Is authorisation or a licence required and if so, how long does it take on average to obtain such permission?
Insurance & Reinsurance
Engaging in the underwriting of life insurance and non-life insurance entails obtaining from the regulatory authorities a life insurance business licence and a non-life insurance business licence, respectively. The FSA endeavors to complete its review of license application procedures within 120 days after a license application reaches to the FAS (which is a standard processing period under Article 246 of the Order for the Enforcement of the Insurance Business Act). An insurers who lay out a plan for obtaining a license, however, cannot normally rely on this standard processing time, first, because it only obligates the FSA to make an effort to meet that deadline, and second, because their negotiations with the FSA begin by an exchange of drafts preceding in the formal filling of documents for the license application – in fact, it is common that no formal documents for the license application are filed before obtaining an acknowledgement from the FSA.
All insurers in Australia must obtain both an authorisation from APRA and an AFSL from ASIC in order to conduct insurance business.
On average, it takes ASIC four weeks to grant an AFSL, while APRA can require between three and 12 months to finalise an insurance authorisation. Applications must be accompanied by a fee of AUD 1,588 for ASIC and AUD 80,000 for APRA.
For intermediaries that require an AFSL from ASIC, the same timeframe and fees apply.
According to Section 11(1) of the Danish Financial Business Act, undertakings which carry out insurance activities, including reinsurance activities, in Denmark, shall be licensed by the DFSA as insurance or reinsurance company. Insurers established in other EEA countries may generally passport their license through their home country regulator, whereas insurers from non-EEA countries may generally not. Accordingly, non-EEA insurers are generally required to set up an insurance company or establish a branch in Denmark and obtain a license to be able to carry out insurance activities in Denmark.
To obtain a license, a detailed application must be filed with the DFSA, detailing capital, financial forecasts, etc. How long it takes to obtain a license depends on the specific circumstances, but 3-4 months on average is probably a fair rule of thumb.
The conducting of insurance and reinsurance activity requires a licence issued by the KNF. The process of establishing an insurance and/or reinsurance company and the licensing procedure are regulated by the Insurance Law. The licensing procedure (i.e. the process from the moment of filing of an application to the KNF until a decision is issued by it) takes approximately from 6 to 12 months. The whole process of establishing an insurance and/or reinsurance company, the licensing procedure and final registration of the insurance and/or reinsurance company by the registry court takes approximately from 1 to 2 years.
Both under the Insurance Intermediation Law currently in force and the new Insurance Distribution Law, agents and individuals who perform agency activities for the agent, must be entered in the register of insurance agents maintained by the KNF, which is preceded by formalised examinations. This process (the examinations and registration) takes a few weeks.
Insurance brokers must obtain a licence issued by the KNF. Insurance brokers and individuals who perform brokerage activities for the broker, must be entered in the register of insurance brokers maintained by the KNF. Similarly, as in the case of agents, it is preceded by formalised examinations. This process (the examinations and licensing) takes from a few weeks to a few months.
The Undersecretariat is the regulatory and supervisory and body dealing with the insurance and reinsurance activities in Turkey.
Companies intending to operate as insurance or reinsurance companies must obtain a license from the Undersecretariat within one year following their incorporation. A company failing to apply for a license within such period would not be able to use “insurance” or “reinsurance” in their titles. Insurance companies can only operate either in life insurance or non-life insurances. Reinsurance companies are not subject to this restriction.
Obtaining license for the first time and when the application and documents provided are in order would take around 3 months. Period for renewals of existing licenses could be limited with 2 months.
Undertakings cannot carry on (re)insurance business in Ireland without authorisation from the Central Bank or from another recognised EU regulator through the ‘single passport’ regime.
On applying for authorisation, an applicant will typically meet with Central Bank representatives on a number of occasions. In the first instance, the applicant will have a preliminary meeting with the Authorisations Team of the Central Bank. Thereafter, the application proceeds through the submission of a detailed business plan to the Central Bank. The Central Bank will take a number of months to review the application. During the review process, it will typically request additional information and documentation and is likely to have comments on certain features of the application for authorisation. The Central Bank may seek additional meetings with the applicant as part of this process in order to discuss aspects of the proposal in further detail.
The Central Bank has a statutory six month time period within which to consider a fully completed application for authorisation as an insurance undertaking. Once an undertaking is authorised by the Central Bank it is licensed to carry on insurance or reinsurance activity across the EEA. The Central Bank does not currently charge a fee for licence applications.
A reinsurance provider can establish a special purpose reinsurance vehicle, which provides a quicker and simpler route to authorisation and reduces the extent of supervision by the Central Bank as compared with fully regulated reinsurers.
Permission must be sought from the PRA to carry on insurance business in the UK, i.e. to effect or carry out a contract of insurance) and from the FCA to act as an insurance intermediary. In either case ‘Part 4A permission’ authorisation application must be made and the relevant Regulator must make a decision on complete application within 6 months. If permission is granted, then the firm will receive a ‘Scope of Permission’ notice which will state the regulated activities that the firm has permission to carry out, when the permission starts and any requirements or limitations that the firm may be subject to.
Authorised firms appear on a publicly searchable Financial Services Register which shows which permissions they have been granted in relation to regulated activities.
All insurers who carry out insurance activities in Sweden must be authorised by the FSA, except for EEA insurers operating on the basis of authorisations obtained in their country of domicile.
To obtain authorisation, an insurance company’s application must include detailed information about the applicant, its ownership and control, Articles of Association, organisation description, business plan, capital base, its central functions, such as actuary, compliance and risk management, as well as insurance technical guidelines regarding debt coverage, money laundering, executive pay, and investment guidelines.
The FSA deals with authorisation applications within five months of receipt. If requested, the FSA may also give an advance ruling on whether or not the particular business is subject to authorisation. Such advance ruling is binding for the FSA and may be appealed by the applicant to the administrative courts.
All insurance intermediaries, except tied insurance intermediaries, must also be authorised by the FSA. To obtain authorisation, an intermediary’s application must, inter alia, include detailed information about the legal or physical person applying for authorisation as insurance intermediary and, if applicable, its management personnel and employees. The information that shall be provided shall, inter alia, include details about financial strength and appropriateness as well as an assurance that all relevant persons have sufficient experience and knowledge for their respective positions.
With the entering into force of the new Insurance Distribution Act on 1 October 2018, no major changes to the authorisation and license requirements above are proposed. However, under the Insurance Distribution Act, only tied insurance intermediaries distributing non-life insurance products will be exempt from the authorisation requirement.
In order to carry on (re-)insurance business, an undertaking has to obtain authorisation from BaFin pursuant to Section 8 VAG. Section 9 VAG requires an undertaking to attach an operating plan to its application, disclose the purpose and structure of the business, the region in which business is to be conducted and clearly state the conditions under which the future liabilities of the undertaking are guaranteed. The operating plan has to include, inter alia, the articles of association as well as information about the classes of insurance the undertaking intends to carry on and which risks it intends to cover. Moreover, the operating plan must give evidence of the existence of own funds in the amount of the minimum guarantee fund and provide estimates for the first three financial years of commission expenses and other current operating expenses, expected premiums, the expected expenses for claims incurred and the expected liquidity situation.
If the undertaking has already obtained authorisation to carry on insurance business in another EU/EEA country, the authorisation will be valid in Germany as well as in all other EU/EEA states under the single license regime. After going through a so-called notification procedure, an undertaking may carry on insurance business outside its home country through branches or through cross-border provision of services.
As a general rule, primary insurers and reinsurers from third countries, i.e. countries that are not Member States of the EU/EEA, wishing to carry on insurance or reinsurance business in Germany need to obtain authorisation from BaFin and establish a German branch office. The requirements for the authorisation application and the establishment of a branch office are predominantly based on Sections 68 and 69 VAG.
Norwegian insurance legislation does not grant personal licenses and instead the insurance undertaking itself must be authorised. An insurance license is granted for one or more classes of insurance, as defined in the regulation on separation in insurance classes (based on Directive 73/239/EEC on direct insurance):
- Life insurance.
- Non-life insurance
- Guarantee insurance.
The Ministry of Finance grants authorizations to conduct insurance activities in Norway, with the FSAN as the preparatory body. An application must include:
- A business plan for the company's first three years of operation
- An overview of the insurances to be offered by the company.
- Details of the company's capital.
- A budget for establishment and administration expenses.
- Details of the principles to be applied for calculating premiums.
- Details for the plan regarding reinsurance arrangements.
- A forecast of financial position after three years' operation.
In practice, the FSAN requires far more detailed analyses from the applicant's side, not least with respect to solvency capital, capital adequacy, actuarial and organizational matters. The level of detail depends on the complexity of the applicant's planned product range, that is, if it will offer conventional insurance products or more complex products such as various longevity products, defined benefit products and so on.
The application must also be accompanied by particular documentation, including the company's articles of association, certified copies of the company's memorandum of association and minutes of the first general meeting.
Provided that the applicant provides all required documentation, the permission shall as a main rule be granted within 6 months.
An insurance license may be revoked in the event of certain irregularities, including irregularities relating to the company's management or if the company no longer has an adequate financial basis.
Insurance and reinsurance companies that are established in the EEA can operate in Norway on a right of establishment or freedom of services basis under the applicable EU insurance directives. Norwegian branches of such foreign companies can commence their activities two months after the FSAN has received a notification from the home state regulator of the foreign insurance company. An EEA-based insurer or reinsurer who wants to operate on a freedom of services basis can commence its activities in Norway once the company has received confirmation from its home state regulator that the latter has filed the notification of the insurer's intention of providing cross border activities in Norway with the FSAN.
Non-EEA based insurance/reinsurance companies can also establish a branch in Norway, provided that the FSAN has entered into an agreement on supervisory activities with the home state regulator of the foreign insurance company. Non-EEA based insurance/reinsurance companies must apply the Ministry of Finance for a license to conduct insurance activities, and cannot make use of a simplified notification procedure.
Pursuant to the LISF, to incorporate and operate an insurance company in Mexico, an authorization shall be filed with the CNSF. The application must comply with the requirements set out in Article 41 of the LISF and the Circular. The CNSF has discretional authority to grant the authorization or to deny it.
As a general rule, the process to obtain the license to incorporate a new insurance company takes between nine and twelve months from the date of the filing of a complete application; and an additional four months to initiate operations after the respective incorporation.
Under the LISF, both Mexican reinsurance companies and foreign reinsurance companies may cede risks to and take risks from Mexican insurance companies in reinsurance. In the case of foreign reinsurance companies, these must be registered with the General Foreign Reinsurance Registry to take Reinsurance and Rebonding in the Country (“RGRE”) to cede or take risks in reinsurance from and with Mexican insurance companies. In order to register with the RGRE, an application must be submitted with the CNSF. The CNSF may grant or deny such registration on a discretionary basis. The application must contain, among others, the rating granted by an authorized rating agency that complies with the minimum ratings requirements provided by the Circular.
It is mandatory for those who intend to engage in any insurance related activity in the UAE (other than reinsurance) to apply for and obtain a license from the IA. There are also other regulatory steps that must be taken before the entity is fully licensed to carry on its activities, including obtaining a commercial license from the Emirate in which it is located. Those companies offering medical insurance products will also require a permit from HAAD and/or DHA, depending on if they operate in Abu Dhabi or Dubai.
In practice, the IA is not presently granting any new insurance company licenses, for the reasons discussed in Query 19 below.
With regard to brokers, as per IA Regulation No. 15 of 2013, the IA will consider the license application and make its determination within twenty working days from submission. For agents, the assessment period is fifteen days, as per IA Regulation No. 8 of 2011, and for loss adjusters and surveyors the assessment period is thirty days, as per IA Regulation No. 6 of 2010; however, the stated periods only account for the assessment of the license application and do not guarantee final approval within these timeframes.
In practice, the actual timeframes needed to obtain a license are measured in months, and will depend upon the quality of the application and whether the initial application contained all of the required elements. Because obtaining final operational authority for all of the relevant ministries and other regulators involves multiple steps that may need to be taken in serial, a delay in obtaining one document will create a delay in the processing of the entire application. An example of this can be found, infra, at Query 13. It is not uncommon for a broker or TPA license to take between 8 and 12 months, or greater, to be approved by all of the regulators to whom application must be made.
In the DIFC, approval is needed from its financial services regulator - the Dubai Financial Services Authority (DFSA) - before a license is granted. This can take from between 3 and 6 months for a broker or TPA license. A license to issue reinsurance is more complex and will likely take longer.
Licenses for insurance brokers and agents are required, and the time to obtain them depends on the licensing requirements of each state in which the broker or agent seeks a license. For example, many states’ pre-licensing educational requirements include a minimum number of hours of coursework depending upon the line of business; e.g., New York State requires at least 40 hours of coursework prior to issuing a life, accident and health insurance license.
Other issues impacting the length of time to obtain a license include the completion of background checks and obtaining prior approval of any trade name used for licensees’ businesses. In instances where a person is licensed as an insurance agent or broker in the state of their home residence, they may apply for the same types of licenses in other states without having to complete any of the pre-licensing coursework, examinations or background checks.
Many states have streamlined the application process by allowing for the submission of online applications.
Both insurance brokers and agents need to be qualified in accordance with the GewO, such qualifications being publicly available via the Austrian Insurance Intermediary Register. In particular, brokers and agents need to pass a qualification examination to be permitted to market and promote insurance contracts. The timeframe for obtaining a licence depends on the individual’s prior knowledge. In total, three examinations have to be undertaken, which deal with legal and entrepreneurial issues as well as the specifics of particular insurance sectors. The subjects of the exams to be taken by aspiring insurance brokers differ from the corresponding versions for future insurance agents.
Similarly, insurance companies must make use of qualified employees or draw on the services of brokers and agents when brokering insurance products to clients.
With regards to the licensing requirements for insurance and reinsurance undertakings, only insurers that have been authorised by the Financial Market Authority (Finanzmarktaufsicht; FMA) are permitted to undertake insurance business (cf. Question 6).
Insurance and reinsurance companies can legally exist with the regulator’s authorization. For that purpose, it is necessary to make a complete presentation of a Project of Formation, which shall include:
- Identity of its shareholders and controllers.
- Lack of legal incompatibilities regarding shareholders, controllers, members of the board and main managers.
- Evidence of an equity not lower than the legal capital required.
- Antecedents regarding management, business plan, risk management systems, and transactions with related parties.
On average it takes 6 months to obtain the regulator’s approval.
Taking up insurance business in or from Switzerland is subject to authorisation by the FINMA (see question 1 above). In the course of the application a business plan of the insurance company must be submitted to FINMA. The business plan consists of the following information and documents:
- Organisation and local area of activity including, where applicable, the group or conglomerate of insurance companies the companies belongs to
- If activity abroad is envisaged: authorisation or equivalent by the foreign supervisory authority
- Information on capital and reserves
- Balance sheets of the last 3 business years or opening account
- Information on persons holding at least 10 per cent of the share capital in the insurance company or who can influence the company by other means
- Information (including names and CVs) on the persons who are in the senior management and those who are in charge with the supervision and control of the senior management
- Name (including CV) of the appointed actuary
- Agreements by which essential functions of the insurance company shall be outsourced
- Envisaged classes of insurance and kind of risks to be covered
- Where applicable: membership in the national insurance burau and national guarantee fund.
- Where authorisation for assistance is applied for: information on means to perform assistance benefits
- Reinsurance plan and retrocession plan for active reinsurance
- Estimated costs for the set-up of the insurance company
- Budgeted balance sheets and budgeted profit and loss accounts for the first 3 years
- Information on risk management
- In case of life insurance in connection with occupational schemes and in supplemental health insurance: Tariffs and general terms and conditions.
The duration of the licensing process depends on various issues, including the quality and completeness of the documents submitted to the FINMA, the complexity of the envisaged business, whether authorisation is sought for a newly established insurance company with its seat in Switzerland or for a branch of an EU based insurance company (the latter profit from some a certain liberalisation) communication with FINMA and, last but not least FINMA’s workload.
On average, once the documentation has been completed and lodged, one should expect that it may take between 3 and 6 months before a licence is granted.
All the activities of the insurance system require an enabling title, called 'operation license'. In the case of insurance intermediaries, the SBS manages a registry by virtue of which the services of the branches of insurance are specified for each insurance company.
Obtaining an Operating License to provide insurance services can take between 8 and 12 months.
For insurance brokers, the average term to obtain its registration before the SBS is approximately 12 months for natural persons and 04 for legal persons. For reinsurance brokers, the average term to obtain the registration is approximately 04 months.
Yes, all insurers, insurance intermediaries, Indian reinsurers, Branch Offices of Foreign Reinsurers and syndicates of reinsurers operating through service companies set up under the Lloyd’s India branch, are required to be registered in accordance with the applicable regulations issued by the IRDAI.
Broadly, for most of these entities the registration process is divided into stages. The timelines for obtaining registration are not expressly specified under the applicable regulations and therefore, vary on a case to case basis and depending on the form of entity being registered.
Insurance brokers are required to obtain an insurance broker license from the MAS, pursuant to the IA. Banks, financial advisers, direct life insurers, capital market service providers licensed under the relevant governing Acts are, however, exempted from this requirement.
Applicants may be registered as:-
- A direct insurance broker;
- A general reinsurance broker;
- A life reinsurance broker; or
- An insurance broker to carry out any combination of the above.
In order for this licence to be granted, potential applicants must also satisfy a number of criteria, including minimum financial requirements, management expertise, track record and the adequacy of internal compliance systems and processes.
All potential applicants must submit their application in a prescribed form to the MAS. MAS takes approximately 4 months to process and approve a registration application.
SUSEP authorization is required to act as an insurer or reinsurer in the Brazilian market. SUSEP makes extensive analysis of the authorization request, taking into account the capacity and suitability of the controlling group. SUSEP cannot deny the request if all legal and regulatory requirements are met. This analysis takes on average six months in ordinary circumstances. Insurance brokers must obtain a license from SUSEP, after they have passed a qualifying examination.
According to the Control Law the broker must pass examinations in order to receive a license. After passing the exams, he must work for 2 years at the office of an authorized broker in order to be qualified as a licensed broker.
With respect to (re)insurers, a licence is necessary for every insurer or reinsurer wishing to be active in Belgium, depending on its home country: (1) Belgian (re)insurers must be licensed in Belgium prior to starting their activity (Article 17 of the Supervision Act ), (2) (re)insurers from another EEA member state may be active in Belgium either through a Belgian branch or through the freedom to provide services (Articles 550 and 556 of the Supervision Act), after having passported in Belgium the licence obtained in their home EEA country, or (3) (re)insurers outside the EEA must be licensed in Belgium (Article 584 of the Supervision Act).
After the completion of a file which complies with the relevant legal provisions, the process of obtaining a licence granted by the NBB may take around 2.5 or 3 months.
With respect to (re)insurance intermediaries, Article 262 of the Insurance Act states that registration is necessary for every insurance intermediary wishing to be active in Belgium, depending on its home country: (1) Belgian insurance intermediaries must be registered on the list of insurance intermediaries kept by the FSMA prior to starting their activity, (2) (re)insurance intermediaries from another EEA member state may be active in Belgium either through a Belgian branch or through the freedom to provide services after having passported in Belgium the registration obtained in their home EEA country, or (3) (re)insurance intermediaries from third countries must be registered with the FSMA prior to starting their activities in Belgium.
The FSMA has a period of 60 days after receipt of the future (re)insurance intermediary’s complete file to decide on the registration.
Insurance companies need to have a license in order to underwrite insurance related to risks situated in France. Licenses are not general, but granted for specific classes of insurance activities, which are listed in article R.321-1 of the French Insurance Code.
Reinsurers also need to have a license to carry out reinsurance and related activities in France but, unlike insurers, reinsurers can write both life and non-life business.
The French insurance regulatory body, the ACPR, is responsible for reviewing applications and granting licenses. When electing whether to grant licenses, the ACPR takes the following criteria into account:
- the technical and financial resources of the company,
- the honorability, expertise and experience of the individuals responsible for the firm’s management,
- the shareholders and capital structure, and
- the Minimum Capital Requirement (MCR) and Solvency Capital Requirement (SCR) required by the Solvency II Regulation.
The ACPR has six months to communicate its answer to the applicant. If no answer is provided at the end of this six-month period, the license is deemed to have been granted. In the event of a refusal from the ACPR, the applicant can lodge an appeal before the French supreme administrative court (“Conseil d’Etat”) within the two months following the refusal’s notification.
Insurers based in other EU Member States can operate in France thanks to the European passporting mechanism, pursuant to the freedom of establishment and freedom of services EU regulations, which have been implemented in France.
To operate in France, insurers situated outside the European Union will usually need to obtain a general authorisation from the ACPR, as well as a special approval for a general representative to be based in France.
A foreign insurer needs to obtain the approval of the Federal Minister of Finance and OSFI before commencing to insure risks in Canada, a process which may take twelve months or more. After that, provincial licensing of an insurer is a matter of two to four months on average. Licensing of intermediaries is exclusively provincial and takes about two to three months on average.
Yes. Basically, there three options for an insurer to write business in Spain, which are:
- Setting up a Spanish limited company, i.e. the full incorporation of a new Spanish company. This means the need to comply with all the legal and capacity requirements in accordance with the Spanish Law, not only from the insurance but also from the corporate point of view. Once the Spanish company is fully incorporated, the Ministry of Economic must grant the license to write insurance business in Spain.
- Setting up a branch of a EU insurance company. Under the relevant EU Directives, this is the freedom of establishment. Opening a branch means that tan EU Insurer has a permanent presence in Spain. The branch shares the legal personality of the Insurer, its assets and structure. Even, the directors of the Insurer are the directors of the branch. This requires the filing of an application with the regulator of the member State and a procedure of notification from the regulator of the member State to the Spanish regulator, rather than approval by the Spanish regulator.
- Writing business from EU insurance company on freedom of services basis, which means the direct writing of insurance in Spain from a EU member state without any permanent presence in Spain. This also requires an application with the regulator of the member State and a procedure of notification from the regulator of the member State to the Spanish regulator, rather than approval by the Spanish regulator.
With regards to timelines to get the relevant license/authorization, please note that if a
local/Spanish entity applies for a new license (in which case the law provides for a 6 month term – but experience tells it can take more- for the Spanish Insurance Regulator to issue a resolution as from the date when the application and documents required was submitted). In case of EU companies operating either on a FOE or FOS basis in Spain, this is a formality to be dealt with by the company with its Home State Regulator (single license principle) and, in our experience, registration in Spain is normally granted within one month as from the date when such application was first submitted.
In order for insurance and reinsurance undertakings to operate in Portugal, they must apply for a license. For such purpose, the entities must comply with the requirements provided for in PIRL. Insurance intermediaries are also required to apply for a license in order to operate in Portugal.
Insurance or reinsurance undertakings as well as insurance intermediaries based in another EU member state may also pursue their activities in Portugal under the freedom of establishment principle, by setting up a branch in Portugal, or even without one, under the freedom to provide services principle. In accordance with the principle of freedom to provide services, it is not required for an insurance or reinsurance undertaking or an intermediary to have a physical presence in Portugal so as to write insurance policies in Portugal.
In order to incorporate an insurance or reinsurance undertaking in Portugal, an application must be submitted to ASF. Under article 56 of PIRL, ASF’s decision must be notified to the applicant within 6 months. However, there might be a need to complement or clarify the information initially provided, in which case the authorisation process may take up to 12 months. The same timeframe is applicable to the authorization request to establish a branch in Portugal of an entity incorporated in a third country, i.e., countries that are not member states of the EU.
For the purposes of an insurance or reinsurance undertaking (duly licensed in a EU member state) operating in Portugal, the supervisory authority of the relevant member state must communicate to ASF the intention of the undertaking to operate in Portugal. ASF must, within 2 months, reply to the communication setting forth the conditions under which such entity may exercise its activity in Portugal.