PORTUGAL Law and Practice Contributed by: Leonor Futscher de Deus, Broseta Abogados, SLP
Exemption regarding reinsurance Undertakings from third countries that carry on rein- surance business in Portugal without a branch may benefit from an authorisation exemption, as long as the European Commission decides that the solvency regime in said third country is equivalent to that laid down in the Solvency II Directive. Insurers with a head office in Switzerland The establishment of branches of insurers with a head office in Switzerland that intend to pursue non-life insurance business is subject to authorisation from the ASF and compliance with a special regime under the Insurance Activity Law. Brexit Insurers based in the UK stopped benefiting from the EU passport from 31 December 2020 and became third-country undertakings. In order to be able to take up and pursue business in Portugal, they are required to establish a branch therein, in accordance with the requirements laid down in the Insurance Activity Law. Nonetheless, policies (covering risks situated in Por- tugal or regarding which Portugal is the member state of the commitment) that were concluded with a UK-based undertaking under a licence to conduct insurance business in Portugal before the end of the transitional period provided for in the Brexit Agree- ment remain valid until the policy’s termination date, without prejudice to early termination under general terms. Undertakings must report annually to the ASF by email ‒ up to 31 March ‒ updated information on said policies until run-off, in accordance with the tem- plate provided under Decree-Law No 106/2020, dated 23 December 2020. 3.2 Fronting Fronting is permitted. Portuguese law does not stip- ulate many rules regarding reinsurance, leaving the contents of the reinsurance agreement and the por- tion/identification of the risks that are transferred to the reinsurer at the parties’ will, depending on the specific arrangements between them. For all matters not specifically stated under the reinsurance agree- ment, the Insurance Contract Law will subsidiarily apply insofar as it does not conflict with any agreed arrangements.
• Undertakes to cover the solvency capital require- ment and the minimum capital requirement in accordance with the applicable requirements. • In the event it intends to cover motor vehicle liability other than the carrier’s liability, appoints in each member state a claims representative respon- sible for handling and settling claims in the victim’s country with regard to claims occurring in a mem- ber state other than the one in which the victim resides. • Submits an operations scheme in accordance with the Insurance Activity Law’s requirements. • Fulfils the governance requirements laid down in the Insurance Activity Law. The branch will be authorised to pursue the risk class- es and modalities for which the undertaking is author- ised in the state where it is established. Life insurance and non-life insurance cannot be pursued simultane- ously, unless the undertaking is authorised to such effect and each activity is managed separately. The application to the ASF must comply with the criteria laid down in the Insurance Activity Law. The undertaking must file a reasoned report as to why it intends to establish a branch in Portugal, including information about its international business, financial statements and accounts regarding the past three tax years, and a certificate from the home country super- visor attesting that the undertaking is duly incorpo- rated and operates in accordance with the applicable law. The ASF may require additional information or ask the applicant to correct any insufficiencies. The ASF will grant (or decline) authorisation within six months after receiving the application or, where appli- cable, after receiving any additional information from the applicant – although never more than 12 months after the date the application was initially filed. The lack of notification from the ASF within the relevant deadlines will be deemed a tacit denial. The authori- sation will expire in the event the branch is not incor- porated within six months or does not start its activity within 12 months following the date the authorisation was granted.
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