd's), a specialist reinsurance market in the City of London within which multiple financial backers, grouped in syndicates, come together to pool and spread risk. Both Lloyd's and syndicates operating within it are dual-regulated. The majority of reinsurance business written by underwriters at Lloyd’s (also known as "members") is placed through brokers and both members and brokers are regulated by the FCA.

Sweden Small Flag Sweden

Freedom of contract is part of the foundation of Swedish contract and insurance contract law, meaning that two parties are free to enter a contract of their own wording, without interference from the legislator. However, there are numerous exceptions to this rule; especially so within the field of insurance law. Generally speaking, though, exceptions target the parties’ general obligations towards each other, and does not interfere with the insurers’ right to construct insurance products, which follows from the product freedom principle.

As often is the case, the regulation targeting consumer relationships is the most strongly biased towards using mandatory law and control over policy wordings; one notable exception to the freedom of contract principle is the insurers’ duty to accept consumer insurance and personal insurance contracts. Even if freedom of contract is stronger in commercial insurance relationships, numerous exceptions, such as mandatory law requiring the policyholder to provide certain information to the insurer or mandatory law preventing insurers from precluding indemnification except for certain situations, still apply.

Freedom of contract and product freedom aside, insurance contracts are regulated in the Insurance Contracts Act (SFS 2005:104), unless they are deemed null because they, for example, cover a non-insurable interest, such as a criminal act. In contrast, there is no specific law that regulates the content of reinsurance contracts, which instead falls under the more general Contracts Act (SFS 1915:218) and other general principles of Swedish contract law.

Following the product freedom principle, insurers are free to construct insurance products without the legislator’s interference, unless such interference is necessary to protect a special social concern. This means that there are no prohibitions on coverage, except those regarding illegal interests, and that there, for example, are no minimum coverage provisions in the Insurance Contracts Act, though there are specific mandatory insurances that are governed by special legislation, such as patient insurance and motor vehicle liability insurance. However, in practice, insurers usually mirror the wording of the Insurance Contracts Act, since the said act will apply instead of any contractual provisions that are less favourable to the insured than those of the said act.

Germany Small Flag Germany

Insurance supervision in Germany is mainly regulated by the Insurance Supervisory Act (Versicherungsaufsichtsgesetz, VAG). The VAG contains provisions on, inter alia, authorisation, fund requirements and governance for insurance and reinsurance undertakings. The VAG was reformed in order to transpose the Directive 2009/138/EC ("Solvency II Directive") into domestic law as of 1 January 2016. The Solvency II Directive is supplemented by the Commission Delegated Regulation (EU) 2015/35 of 10 October 2014 which is directly applicable in Germany.

In addition to the provisions of the VAG, insurance and reinsurance undertakings have to comply with a wide range of provisions in German law, e.g. under civil, company and data protection law.

The relevant regulatory body in Germany for insurance and reinsurance activities is the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, BaFin). It supervises all private and public insurance undertakings which carry on private insurance business within the scope of the VAG and have their registered office in Germany. In addition, there are supervisory authorities of the Federal States which are mainly responsible for supervising public insurers whose activities are restricted to the particular Federal State and private insurers who are of lesser financial and economic significance.

Insurance and reinsurance undertakings which have their registered office in another EU Member State, or in a state which is party to the Agreement on the European Economic Area (EEA), and conduct business in Germany under the European Passport or Single License Principle are mainly subject to their home country's supervision, especially in prudential matters. Additional requirements apply for establishing a branch. BaFin closely cooperates with foreign supervisory authorities, especially within the European System of Financial Supervision including the European Insurance and Occupational Pensions Authority (EIOPA).

Norway Small Flag Norway

The regulatory framework for writing insurance contracts in Norway is governed by the Insurance Contract Act (1989:69). The Insurance Contract Act establishes the fundamental principles of insurance contracts, and consists of three main parts:

  • Section A, which regulates non-life insurance (including liability insurance);
  • Section B, which regulates personal insurance (including life- and health insurance);
  • Section C, which sets out certain common requirements relating to resolution of disputes, calculation of deadlines and the use of electronic communications.

Sections A and B are structured similarly, and contain in large part the same provisions, but with certain variations in section B due to the special nature of personal insurance contracts. Certain chapters are specific to each of the two sections, such as the chapter on liability insurance in section A and the chapter on the life insurance registry in section B.

The Insurance Contract Act applies to all insurance contracts governed by Norwegian law, other than guarantee insurance contracts and reinsurance contracts. As a rule, the provisions of the Act are mandatory, and many have been drafted to protect the policyholders from unfavorable and unreasonable terms. However, insurers can freely design their own products and determine their own terms and conditions for their policies, within certain outer limits.

The mandatory nature of the provisions does not apply in relation to business insurance covering large risks (where the policyholder meets certain criteria in relation to annual turnover, balance sheet and/or number of employees) and in certain specific trades, including shipping, aircraft insurance and the international transport of goods. In certain trades in which the Insurance Contract Act is not mandatory, specific agreed documents have been prepared by the insurers' and the policyholders' associations, most notably the Nordic Marine Insurance Plan which covers most aspects of marine insurance in the Nordic countries.

Mexico Small Flag Mexico

Mexican insurance contracts are governed by the Insurance Contract Law (“LCS”). The LCS applies to all insurance contracts, except for maritime insurance governed by the Navigation and Maritime Commerce Law (“LNCM”) published in the Official Gazette of the Federation (Diario Oficial de la Federación) (“DOF”) on 1 June 2006.

The insurance contract is formed through the consent of the parties. According to Article 21.1 of the LCS the insurance contract comes into effect when the insured receives a confirmation that the insurance company accepted his request for insurance coverage, regardless of whether any written evidence such as an insurance policy or certificate is issued. The effectiveness of an insurance contract should not be subject to the condition that the respective insurance policy or any other document evidencing its acceptance is issued nor to the condition that the respective premium is paid.

UAE Small Flag UAE

Compared to many mature markets, the regulation of specific policy language in the UAE is somewhat limited. Firstly, it must be understood that the UAE is a federal entity, with both a central government, and the governments of the several Emirates that comprise the UAE, exercising concurrent regulatory authority. Additionally, there are various “free zones” in the UAE that operate pursuant to different laws, with the discussion regarding such beginning under Query 3.

Insurance Law in “onshore” UAE – that being the UAE exclusive of certain free zones - is primarily regulated pursuant to UAE Federal Law No. 6 of 2007, known and referred to as the Insurance Law, but greater specifics of the differing classes of insurance and required contractual language are found in Insurance Authority (hereinafter, the “IA”) Resolution No 2 of 2009 and Resolution No. 3 of 2010.

Resolution No. 2 of 2009 establishes, among other things, the different classes of insurance cover that may be offered, and specify which classes are denominated as life insurance and fund accumulation operations on one hand, and property and liability insurance on the other.

Resolution No. 3 of 2010 sets forth requirements as to clarity of language, terms, policy period, and any exclusionary clauses. All policies must be drafted in the Arabic language, although an insurer may provide translations into other languages; however, the Arabic text will prevail in the case of any inconsistency. All insurance policies issued in the UAE must also be first submitted to the IA, who has the discretion to refuse to permit such to go to market, as per both Article 38 of the Insurance Law and Article 11 of Resolution No. 3 of 2010.

Certain lines of business, however, such as motor insurance, have greater levels of required specificity as to the extent of cover and allowable rates set forth by the IA from time to time. Note that health insurance is mandatory in both Abu Dhabi and Dubai, and these Emirates each have separate governmental health authorities that also strictly regulate the contents and set mandatory elements of included care provided under the health cover issued within those Emirates. These agencies are the Health Authority of Abu Dhabi (HAAD) and Dubai Health Authority (DHA).

United States Small Flag United States

The McCarran-Ferguson Act (the “Act”), passed by Congress in 1945, explicitly provides for state regulation of insurance. The insurance industry is, therefore, almost exclusively regulated by the individual fifty states’ governments. Each state has an insurance or financial services department which implements and administers regulations concerning a wide variety of matters, including insurers’ (i) finances, (ii) market conduct, (iii) premium rates and policy forms, and (iv) the amount and type of capital insurers must hold as security for their policy obligations. Insurers are generally regulated by the insurance department of the state in which they are domiciled.

Most state regulators are members of the National Association of Insurance Commissioners (“NAIC”) which is a regulatory support and standard-setting organization that promulgates model laws and regulations in an effort to standardize and coordinate insurance regulation across the fifty states, the District of Columbia, and U.S. territories.

Austria Small Flag Austria

The writing of insurance contracts is regulated by the Insurance Contract Act (Versicherungsvertragsgesetz; VersVG), which governs the rights and duties of both the insurer and the insured. The general sections of the VersVG are set out in Articles 1 to 49 and cover all types of insurance contracts. In addition, the VersVG sets out specific rules for different insurance branches such as indemnity insurance, fire insurance, personal liability insurance, legal protection insurance, life insurance, private health insurance and casualty insurance. Maritime insurance and reinsurance contracts are explicitly excluded by the scope of application of the VersVG.

However, the VersVG does not regulate every single aspect of insurance contracts. Rather, it is supplemented by the provisions of the Austrian Civil Code (Allgemeines Bürgerliches Gesetzbuch; ABGB). Matters such as conclusion, transferability, conversion and termination of contracts are (partly) regulated by the ABGB. When insuring consumers, certain provisions of the Consumer Protection Act (Konsumentenschutzgesetz; KSchG) and other consumer-specific statutory provisions have to be borne in mind as well. Moreover, special laws for certain types of insurance contracts exist, as is the case with motor third party liability insurance (Kraftfahrzeug-Haftpflichtversicherungsgesetz; KHVG).

In addition, certain provisions of the Insurance Supervision Act (Versicherungsaufsichtsgesetz; VAG) may be of relevance when writing insurance contracts, e.g. the insurer’s information obligations towards the insured.

Chile Small Flag Chile

The contract of insurance is regulated in the Code of Commerce. In addition, relevant norms regulating insurance and reinsurance activity are included in the Law of Insurance Companies. These legal norms are complemented by the rules issued by the insurance regulator, who has ample regulatory powers over insurance, reinsurance and intermediation activities, including the administrative interpretation of legal norms. The regulator has issued norms on several matters and has regulated in further detail the clauses that should be included in the insurance policies.

In addition, general norms on contracts contained in the Civil Code are applicable to those matters that are not specifically regulated by the special legal provisions on insurance.

From a formal point of view, the contract of insurance is perfected by the mere consent of the parties, although some kind of evidence in writing should exist. Once the contract has been concluded, the Insurer has the duty to issue the policy of insurance or a certificate within five days. The Code of Commerce establishes the matters that have to be included in the policy, and this has been further detailed by the regulator’s norms.

Switzerland Small Flag Switzerland

Before they can start insurance business in or from Switzerland, insurance companies have to be authorised by the Swiss Financial Market Supervisory Authority (Eidgenössische Finananzmakrtaufsicht – FINMA). The FINMA has the competency to supervise the activities of insurance companies in or from Switzerland in accordance with the Financial Market Supervision Act (Bundesgesetz vom 22. Juni 2007 über die Eindgenössiche Finanzmarkaufsicht, Finanzmarktaufsichtsgesetz, FINMAG- FINMASA).

The Insurance Supervision Act (Bundesgesetz betreffend die Aufsicht über Versicherungsuntermen vom 17. 12. 2006, Versicherungsaufsichtsgetz, VAG- ISA) sets down the regulatory requirements that have to be met by insurance companies in order to obtain a license and the business rules that have to be respected in the proper course of the conduct of their business up until run-off. The ISA is relatively lean when compared with the more detailed and more technical Insurance Supervision Ordinance (Verordnung betreffend die Beaufsichtigung von Versicherungsunternehmen, Aufsichtsverordnung AVO- ISO), which complements it. The ISA and ISO are further complemented by Circulars of the FINMA that give details concerning the FINMA’s supervisory practice. Such Circulars are binding on the FINMA so far as supervisory practices described in its Circulars are concerned.

The relationship between an insurance company and its policyholders is predominantly regulated by the Insurance Contract Act (Bundesgesetz über den Versicherungsvertrag of 1908, Versicherungsvertragsgesetz, VAG- ICA). The provisions of the ICA are themselves complemented by the general principles of the Code of Obligations (Obligationenrecht, OR-CO).

Peru Small Flag Peru

According to the General Banking and Insurance Law, Law No. 26702 ('General Law') and the Insurance Contract Law, Law No. 29946 ('LCS'), the insurers are free to set the conditions of their policies, its rates and other conditions. Notwithstanding the foregoing, the LCS establishes that the minimum requirements that, among others, the policies must contain are the following:

(a) Complete personal data of the insurer and the contractor;

(b) Specification of the insured person, asset or insured benefit;

(c) Risks covered and exclusions;

(d) Date and term;

(e) Declared value, sum assured or scope of coverage;

(f) Franchises and deductibles agreed;

(g) Schedule of installments of the premium;

(h) Official registration of the broker and the commission to be received, if applicable;

(i) In cases of life insurance and personal accidents with death or incidental death coverage, the policy must expressly state that the contract is part of the National Information Registry of Life Insurance Contracts and Personal Accidents with coverage of death or accidental death;

(j) In cases of property damage insurance, the policy must contain the indication of the performance of the contractor if two policies cover the same risk.

The content of the policies has a greater regulation in the matter of personal, compulsory and mass insurance. In these cases, the policies must be subject to the minimum conditions and/or clauses that will be approved by resolution of the Superintendent. Moreover, in said matters, the Superintendence of Banking, Insurance and AFP ('SBS') expressly approves and prior to its application, the minimum conditions and/or clauses of the insurance contracts. In other cases, policies should only be made known to the SBS before use and application.

Likewise, the LCS has a declarative list of prohibited clauses that, if included in the insurance policies, are null and void.

India Small Flag India

All insurance contracts are required to be filed with the Insurance Development and Regulatory Authority of India (IRDAI), ie, the Indian Insurance Regulator, in accordance with the applicable product filing guidelines issued by the IRDAI.

Insurers are permitted to market group health insurance products and commercial general insurance products without the prior approval of the IRDAI, subject to compliance with applicable laws. However, life insurance products, retail general insurance products and individual health insurance products can only be offered if the terms and conditions of these products have been approved by the IRDAI.

Further, there are extraneous rules that impact policy terms. For example, the Insurance Act 1938 gives the policyholder a right to override contrary policy terms in favour of Indian law and jurisdiction, and Indian policyholders cannot be stopped from approaching the Consumer Courts.

Singapore Small Flag Singapore

As the central bank of Singapore, the Monetary Authority of Singapore ('MAS') administers the Insurance Act (Cap. 142 ('IA') and regulates the insurance industry in Singapore. The IA has provisions governing the regulation of insurance business, insurers/ reinsurers, insurance intermediaries as well as related institutions in Singapore. MAS is also responsible for the supervision and regulation of insurance and reinsurance companies, including captives, and insurance and reinsurance brokers.

Brazil Small Flag Brazil

In general terms, and according to consumer protection legislation, all contracts involving consumer relations – including insurance contracts – must be drafted in a clear and precise manner, especially the clauses that may impose limitation on consumer rights. Specifically with regard to insurance contracts, the Law (Decree 73/1966) confers on the regulating and market supervision bodies, respectively, the National Council of Private Insurance (CNSP) and the Superintendence of Private Insurance (SUSEP) the power to establish the general characteristics of insurance contracts and also the policy conditions to be mandatorily used.

Israel Small Flag Israel

The Insurance Contract Law, 1981 (hereinafter: The Contract Law) regulates the content of insurance contracts. In addition, the Commissioner of Insurance issued several regulations which dictate wording of certain private line policies and which refer to condition that should be included or that should not be included in insurance contracts.

In addition According to the Control Over Financial Services (Insurance) Law, 1981 (hereinafter: the Control Law) any new insurance program or any change in the terms of an existing program must be notified in advance to the Commissioner of Insurance. According to the Supervision Over Insurance Business (New Insurance Programs and Changes in Programs) Order, 1981 in several insurance fields (such as life insurance, employers liability insurance etc.), a new insurance program or change in an existing program requires the approval of the Commissioner.

Belgium Small Flag Belgium

The Act of 13 March 2016 on the statute and the supervision of insurance or reinsurance undertakings (‘Supervision Act’) sets out the legal framework for the writing of (re)insurance contracts by (re)insurers. The Supervision Act distinguishes (i) Belgian (re)insurers, (ii) (re)insurers from another EEA member state, and (iii) (re)insurers from third countries. A licence is necessary for every (re)insurer wishing to be active in Belgium, depending on its home country (see question 4 below).

The Insurance Act of 4 April 2014 (‘Insurance Act’) deals with the mediation and distribution of insurances by insurance intermediaries. The Insurance Act sets out three categories of insurance intermediaries which are subject to the Act: (i) insurance brokers, (ii) insurance agents, and (iii) insurance subagents. A registration is necessary for every insurance intermediary wishing to be active in Belgium, depending on its home country (see question 4 below).

France Small Flag France

Writing insurance is thoroughly regulated in France. Insurance companies that write insurance contracts in France operate within a specific legal and regulatory framework, which stems from a number of key legal sources (chief amongst which are the French Insurance Code and the French Mutual Code) and is heavily influenced by European Regulations. This framework regulates all the main aspects of the industry, from the licensing of insurance companies and the prudential and financial requirements to which they are subject to the distribution and content of insurance contracts.

An independent administrative authority called the APCR (Autorité de Contrôle Prudentiel et de Résolution) is responsible for licensing and supervising insurance activities (as well as reinsurance and banking activities). It also issues guidelines, relating to best practice, and can hand down sanctions, in instances where insurance companies have fallen foul of their obligations.

The formation and content of individual insurance contracts are also subject to regulation, namely by way of a body of specific requirements, which are set out in the French Insurance Code and intended to promote transparency and ensure that parties to an insurance contract appreciate the precise nature and extent of the cover provided under the contract and their respective obligations in connection with the said contract. This legal framework inter alia governs:

  • insurers’ duty to provide information and advice to the insured before the execution of contract,
  • the way the risk is disclosed during the underwriting phase (i.e. by way of a questionnaire that is prepared by the insurer and completed by the potential insured), or
  • substantive and formal requirements by which all insurance contracts must abide (for instance, certain types of clauses are mandatory and must be included in all insurance policies, whereas other types of clauses, such as exclusion clauses or warranty forfeiture clauses, are unenforceable unless they meet strict requirements as to their wording or layout).

Canada Small Flag Canada

Canada’s ten provinces and three territories each have authority over the writing of insurance contracts in their respective jurisdictions. All of Canada’s provinces and territories other than the province of Québec follow the Common Law but have each enacted Insurance Acts or equivalent statutes and regulations which prescribe additional local requirements. The principles relating to the writing of insurance contracts in the province of Québec are set forth in the Civil Code of Québec while the activities of insurers in the province are governed by an Act respecting insurance and the distribution of insurance by another statute. Provinces and territories all have statutes and regulations that prescribe rules pertaining to the licensing of insurance companies insuring risks in their jurisdictions.

Ireland Small Flag Ireland

There is no statutory definition of a contract of insurance under Irish law, nor are there specific rules for the formation of an insurance contract beyond the general principles of contract law and the duty of utmost good faith. As a result, the law in relation to insurance contracts in Ireland is primarily governed by common law principles, the origins of which can be found in case law. Irish legislation does not specify the essential legal elements of an insurance contract and the courts have considered it on a case-by-case basis.

The Central Bank of Ireland (the “Central Bank”) is responsible for the prudential regulation of (re)insurance undertakings and intermediaries operating in Ireland. The European Communities (Insurance and Reinsurance) Regulations 2015 (the "2015 Regulations"), which transposed Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 (“Solvency II”) into Irish law, sets out the regulatory framework within which insurance activity may be carried on by (re)insurers in Ireland. The 2015 Regulations received minor amendments by way of the European Union (Insurance and Reinsurance) (Amendment) Regulations 2017 (the “2017 Regulations”).

Generally speaking, the Central Bank has no involvement in supervising the writing of insurance contracts and insurers retain significant freedom of contract. However, the Central Bank may, from time-to-time, request that an insurer provides its general and special policy conditions, scales of premiums and other documents which the insurer uses in its dealing with policy holders. The Central Bank may request such information in respect of an insurance contract in order to verify its compliance with applicable requirements, namely the Unfair Terms in Consumer Contracts Directive 1993/13/EC, the Distance Marketing of Financial Services Directive 2002/65/EC, the Consumer Protection Code 2012 and the Consumer Protection Act 2007. The Sale of Goods and Supply of Services Act 1980 is also applicable to insurance contracts.

In addition, the supervisory role of the Central Bank involves ongoing review and assessment of an undertaking’s corporate governance, risk management and internal control systems for example. The Central Bank is also empowered to conduct regular themed inspections across the industry.

It should be noted that the Central Bank does not require the submission of product documents by insurance undertakings operating in the Irish market.

Spain Small Flag Spain

The writing of insurance in Spain is regulated by various Acts of Parliament: (i) the Ordination
Supervision and Solvency of Insurance and Reinsurance Companies Act 2015 regulates the
activity of insurers and reinsurers and also certain aspects of the insurance contract; (ii) the
Insurance contracts are regulated in the Insurance Contract Act 1980, which is mandatory for all insurance contracts with few exceptions; and (iii) the Insurance and Reinsurance Mediation Act 2006 regulates the activities of insurance brokers, agents and bank-assurance operators.

Insurers writing business in Spain are not under the duty to register its policies with any registry nor to obtain the approval of the General Directorate of Insurance. In this respect, the Ordination Supervision and Solvency of Insurance and Reinsurance Companies Act 2015 provides that all insurance entities shall keep records of policies, premiums tariffs and technical bases in its registered office. However, the General Directorate of Insurance) is entitled to demand submission of this documentation at any time in order to check whether they are in compliance with the Spanish law.

On a separate issue, the Spanish Insurance Contract Act 1980 provides that the general
conditions and the schedule of the policy must be drafted in clear and precise terms.

In addition, pursuant to the Ordination Supervision and Solvency of Insurance and Reinsurance Companies Act 2015, insurers are obliged to provide policyholders with certain pre-contractual information in relation to terms of the prospective policy, details of the insurer, details of the regulator supervising the insurer, internal and external instances to bring claims and complaints, applicable laws and competent jurisdiction, etc.

Portugal Small Flag Portugal

Insurance is a regulated activity which is only accessible to duly authorized insurers. The activity’s main regulation is that approved by Law 147/2015 of 9 September (the “Portuguese Insurance Regulatory Law” or “PIRL”). This statute contains the legal framework for the taking up and pursuit of insurance and reinsurance activities in Portugal and for the most part it is the direct result of the implementation of relevant European directives, most notably the Solvency II Directive.

The writing of insurance contracts is governed by a different regulation: that approved by Decree-Law 72/2008 of 16 April, as amended by Law 147/2015 of 9 September (the “Portuguese Insurance Contract Law” or “PICL”). PICL sets forth general provisions, applicable to all types of insurance contracts, such as (i) contract formation, (ii) information duties of the insurer and the policyholder/insured, (iii) execution of the contract, (iv) payment of insurance premium, (v) coinsurance, (vi) reinsurance, (vii) group insurance, (viii) claims handling, and (ix) termination.

However, the main source of contract law in Portugal is the Portuguese Civil Code, which sets forth many general contractual provisions also applicable to insurance contracts.

The Portuguese insurance regulator is Autoridade de Supervisão de Seguros e Fundos de Pensões, also known by its acronym “ASF”.

Italy Small Flag Italy

The Legislative Decree of 7 September 2005, n. 209 (herein after only the Italian Private insurance Code) makes clear that only public companies, cooperatives and mutual insurance companies or equivalent foreign companies can practice insurance and reinsurance. Foreign insurers based in an EU Member State can write business in Italy directly under the freedom of services principle, in accordance to EU legislation and national implementation rules.

To start their operations any of the above mentioned enterprises, regardless if they are Italian or foreign, shall apply to the IVASS (the Italian Supervisory Agency) for an authorization to underwrite insurance and reinsurance in Italy. A notable exception were the Lloyd’s syndicates that were specially authorized by way of the Industry Ministry Decree 02.07.1986 due to their special historical status. New insurance and/or reinsurance companies wishing to do business in Italy shall seek and obtain IVASS’s authorization order (if the undertaking has its head office in Italy) or by a formal acknowledgment of the certification issued by any other competent EU supervising authority where the company has a registered office. The newly authorized (re)insurance company can start operating only after IVASS’s authorization, or the formal acknowledgment, has been published in the Italian Official Journal.

Updated: August 7, 2018