On 23 March 2017 approval was granted to repeal the controversial restrictions for unit-linked insurances. The Belgian lawmaker deemed that the restrictions would put Belgian insurers at a disadvantage compared with their foreign competitors.
On passing the new law on insurances dated 4 April 2014 (the “Law”), the Belgian lawmaker had incorporated a new, highly controversial, provision regarding the types of asset that can back unit-linked insurances (class 23) proposed to a Belgian resident retail client.
Pursuant to Article 20 of the Law, those investment funds could only be certified UCITS or funds subject to a public offer in Belgium and registered with the Belgian regulator (FSMA), or could only invest in eligible assets (in other words, liquid financial assets), in compliance with policy rules for placement applicable to those funds.
This provision has led to a significant decrease in offers of investment funds and assets that can be pegged to a life insurance. Besides, the Belgian regulator had regarded this provision as being part of the general good provisions applying to foreign insurers active in Belgium.
Following the adoption of the Law, many have voiced their concerns (including the Council of State) with Luxembourg insurers, among others, as to the compatibility of such a provision with European law. In fact, by virtue of the European passporting regime put in place by insurances Directives, foreign insurers must be able to enter the Belgian market without constraints (subject to the general good provisions of the host Member State), while remaining under the sole prudential supervision of the regulator in their home Member State (Home Country Control).
Yet Article 20 of the Law (providing for rules in terms of investment policy restrictions) affected prudential specifics, and the application of such restrictions to foreign insurers had become an issue.
The Belgian lawmaker has made a timely decision to adjust its plans. Although it had initially envisaged to hold on to these restrictions in respect of Belgian insurers only, he ultimately resolved to simply repeal Article 20, or else Belgian insurers would have been at a disadvantage compared with their foreign competitors.
The repeal was approved on 23 March 2017.
Benoît Vandervelde, Counsel, benoit.vandervelde@cms-db.com
