News Update Financial Regulatory

In September 2022, the European Court of Justice formulated criteria for determining when group insurance involves mediation. The Dutch Authority for the Financial Markets (Autoriteit Financiële Markten, AFM) recently published its interpretation (in Dutch) of this judgment.

Group insurance mediation

A group insurance policy is an insurance contract concluded between a policyholder and an insurer under which one or more third parties can join the policy as insured persons or are more or less automatically to be considered insured persons.

The European Court's judgment indicates that group insurance involves mediation, and therefore a licence requirement, if the following two cumulative conditions are met:

• There is freedom of choice; and
• Remuneration is received.
  
  

Freedom of choice

According to the AFM, there is no freedom of choice if the following cumulative conditions are met:

• No choice between different types of cover;
• No choice between insured amounts;
• No choice between different policies; and
• No choice between different providers or insurers.
  
  

If all these conditions are met and the policyholder does not play an advisory role, the policyholder does not qualify as an intermediary subject to a licence requirement.

The AFM states that the rules on cross-selling will continue to apply in full, referring to this end to its Cross-Selling Factsheet. The AFM's current policy is that insurance under which the seller of the good or the provider of the service is the policyholder does not involve cross-selling.

If, however, there is freedom of choice, the AFM believes that mediation could be involved. This will depend on whether the policyholder receives any remuneration. 

Choice and remuneration

The AFM believes that remuneration is received if the policyholder obtains a financial advantage. Passing on the premiums and the administrative and other fees is not regarded as remuneration. According to the AFM, offering the group insurance as a service without any financial advantage also means that no remuneration is received.

If there are options to choose from and the policyholder receives remuneration, the AFM believes that this constitutes mediation and therefore creates a licence requirement, unless an exemption can be opted for. The AFM is giving parties until 1 October 2025 to meet any applicable licence requirement.

Remuneration but no choice

A situation in which remuneration is received but no freedom of choice is offered does not create a licence requirement for the policyholder under the group insurance. The AFM indicates that this is not a desirable situation. The consequences that the AFM attaches to automatic insurance with remuneration are not clear from the publication.

Practical implications of the AFM's interpretation

Market participants acting as policyholders under a group insurance policy, such as platforms, retailers and car rental companies, will more readily qualify as intermediaries subject to a licence requirement under this interpretation. They will have to verify if their activities qualify as mediation and, if so, whether they can apply for any exemption. If their group insurance activities require a licence and no exemption or exception applies, these parties will need to have this licence by 1 October 2025.

Are you a market participant that uses group insurance and would you like to know how the AFM's interpretation will affect your company? Our experts Berry van Wijk and Gijs Hamelijnck will be happy to advise you.