Belgian Regulator Reminder Regarding the Use of Third Parties by Insurance Intermediaries

The Belgian regulator (FSMA) has just published a warning following findings of irregularities in the insurance distribution sector. The FSMA reiterates that any use of a non-employee to carry out distribution activities is prohibited if that third party does not itself hold a duly valid licence.

For various reasons, insurance intermediaries may wish to work with third parties to support them in their insurance distribution activities. In some cases, those third parties have a network of clients or prospects that they are willing to refer to a particular intermediary. Referral activity (“business introduction”) may be exempt from FSMA authorisation, but only under very restrictive conditions. If the introducer wishes to be involved in the commercial relationship, participate in the structuring of policies, the signing of contracts or follow the claims handling, and/or receive ongoing remuneration, it cannot benefit from that exemption.

We understand that the FSMA has identified various instances of non-compliance among several intermediaries. In some cases, these external persons were included in the regulatory file as the intermediary’s “persons in contact with the public,” even though that status is reserved for the intermediary’s employees.

It can be said that the FSMA has “blown the whistle on playtime” for these borderline structures. The FSMA recalls that this type of external collaboration requires the third party to hold a specific authorisation (in principle as a “sub-agent”), and that intermediaries must ensure that such authorisation exists before entering into a relationship with third parties.

Sanctions should be expected for offenders, and persons who submit an authorisation application in order to regularise their situation might fail their “fit & proper” test.