BELGIUM Law and Practice Contributed by: Joan Carette, Philippe De Prez and Thomas Derval, Simont Braun
9. Regtech 9.1 Regulation of Regtech Providers
of 13 March 2016 on the status and control of insur - ance and reinsurance companies (Law of Control). In practice, insurtechs most often act as distributors or business introducers. Insurtechs as Distributors When they act as distributors, insurtechs need to be registered as insurance intermediaries with the FSMA. The regulations applicable to insurance intermediaries are mainly centralised in the Law of 4 April 2014 relat - Mere business introducers do not need any licence or registration but must carefully design their busi - ness model as they can provide only strictly limited services, thereby reducing their potential added value. Additional Rules and Obligations ing to insurances (Insurance Law). Insurtechs as Business Introducers Whichever distribution and operation structure they opt for, insurtechs will need to comply with the rules of conduct contained in the Insurance Law, as well as the circulars and recommendations issued by the NBB and the FSMA. Furthermore, the provision of online services, as well as B2C provision of services, leads to the application of additional obligations, mostly organised by the CEL. 8.2 Treatment of Different Types of Insurance In addition to general common principles, each type of insurance (life, annuities, property, etc) is subject to its own set of regulations under the Insurance Law. Industry players often tend to specialise in one or more specific markets; at the very least, they tend to focus on either life or non-life products. As a matter of fact, the Law of Control prohibits the provision of both life and non-life services to insurance companies (Article 222). Investment and savings life insurance products are among the most regulated products. Their distribution leads to the application of strict diligence obligations (appropriateness and suitability tests).
Regtech providers are not specifically regulated (except for eID and trust service providers, which are regulated by the eIDAS Regulation). However, as they serve industry participants with products/services facilitating compliance with prudential regulations (eg, EU Directive 2009/138/EC of 25 November 2009 on the taking-up and pursuit of the business of Insur - ance and Reinsurance (Solvency II) or the CRR) or rules of conduct (eg, MiFID II, Directive (EU) 2016/97 of 20 January 2016 on insurance distribution, PSD2 and AMLD5), regtechs need to have a comprehensive understanding of these regulations. Regtechs are also indirectly subject to DORA, which requires regulated entities to impose specific obliga - tions on their ICT service providers. In addition, some regtech providers may directly fall under the scope of DORA as CTPPs. 9.2 Contractual Terms to Ensure Performance and Accuracy Contractual Arrangements Contractual arrangements between regtech provid - ers and regulated entities are not regulated per se. However, services offered by regtech providers often fall within the scope of the notion of “outsourcing” or “ICT services”, triggering specific obligations for regulated entities, including specific mandatory provi - sions in the agreement between the regtech and the regulated entity (eg, terms to assure performance and accuracy). Obligations Imposed on Regtech Service Providers Regtech service providers are not themselves subject to any regulatory obligation. However, under the out - sourcing rules and DORA requirements, before enter - ing into outsourcing arrangements or arrangements with ICT service providers, regulated entities must conduct thorough due diligence on the service provid - ers to ensure their suitability. Furthermore, regulated entities are required to impose multiple contractual obligations on regtech providers, such as agreed ser - vice levels, reporting obligations, continuity plans, ter - mination assistance and audit obligations. The audit clause generally allows regulated entities as well as
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