Insurance and reinsurance in Spain: overview

A Q&A guide to insurance and reinsurance law in Spain.

The Q&A gives a high level overview of the market trends and regulatory framework in the insurance and reinsurance market; the definitions for a contract of insurance and a contract of reinsurance; the regulation of insurance and reinsurance contracts; the forms of corporate organisation an insurer can take; and the regulation of insurers and reinsurers, including regulation of the transfer of risk. It also covers: operating restrictions for insurance and reinsurance entities; reinsurance monitoring and disclosure requirements; content requirements for policies and implied terms; insurance and reinsurance claims; remedies; insolvency of insurance and reinsurance providers; taxation; dispute resolution; and proposals for reform. Finally, it provides websites and brief details for the main insurance/reinsurance trade organisations in Spain.

To compare answers across multiple jurisdictions visit the Insurance and reinsurance Country Q&A tool.

This Q&A is part of the global guide to insurance and reinsurance. For a full list of jurisdictional Q&As visit www.practicallaw.com/insurance-guide.

Contents

Market trends and regulatory framework

1. What were the main trends in the insurance and reinsurance markets over the last 12 months?

Insurance

The following important current market trends can be highlighted:

  • There have been many alliances between insurers and saving banks under which the saving bank sells a part of the shares it holds in its own insurer to an insurer, resulting in important joint ventures. These arrangements allow the savings bank to obtain cash and maximise the use of its insurance business, and the insurer to offer its products to a wider range of clients (due to the savings bank's network).

  • The Insurance Authority (Dirección General de Seguros y Fondos de Pensiones) (DGSFP) has announced its intention to implement the Directive 2009/138/EC on the taking-up and pursuit of the business of insurance and reinsurance (Solvency II Directive) through a new Act on the Regulation and Supervision of Private Insurance Activity, which will replace the current Consolidated Act on the Regulation and Supervision of Private Insurance Activity approved by Legislative Royal Decree 6/2004 dated 29 October (Texto Refundido de la Ley de Ordenación y Supervisión de los Seguros Privados) (TRLOSSP). The implementation of the Solvency II Directive requires the modification of nearly all the articles of the TRLOSSP. The main changes affect the:

    • capital requirements, in particular solvency and minimum capital requirements, and capital add-ons;

    • governance system (including the risk management, compliance, internal audit and actuarial functions); and

    • supervision of insurance groups.

  • The main concern is the possible effects that the implementation of the Directive may have on the insurance market, which is shared by many small insurers (there are more than 300 insurers on the market). Specifically, many smaller insurers may disappear if they are unable to meet the capital and solvency requirements.

Reinsurance

In the last 12 months, several Spanish insurers have been involved in value-in-force (VIF) transactions, under which an insurer monetises the VIF of its individual life risk portfolio and sells it to a reinsurer. A VIF transaction is structured through a quota share reinsurance treaty whereby the cedant (insurer) cedes the defined book to the reinsurer in exchange of an upfront reinsurance commission that reflects the assessment of the future profits expected to arise from the defined book of business.

 
2. What is the regulatory framework for insurance/reinsurance activities?

Regulatory framework

Spain's regulatory framework is largely based on EU Directives. However, the government still plays an important role in the regulation of insurance and reinsurance activities. In particular, regarding insurance mediation, the government has adopted an interventionist approach which involves interpreting EU legislation in a way that does not always reflect the text of EU directives (through "gold-plating'' techniques).

The rules for the regulation of the insurance sector are mainly contained in the:

  • Consolidated Act on the Regulation and Supervision of Private Insurance Activity approved by Legislative Royal Decree 6/2004 dated 29 October (Texto Refundido de la Ley de Ordenación y Supervisión de los Seguros Privados) (TRLOSSP).

  • Implementing Regulation on the Organisation and Supervision of Private Insurance, approved by Royal Decree 2486/1998 dated 20 November.

The activities of insurance and reinsurance intermediaries are regulated under the Insurance Mediation Act (Ley 26/2006, de Mediación de Seguros y Reaseguros Privados) (LMSRP).

Insurance contracts must also comply with the Insurance Contract Act (Ley 50/1980, de Contrato de Seguro), which is mandatory for all insurance contracts. Parties cannot contract out of the Act unless the agreed provisions are more beneficial to the insured. However, parties to large risk insurance and reinsurance contracts can depart from the provisions of the Act.

Pension plans and funds are regulated under the Consolidated Act on Pension Plans and Funds, approved by Royal Legislative Decree 1/2002, dated 29 November (Texto Refundido de la Ley de Regulación de los Planes y Fondos de Pensiones), and implemented by the Regulation on Pension Plans and Funds (Reglamento de Planes y Fondos de Pensiones), approved by Royal Decree 304/2004, dated 20 February.

Regulatory bodies

The government (Ministry of Economy and Treasury) acts through the Insurance Authority (Dirección General de Seguros y Fondos de Pensiones) (DGSFP), which is the relevant supervisory body for the insurance industry.

The Insurance Authority is responsible for ensuring compliance with the legislation and can impose sanctions on entities that fail to comply with their regulatory obligations. In addition, the Insurance Authority regularly issues guidelines that aim to clarify the meaning of the provisions of the above legislation, in particular the Insurance Mediation Act. These guidelines are important to ascertain the Authority's opinion on unclear issues. However, they are not binding and are merely recommendations addressed to insurers, reinsurers and intermediaries.

Where an insurance group has an insurance subsidiary authorised to carry on business in Spain, the regulation and supervision of the Insurance Authority only apply to the Spanish subsidiary.

 

Regulation of insurance and reinsurance contracts

3. What is a contract of insurance for the purposes of the law and regulation? How does it differ from a contract of reinsurance?

Insurance contract

An insurance contract is a contract under which the insurer undertakes, at the agreed conditions and after receiving the corresponding premium, to compensate the damage suffered by the insured, or to provide certain capital, income or other benefits if the risk covered by the contract is realised (Article 1, Insurance Contract Act).

Reinsurance contract

A reinsurance contract is a contract under which a reinsurer agrees, within certain regulated or contractually agreed limits, to indemnify the debt arising from the cedant's obligation to compensate an insured party.

 
4. Are all contracts of insurance/reinsurance regulated?

All insurance contracts are regulated. Generally, insurance contracts are regulated under the Insurance Contract Act (see Question 2, Regulatory framework), although some specific insurance contracts (such as air or marine insurance contracts) are regulated by specific acts. The Insurance Contract Act is mandatory where both:

  • The contract refers to risks located in Spanish territory.

  • The policyholder has its usual place of residence in Spain (for an individual) or its registered office or central administrative office and business management in Spain (for a legal entity).

The Insurance Contract Act does not apply to "large risks" insurance policies. Large risks are mainly those related to (Article 107, Insurance Contract Act):

  • Transport risks (including goods in transit), regardless of size.

  • Credit and surety risks, if these are linked to a trade.

  • Fire and other property damage, general liability and pecuniary loss, where the policyholder, or group to which he belongs, meets certain conditions relating to balance sheet, turnover and number of employees.

Reinsurance contracts are also regulated, although only through three provisions of the Consolidated Act on the Regulation and Supervision of Private Insurance Activity (Articles, 57, 58 and 58bis). Under the principle of freedom of contract (Article 1255, Spanish Civil Code), parties to reinsurance contracts can therefore agree to their own terms and conditions.

 

Corporate structure

5. What form of corporate organisation can insurers take?

To carry out insurance activities, a corporate organisation can take one of the following corporate structures:

  • Public limited company.

  • Mutual company.

  • Co-operative.

  • Social welfare mutual association.

 

Regulation of insurers and reinsurers

6. Are all insurers and reinsurers regulated? Are they all regulated in the same way?

All insurers and reinsurers are regulated and must be authorised to act by the Insurance Authority to carry out their activities (see Question 2).

The following acts were drafted to regulate the insurance market:

  • Consolidated Act on the Regulation and Supervision of Private Insurance Activity.

  • Implementing Regulation on the Organisation and Supervision of Private Insurance

  • Insurance Mediation Act.

However, the Consolidated Act only contains three provisions governing reinsurance activities (see Question 4).

 
7. Can insurers and reinsurers carry on non-insurance business? Are there any restrictions on their business activities?

Insurers cannot carry on other commercial activities or grant collaterals that are not related to the insurance activity (Article 4, Consolidated Act on the Regulation and Supervision of Private Insurance Activity). In addition, they cannot undertake brokerage activities, as defined in the Insurance Mediation Act.

Insurance activities are classified into different classes of business. Authorisation is granted by classes of business. An insurer seeking to expand its activities into classes not covered by its existing authorisation must obtain an additional authorisation from the Insurance Authority.

In addition, the corporate purpose of a reinsurance company must be limited to carry on reinsurance activity and related operations, although insurance companies authorised to operate in the direct market are allowed to carry on reinsurance activities.

 
8. Are there any statutory limits or other restrictions on, or requirements relating to, the transfer of risk by insurance or reinsurance companies?

There are no statutory limits or other restrictions on, or requirements relating to, the transfer of risk by insurers or reinsurers to reinsurers and retrocessionaires (that is, a reinsurer that accepts a portion of the cedant's underlying reinsurance risk from another reinsurer), respectively.

Fronting operations typically involve direct insurers transferring 100% of the risk underwritten to reinsurers.

 

Operating restrictions

Authorisation or licensing

9. Does the entity or person have to be authorised or licensed?

Insurance/reinsurance providers

Insurers. A company intending to operate in the insurance sector in Spain must apply for authorisation from the Insurance Authority. However, companies domiciled in the European Economic Area (EEA) intending to operate in Spain under the right of establishment or freedom of services regimes must apply for authorisation from the relevant state regulator.

To apply for authorisation, the company must comply with certain requirements set out in Article 5.2 of the Consolidated Act on the Regulation and Supervision of Private Insurance Activity. The most important requirements are as follows:

  • The company must be a public limited company (sociedad anónima), a mutual entity or a co-operative.

  • The corporate purpose of the company must be limited to insurance and related activities.

  • The company must file an activities programme with the Insurance Authority and comply with it.

  • The company must have the minimum share capital requirements set out in the Insurance Act. These requirements depend on the insurance classes in which the company intends to operate.

  • The company must identify the shareholders or participants of the fund (the shareholders and participants must also comply with certain legal requirements).

  • The company must be managed by persons who fulfill certain honesty, qualification and experience requirements.

Companies intending to operate as insurers must prove that they meet all the above requirements.

In addition, the application filed with the Insurance Authority must include information on the:

  • Classes of business the applicant intends to undertake.

  • Geographical scope of its activities.

  • Projected budgets.

  • Financial results.

There may be additional requirements imposed on the applicant depending on the particular sector in which it intends to operate.

When an application is filed, the Insurance Authority has six months to decide whether to grant the authorisation. Due to the complexity of the procedures in some cases, this term may be exceeded.

After authorisation is granted, the Ministry of Economy and Treasury has a right of veto, although it is almost never used.

The authorisation is granted for specific classes. If the insurer later decides to operate in different classes of insurance, it must file an additional application (with additional information and documents).

Spanish insurers (domiciled in Spain) intending to operate in an EEA member state (either under the freedom of services or right of establishment regimes) must apply to the Insurance Authority for authorisation.

Reinsurers. Reinsurance activities can be carried out by the following entities (Article 57, Consolidated Act on the Regulation and Supervision of Private Insurance Activity):

  • Spanish reinsurers with authorisation from the Ministry of Economy and Treasury.

  • Spanish insurers with authorisation from the Ministry of Economy and Treasury to operate in the direct market, if they carry out reinsurance activities in the same classes for which they are authorised in the direct market.

  • Insurers and reinsurers domiciled in other EEA member states that are authorised to carry out reinsurance activities in their home member states.

  • Insurers and reinsurers domiciled in third countries that carry out reinsurance activities in their own country.

To obtain the authorisation mentioned in the first bullet above, entities must file an application with the Insurance Authority. The applicant must include information such as:

  • The risks it intends to cover.

  • The type of agreements it intends to enter into with cedant companies.

  • A balance sheet.

After an application has been filed, the Insurance Authority has six months to decide whether to grant the authorisation. Due to the complexity of the procedures in some cases, this term may be exceeded.

The Ministry of Economy and Treasury also has a right of veto on the issuance of the authorisation.

Insurance/reinsurance intermediaries

There are different types of insurance intermediaries (that is, entities that market insurance and reinsurance products):

  • Agents. Agents can be either exclusive or non-tied agents. Exclusive agents distribute products on behalf of a single insurer, whereas non-tied agents are entitled to work with more than one insurer.

  • Insurance and reinsurance brokers. These are independent intermediaries operating in the insurance and reinsurance markets to obtain the best deal to meet their clients' (the policyholder, in the case of insurance brokers) needs.

  • Bank-insurance operators. These are financial entities (for example, banks, savings banks, and so on) that use their existing network to distribute insurance products. Like agents, bank-insurance operators can be either exclusive or non-tied.

Agents. The requirements are as follows:

  • Exclusive agents. Before starting operations in Spain, exclusive agents must be registered in the Insurance Authority registry. The relevant insurer is responsible for registering its exclusive agent.

  • Non-tied agents. Non-tied agents must be authorised by the Insurance Authority before starting to distribute insurance products. They must file an application form that contain information regarding, among other things, their:

    • financial capacity;

    • qualification and professional experience;

    • honesty;

    • professional insurance liability policy;

    • training programme for employees and external auxiliaries; and

    • activities programme.

  • After the Insurance Authority grants its authorisation, the non-tied agent is registered in the Insurance Authority registry.

Brokers. Insurance/reinsurance brokers must also comply with certain authorisation requirements to operate and must be registered in the Insurance Authority registry. These requirements are the same as for non-tied agents (see above, Non-tied agents).

Bank-insurance operators. The financial entity must meet certain authorisation requirements to operate and be registered in the Insurance Authority registry.

External auxiliaries. Although external auxiliaries are not intermediaries themselves, they collaborate with intermediaries, capturing clients and carrying out administrative activities. External auxiliaries do not require an authorisation or licence because they do not carry out insurance mediation activities. They only need to be registered in an internal registry held by the insurance intermediary with whom they collaborate.

Adviser auxiliaries. These external auxiliaries (which are not intermediaries) do not only participate to client capture and administrative functions, but also assist in the management, performance and conclusion of insurance contracts. To operate, they must:

  • Comply with certain authorisation requirements from the Insurance Authority.

  • Be registered in a specific registry of the Insurance Authority:

    • by the insurer if they are advising exclusive agents or exclusive bank-insurance operators; or

    • by the non-tied agents, non-tied bank-insurance operator, insurance and reinsurance brokers in other cases.

Other providers of insurance/reinsurance-related activities

Professionals involved in the insurance sector. Administrative professionals who carry out insurance/reinsurance-related activities (such as experts and adjusters) do not require specific administrative authorisations, but must have a suitable qualification/degree.

Underwriting agencies. An underwriting agency is a legal entity that provides and supplies insurance and reinsurance services in the name of and on behalf of an insurer or reinsurer but does not cover the risks underwritten.

Since 2013, underwriting agencies intending to operate in Spain must meet certain authorisation requirements and be registered in the Insurance Authority registry (up to 2013, they were only required to submit the powers of attorney granted by the insurer to the Insurance Authority).

 
10. What are the main exemptions or exclusions from authorisation or licensing?

Insurance/reinsurance providers

Spanish insurers and reinsurers must file for authorisation from the Insurance Authority before starting operations (see Question 9, Insurance/reinsurance providers).

However, if an insurer domiciled in a European Economic Area (EEA) member state intends to set up a branch in Spain, it can operate under the freedom of establishment regime after its home insurance regulatory authority has communicated its authorisation to the Insurance Authority. Authorisation from the Spanish Authority is therefore not required. Similarly, insurers working in Spain under the freedom of service regime do not require further authorisation after their home insurance regulator has communicated its authorisation to the Insurance Authority.

Third countries' insurers and reinsurers carrying on reinsurance business in their home country can accept reinsurance operations in Spain (Article 57, Consolidated Act on the Regulation and Supervision of Private Insurance Activity).

Organisations created on a permanent basis to distribute risk coverage among insurance companies, provide joint services related to insurance companies' activities, and associations of economic interest and temporary unions of companies do not need a licence to operate, although they must inform the Insurance Authority on initiating the joint activity (Article 5.9, Consolidated Act on the Regulation and Supervision of Private Insurance Activity).

Insurance/reinsurance intermediaries

Exclusive agents. The activities of exclusive agents do not require a licence as such. Exclusive agents must be registered by the insurer. Therefore, exclusive agents' activity is only subject to prior communication to the Insurance Authority.

Non-tied agents and brokers. Non-tied agents and brokers must be licensed and registered. The registry must also consider insurance and reinsurance intermediaries operating in Spain under the rights of establishment or freedom of services regimes, which (subject to their home regulatory authorisation) are only subject to communication requirements to the Insurance Authority.

External auxiliaries. External auxiliaries do not require authorisation or licences, but must be registered in an internal registry held by the intermediary with whom they collaborate.

Adviser auxiliaries.Advisor auxiliaries do not require authorisation or licences, but must be registered in a special purpose-built registry.

Other providers of insurance/reinsurance-related activities

Professionals involved in the insurance sector. Adjusters and experts do not require any special authorisation or licence, but must have a suitable qualification/degree.

Underwriting agencies. These must be authorised by the Insurance Authority. There are no exemptions or exclusions from authorisation.

 

Restrictions on ownership or control

11. Are there any restrictions on the ownership or control of insurance-related entities?

Insurance/reinsurance providers

The restrictions on the ownership or control of insurance-related entities regarding age are the same as for limited companies (that is, legal age is required). However, there are specific and relevant requirements that insurance and reinsurance companies must comply with regarding control, ownership, qualification and solvency:

  • Insurance and reinsurance companies must meet certain requirements to ensure solvency through the guarantee fund, solvency margin and technical provisions requirements.

  • Insurance companies' managers must meet certain requirements, including to:

    • be commercially honourable; and

    • have certain qualification and professional experience.

  • There are also relevant restrictions regarding significant holdings (participaciones significativas) and close links (vínculos estrechos) (that is, stakes representing at least 20%) which result from the acquisition, increase or decrease of share capital of insurance or reinsurance companies (see Question 12, Insurance/reinsurance providers).

Insurance/reinsurance intermediaries

Insurance intermediaries are subject to specific qualification requirements. Persons who exercise the control of the intermediary must comply with the qualification and training requirements set out in the Resolution of the Insurance Authority dated 18 February 2011 and in Royal Decree 764/2010.

Other providers of insurance/reinsurance-related activities

There are no specific restrictions on underwriting agencies, adjusters and experts.

 
12. Must owners or controllers be approved by or notified to the relevant authorities before taking, increasing or reducing their control or ownership of the entity?

Insurance/reinsurance providers

The Insurance Authority requires prior notification of the following information for certain transactions (Article 22, Consolidated Act on the Regulation and Supervision of Private Insurance Activity):

  • Any taking, increasing or reducing of shares involving a change of control of 5% or more of the company's share capital or voting rights (significant holding).

  • Any transaction that results in the stake of a partner in a company exceeding 20%, 33% or 50% (close links).

  • Any person or entity acquiring a dominant position within an insurance company.

After the Insurance Authority is notified, it has three months to oppose to the transaction. Silence from the Authority is considered approval. Failure to notify may result in serious penalties (see Question 13).

Before deciding if it must oppose to the transaction or not, the Insurance Authority must obtain a report on the operation issued by the Executive Service of the Commission of Prevention of Money Laundering (Servicio Ejecutivo de la Comisión de Prevención de Blanqueo de Capitales e Infracciones Monetarias) (SEPBLAC) (Article 22, Consolidated Act on the Regulation and Supervision of Private Insurance Activity).

Insurance/reinsurance intermediaries

Insurance brokers must inform the Insurance Authority when taking, increasing or reducing their shareholdings if this may lead to significant holdings or close links (Article 28, Insurance Mediation Act) (see above, Insurance/reinsurance providers).

In particular, if an insurance broker has a significant stake in an insurance or reinsurance company or agent, this must be mentioned in all commercial documentation regarding private insurance mediation submitted by the broker (Article 33.3, Insurance Mediation Act). Other information duties related to significant stakes are also set out in Article 42.1 of the Insurance Mediation Act.

Other providers of insurance/reinsurance-related activities

Professionals involved in the insurance sector. There are no specific approval or notification requirements before taking, increasing or reducing the control or ownership of adjusters and experts.

Underwriting agencies. As underwriting agencies represent insurance companies, an insurance or reinsurance broker wishing to acquire a significant holding in an underwriting agency will also be subject to the general regulation of significant holdings (see above, Insurance/reinsurance providers). Brokers must therefore inform the Insurance Authority about significant stakes they have in underwriting agencies (Articles 33 and 42.1, Insurance Mediation Act) (Criteria of the Insurance Authority number 00002939/2007, dated 5 July 2007). This information duty does not apply in relation to significant stakes of underwriting agencies in brokers.

 

Ongoing requirements for the authorised or licensed entity

13. What are the key ongoing requirements with which the authorised or licensed entity must comply?

Insurance/reinsurance providers

The key ongoing requirements authorised insurance and reinsurance companies must meet are contained in the:

  • Consolidated Act on the Regulation and Supervision of Private Insurance Activity.

  • Implementing Regulation on the Organisation and Supervision of Private Insurance.

Insurance and reinsurance companies must meet certain legal requirements on necessary technical provisions (provisiones técnicas) which vary depending on the insurance activities carried out (Article 16, Consolidated Act on the Regulation and Supervision of Private Insurance Activity). These provisions are defined in Chapter II of the Implementing Regulation and are aimed at ensuring the yield and liquidity of the company's investments.

Insurance and reinsurance companies must also meet a solvency margin (margen de solvencia), which depends on the insurance core activity and classes of insurance (Article 17, Consolidated Act on the Regulation and Supervision of Private Insurance Activity). The solvency margin includes assets without encumbrances, but not intangible assets. A third of the minimum amount of the solvency margin constitutes the guarantee fund (fondo de garantía) (Article 18, Consolidated Act on the Regulation and Supervision of Private Insurance Activity). This fund comprises a legal reserve that must not be lower than certain amounts determined legally and which depend on the classes of insurance the company undertakes. The value of both the solvency margin and guarantee fund is set out in Chapter II of the Implementing Regulation.

To ensure that the company's accounting books reflect its actual financial situation, insurance and reinsurance companies must also comply with certain accounting obligations (Article 20, Consolidated Act on the Regulation and Supervision of Private Insurance Activity). Individual and consolidated annual accounts must therefore be supervised by auditors. This accounting information will be submitted to the Insurance Authority.

Insurance and reinsurance companies must also submit online to the Insurance Authority (Article 66, Consolidated Act on the Regulation and Supervision of Private Insurance Activity):

  • Certain statistical and accounting information (annually, semi-annually and quarterly).

  • The company's annual accounts.

Insurance/reinsurance intermediaries

The basic regulation of insurance and reinsurance intermediaries is set out in the Insurance Mediation Act.

Like insurance and reinsurance companies, insurance and reinsurance intermediaries must also periodically submit certain statistical and accounting information to the Insurance Authority.

Other providers of insurance/reinsurance-related activities

Insurance legislation does not set out any specific regulatory requirements applicable to underwriting agencies, experts and adjusters.

 

Penalties for non-compliance with legal and regulatory requirements

14. What are the possible consequences of an entity failing to comply with applicable legal and regulatory requirements? What recourse do policyholders have if they have done business with a non-approved entity?

Insurance/reinsurance providers

The possible offences committed by insurance or reinsurance companies when failing to comply with legal or regulatory requirements are established in Article 40 of the Consolidated Act on the Regulation and Supervision of Private Insurance Activity. These offences are based on certain criteria, such as the nature of the infringement, the amount of damage caused or the turnover resulting from the infringement. These criteria are also taken into account when adjusting the sanction imposed.

Administrative infringements are categorised into three groups (very serious, serious and minor). Each of these groups contains offences that are penalised as follows (Article 41, Insurance Act):

  • Very serious administrative infringements. The legal consequences are as follows:

    • revocation of the administrative authorisation;

    • suspension of the administrative authorisation to operate in one or several insurance classes for five to ten years;

    • publication of the activity constituting the administrative offence; or

    • a fine amounting to 1% of the entity's equity or between EUR150,000 and EUR300,000 (whichever is higher).

    The publication of the offence can be imposed simultaneously with one of the other sanctions.

  • Serious administrative infringements. The legal consequences are as follows:

    • suspension of the administrative authorisation to operate in one or several insurance classes for five to ten years;

    • publication of the activity constituting the administrative offence; or

    • a fine amounting to 1% of the entity's equity or between EUR30,000 and EUR150,000 (whichever is higher).

    The publication of the offence can be imposed simultaneously with one of the other two sanctions.

  • Minor administrative infringements. The insurance company will receive a fine of up to EUR30,000 or a private warning.

Insurance/reinsurance intermediaries

Administrative offences committed by insurance or reinsurance intermediaries when failing to comply with legal or regulatory requirements are established under Article 55 of the Insurance Mediation Act and are also categorised as very serious, serious and minor offences. The corresponding penalty depends on the category of offence. The applicable sanctions to administrative offences are as follows (Article 56, Insurance Mediation Act):

  • Very serious administrative infringements. The legal consequences are as follows:

    • cancellation of registration in the special administrative Registry of insurance intermediaries, reinsurance brokers and technical directors;

    • suspension of the right to operate as exclusive insurance agent, insurance broker or bank-insurance operator for a maximum period of ten years;

    • publication of the activity constituting the administrative offence; or

    • a fine from EUR15,001 to EUR30,000.

    The publication of the offence can be imposed simultaneously with one of the other sanctions.

  • Serious administrative infringements. The legal consequences are as follows:

    • suspension of the right to operate as exclusive insurance agent, insurance broker or bank-insurance operator for a maximum of one year;

    • publication of the activity constituting the administrative offence;

    • a public warning; or

    • a fine from EUR15,001 to EUR30,000.

    The publication of the offence can be imposed simultaneously with one of the other sanctions.

  • Minor administrative offences. The legal consequences are as follows:

    • a public warning; or

    • a fine from EUR6,001 to EUR15,000.

Other providers of insurance/reinsurance-related activities

No specific penalties or administrative offences are provided for underwriting agencies, adjusters or experts.

Policyholders' remedies

The insurance policy subscribed by a non-approved entity acting as an insurer is void. The policyholder will not be obliged to pay the agreed premium and will be entitled to claim the premium already paid, unless the risk has already occurred. In this case, the entity will have to cover damages according to the terms of the policy subscribed, and other damages arising from the infringement. Directors and managers of the non-approved entity and the entity are jointly and severally responsible for the damages.

 

Restrictions on persons to whom services can be marketed or sold

15. Are there any restrictions on the persons to whom insurance/reinsurance services and contracts can be marketed or sold?

The restrictions on the underwriting of insurance contracts are those that apply to contracts generally, as set out in Articles 1259, 1263 and 1264 of the Spanish Civil Code (that is, valid consent).

However, the Insurance Contract Act also sets out the following specific restrictions for life insurance contracts:

  • In policies covering the risk of death, the written consent of the insured is necessary unless his interest in the insurance can be inferred (Article 83, Insurance Contract Act).

  • If the insured is a minor, the written consent of the minor and the written authorisation of his legal representatives are required.

  • No insurance policies covering the risk of death can be underwritten if the insured is under 14 or disabled, except in insurance contracts in which the death cover is lower or equal to the premium or the surrender value.

For reinsurance contracts, the only restriction is that the entity to whom the contract is marketed must be an insurer (cedant).

 

Reinsurance monitoring and disclosure requirements

16. To what extent can/must a reinsurance company monitor the claims, settlements and underwriting of the cedant company?

Reinsurance companies typically monitor the claims of the cedant through a claims control clause (cláusula de control). Under such a clause, the cedant cannot confirm the insured's cover or settle the claim unless the reinsurer's prior consent has been given.

Claims co-operation clauses (cláusulas de cooperación o vigilancia) are also common in the Spanish reinsurance market. These clauses impose on the cedant a duty to notify the reinsurer immediately of the loss, and entitle the reinsurer to participate in the handling of the claim (for example, by instructing adjusters, assessing the damage, and so on).

In addition to monitoring claims and settlements, reinsurance companies can also participate in policy underwriting if this is agreed by the cedant and the reinsurance company. For example, reinsurance companies can carry out the risk assessment directly (which is increasingly common in the Spanish life insurance market).

 
17. What disclosure/notification obligations does the cedant company have to the reinsurance company?

Unlike insurance contracts, reinsurance contracts are not heavily regulated under Spanish legislation. Parties can therefore agree any disclosure/notification obligations they wish to ensure that the reinsurance company can assess the risk undertaken by the cedant (see Question 16).

 

Insurance and reinsurance policies

Content requirements and commonly found clauses

18. What are the main general form and content requirements for insurance policies? What are the most commonly found clauses?

Form and content requirements

The minimum content requirements for insurance policies are as follows (Article 8, Insurance Contract Act):

  • Name and surname or corporate name of the contracting parties and their address, and designation of the insured and beneficiary, when applicable.

  • The "concept of the insurance", that is whether the policyholder is taking out the insurance for himself (in which case the policyholder and the insured will be the same person) or on behalf of another person (in which case the policyholder and the insured will be different persons).

  • Nature of the risk covered.

  • Designation of the insured objects and their location.

  • Insured sum or scope of coverage.

  • Premium amount, surcharges and taxes.

  • Maturity of the premiums, place and form of payment.

  • Duration of the contract, stating the day and time when it effectively starts and terminates.

  • Name and type of insurance intermediary, if any.

In addition, the insurer must provide an Information Note (Nota Informativa) to the policyholder with the following information before underwriting the policy (Article 104, Implementing Regulation on the Organisation and Supervision of Private Insurance):

  • Applicable legislation.

  • Internal or external claim procedures.

  • Country where the insurance company or the branch has its registered office and its corresponding address.

  • Identity and position an insurance intermediary participates to the underwriting of the policy, some information must be included on its.

For life insurance policies, certain information must also be provided to the policyholder before underwriting the contract, including (Article 105, Implementing Regulation on the Organisation and Supervision of Private Insurance):

  • Coverage specification.

  • Duration of the contract.

  • Conditions for termination of the contract.

  • Conditions, periods and expiration of premiums.

The policyholder must declare in the policy that he has been given the information above.

In addition, insurance policies must contain a clause relating to the indemnification of extraordinary risks by the Insurance Compensation Consortium (Consorcio de Compensación de Seguros) when the policy involves the payment of the Consortium's surcharges. The Insurance Compensation Consortium is a public corporate entity attached to the Ministry of Economy and Treasury and is responsible (among other things) for indemnifying extraordinary risks for insured persons who have paid the corresponding surcharges. The Consortium always satisfies the indemnity, unless the insured had underwritten a special policy covering it (although this is not common as the insured will be indemnified if it has paid the surcharges due) and the insurer is able to pay the indemnity.

Commonly found clauses

Insurance policies usually use a standard structure that includes:

  • General conditions. These are the general provisions or principles applicable to a class of insurance (that is, payment provisions, general exclusions and notifications between parties). They are pre-established by the insurer.

  • Particular conditions. These relate to the definition and scope of the particular risk covered by the given policy (for example, identification of the insured party and object, term, premium, and so on). These conditions are negotiated between the insurer and the policyholder.

  • Special conditions. These clarify the general conditions but do not refer to the particular policy. They are usually pre-established by the insurer. Most insurance contracts include special conditions.

 
19. Is facultative or treaty reinsurance more common? What are the most commonly found clauses in reinsurance policies?

Both facultative and treaty reinsurance are common in Spain. The choice between facultative or treaty reinsurance depends on the nature of the risks reinsured.

The most commonly found clauses in reinsurance policies are those that are usual in the international reinsurance market, including:

  • Follow the fortunes clause. The reinsurer is bound by the decisions of the cedant in handling claims.

  • Follow the settlement clause. The reinsurer must accept the decisions of the cedant regarding the adjustment and settlement of claims.

  • Claims co-operation clause. The cedant can manage claims but must promptly provide the reinsurer with information about any claim, co-operate and not settle claims without the approval of the reinsurer (see Question 16).

  • Claims control clause. The reinsurer has full control regarding all claims (see Question 16).

 

Implied terms

20. Are there any terms that are implied by law or regulation (even if not included in the insurance or reinsurance contract)?

The provisions of the Insurance Contract Act are mandatory and prevail over the terms and conditions of the insurance policy unless these are more favourable to the insured. These provisions apply even where the policy does not expressly mention them (see Question 4).

 

Customer protections

21. How do customer protections in the general law affect insurance contracts? What customer protections are generally included in insurance policies to supplement this?

General law

The general provisions on consumer protection apply to insurance contracts, including the:

  • Consolidated text of the General Law for the Protection of Consumers and Users (Texto Refundido de la ley para la Defensa de Consumidores y Usuarios).

  • General Conditions of Contracts Act (Ley de Condiciones Genrales de la Contratación).

  • Distance Commercialisation of Services for Consumers Act (Ley sobre Comercializacón a Distancia de Servicios Financieros a Consumidores).

Insurance policies

Insurance regulation aims to protect customers' rights. The current legislative trend is to seek greater transparency and increased protection for policyholders.

The insurer must provide certain information to the policyholder before underwriting the policy (see Question 18, Form and content requirements).

The Ministry of Economy and Treasury protects the balance of rights and obligations of the insured and the insurance company. In particular, such protection is regulated by the Regulation on the Protection of Financial Services Clients (Act 44/2002, dated 22 November, on measures to amend the financial system, and its developing rules). Insurance companies must have a customer service responsible for resolving claims and complaints. Claims before the Insurance Authority can only be made after claiming through the insurer's customer service. The insured can claim before the Insurance Authority if the customer service does not address or reject the insured's claim.

Clauses that restrict the customers' rights must be (Article 3, Insurance Contract Act):

  • Specifically highlighted (usually in bold).

  • Specifically and expressly accepted in writing

 

Standard policies or terms

22. What are the main standard policies or terms produced by trade associations or relevant authorities?

The Association of Spanish Insurers and Reinsurers (UNESPA) used to prepare standard wording policies in relation to certain risks which were available and commonly used by insurers. However, UNESPA (or other trade association or relevant authority) no longer makes standard policies or terms. Standard policies and terms could raise competition law issues, as the sale of the same products at the same prices by all insurance could in practice eliminate free competition.

The only standard clause imposed by regulations is the clause regarding the indemnification of extraordinary risks by the Insurance Compensation Consortium (see Question 18, Form and content requirements).

 

Insurance and reinsurance policy claims

Establishing an insurance claim

23. What must be established to trigger a claim under an insurance policy?

Different circumstances must be considered for a claim to be covered under an insurance policy. These vary depending on the type of insurance contract.

For third party liability insurance, regardless of the compliance with all the conditions for coverage (for example, period of insurance, claims exceeding deductible under the policy, and so on), a claim falls under the scope of the policy if:

  • The insured has received a claim from a third party who seeks compensation for the damages caused as a consequence of the insured's negligent act or omission.

  • The claim falls under the temporary scope of the policy. Special attention should be given to the discovery and/or retroactivity period granted by the policy.

  • The insured did not intentionally cause the damage.

 

Third party insurance claims

24. What are the circumstances in which third parties can claim under an insurance policy?

Third parties can claim under an insurance policy against the insurer, either jointly with the insured or solely (Article 76, Insurance Contract Act (relating to civil liability insurance)). Prejudiced third parties therefore have a direct action against the insurer. The insured must disclose the details of the policy to the aggrieved party to enable such party to make a claim against the insurer.

 

Time limits

25. Is there a time limit outside of which the insured/reinsured is barred from making a claim?

There is a two-year limitation period for claims related to damage insurance contracts (Article 23, Insurance Contract Act). Claims related to life, accidents and health insurance (that is, claims related to personal damages) must be brought within five years from the date the action can be exercised (which is usually the date of the loss).

As reinsurance contracts are deemed to be damage insurance contracts, scholars consider that the two-year limitation applies (see above).

 

Enforcement

26. Can the original policyholder or other third party enforce the reinsurance contract against a reinsurer?

The original policyholder, the insured or other third party cannot enforce the insurance or reinsurance contract against a reinsurer as such contract is a fully independent contract (Article 78, Insurance Contract Act). There is no contractual relationship between the above parties.

In the event of the insurer's voluntary or compulsory liquidation, the insured have a special privilege over the credit balance of the insurer's account with the reinsured. However, the insured must enforce his priority against the insurer's receivers, not the reinsurer.

However, both scholars and case law have recognised the validity of clauses that allow the insured to demand payment of the indemnity directly to the reinsurer. Such clauses must be expressly agreed in the policy.

 

Remedies

27. What remedies are available for breach of an insurance policy?

Insurer

The available remedies for breach of an insurance policy by the insurer are as follows:

  • The insurance contract is void if at its conclusion no risk existed or the loss had already occurred.

  • The policyholder must inform the insurer about all the circumstances known that may influence the risk. The insurer therefore has the duty to provide a risk questionnaire form, or the policyholder will be exempt from providing these details. If the questionnaire has been provided, the insurer can terminate the contract by a statement within a month after it became aware of the relevant circumstances on the questionnaire. If the loss occurs before such statement has been given, the indemnity will be reduced proportionally. However, the policyholder's malice or gross negligence generally implies that the insurer is released from its payment obligation.

  • The policyholder must inform the insurer about all the circumstances increasing the risk. An increased risk allows the insurer to propose an amendment within two months of being informed of such increase. If the increased risk has not been communicated to the insurer, the contract can be terminated. However, if a loss occurs and the increased risk was not communicated, the insurer is only released from its duties to pay if the policyholder or the insured acted in bad faith. Otherwise, the insurer's duties are proportionally reduced to the difference between the agreed premium and the one that would have been applied if the risk had been duly assessed.

  • In relation to premiums, if the policyholder does not pay the first or single premium agreed in the insurance policy, the insurer can terminate the contract or request payment. If the loss occurs before the policyholder pays the first or single premium, the insurer has no indemnity payment duty. If the policyholder does not pay the further premiums (in cases of periodic premiums), his coverage is suspended within one month from its due date. In addition, if the insured does not claim its payment within six months after its due date, the contract is considered terminated.

  • The policyholder must inform the insurer of the loss within seven days after being aware of the loss (or later if agreed by the parties). If this duty is not fulfilled, the insurer can claim damages resulting from the lack of communication, unless the insurer was otherwise aware of the loss. In addition, the policyholder or the insured must provide detailed information on the loss and its consequences. If this requirement is not met, the insured will lose its indemnity right if he acted with malice or was grossly negligent.

  • For damages insurance, if the amount insured exceeds the value of the interest insured, any party can seek a reduction of the amount and premium. In this case, the insurer must refund the premium excess to the policyholder. If the loss occurs, the insurer must indemnify the damage actually caused. However, if over-insurance was due to the insured's bad faith, the contract is void, and the insurer who acted in good faith can withhold the premiums due, and those corresponding to the current insurance period.

  • When two or more insurance contracts underwritten by the same policyholder with different insurers cover the same risk and the same period, the policyholder or the insured must notify these circumstances to the insurers.

  • For life insurance policies, in cases of reluctance or inaccurate statements affecting the risk assessment made by the policyholder, the effects described in the second bullet point above apply. However, the insurer must not challenge the contract after a year from its conclusion (or a shorter term if agreed in the policy between the parties) unless the policyholder acted with malice.

  • If the age of the insured is incorrect, the insurer can terminate the insurance contract if the insured's real age exceeds the admission limits. In any other case, if the premium paid is lower than what it should be, the insurer's indemnity is proportionally reduced. If the premium paid is higher than should have been paid, the insurer must reimburse the premium excess.

Insured

The insurer must pay (Article 18, Insurance Contract Act):

  • Compensation after carrying out the necessary investigations.

  • The minimum amount it may owe within 40 days after the declaration of the accident.

Arrears charges will apply if the insurer does not pay the above sums, except when the lack of payment is justified (Article 20, Insurance Contract Act).

 

Punitive damage claims.

28. Are punitive damages insurable? Can punitive damages be reinsured if they are covered by an underlying policy?

Spanish courts cannot award punitive damages. It is therefore not necessary to insure such damages as these will not be claimed against an insured.

 

Insolvency of insurance and reinsurance providers

29. What is the regulatory framework for dealing with distressed or insolvent insurance or reinsurance companies, or other persons or entities providing insurance or reinsurance related services? What regulatory and/or other protections exist for policyholders if the insurance company is insolvent?

If an insurer or reinsurer domiciled in Spain becomes insolvent, two different procedures are available:

  • The insurer itself or one of its creditors can request that the court start insolvency proceedings, proving that the insurer is actually insolvent.

  • The Insurance Authority can decide to dissolve the insurer/reinsurer and put it into liquidation, and entrust the Insurance Compensation Consortium with the liquidation of the company.

The Insurance Compensation Consortium is also responsible for liquidating insolvent companies (Article 14, Insurance Compensation Consortium Statute and Article 31, Consolidated Act on the Regulation and Supervision of Private Insurance Activity). The administrative liquidation of an insurer by the Consortium can be carried out without the intervention of the courts (that is, it can be considered as an alternative to the liquidation of an insolvent company by the Mercantile Courts). One of the Consortium's main purposes during liquidation is to protect the rights of the insured, beneficiaries and aggrieved parties, even purchasing their credits.

When insolvency proceedings are requested by either the insurer or one or more creditors, the Insolvency Act (Ley 22/2003, Concursal) applies. This Act applies to insolvency proceedings for all types of companies. However, some special provisions apply when the insolvent company is an insurer:

  • After the judge starts insolvency proceedings, he must communicate this information to the Insurance Authority, so that it can inform the other insurance authorities in the EEA and publish it in the EU's Official Journal.

  • The administration body (which is responsible for, among others, assisting and representing the insolvent company, issuing a report on the situation of the company, creating the list of creditors and preparing a list of the assets) must include three judge-appointed members:

    • a lawyer from the lawyers proposed by the Insurance Compensation Consortium;

    • an economist or auditor from the economists and auditors proposed by the Insurance Compensation Consortium; and

    • a representative of the Insurance Compensation Consortium.

  • The Insurance Authority can request the judge dealing with the insolvency proceedings to submit information on the status and development of the proceedings.

  • After the insurer is put into liquidation, the Insurance Compensation Consortium conducts the liquidation.

  • If the insurer lacks liquidity during the insolvency proceedings, the Insurance Compensation Consortium can advance the expenses required to guarantee the correct development of the insolvency proceedings.

General insolvency provisions apply for all other matters.

One of the fundamental principles of insolvency law is that the unsecured creditors of an insolvent party rank pari passu on insolvency (that is, they are paid out equally pro rata to their claims). However, there is an exception in the case of insolvency of an EEA insurer under Directive 2001/17/EC on the reorganisation and winding-up of insurance undertakings (Insurers Reorganisation and Winding-up Directive) (implemented by Law 34/2003, of 4 November, which modifies the Consolidated Act on the Regulation and Supervision of Private Insurance Activity). The credit of the insured, beneficiaries and prejudiced parties in civil liability insurance have absolute priority over the rest of creditors with respect to the assets in which the technical provisions are invested (Article 59, Consolidated Act on the Regulation and Supervision of Private Insurance Activity).

 
30. Can excess insurance policies "drop down" to provide coverage if the primary insurer goes into insolvency?

There is no provision under which the excess insurer must provide coverage if the primary insurer goes into insolvency. However, the principle of freedom of contract applies (Article 1255, Spanish Civil Code) so that the excess insurer can contractually undertake to provide coverage if the primary insurer is insolvent. In the authors' view, a ''drop down'' clause would be treated as a guarantee in the insolvency proceedings.

 
31. Is a right to set-off mutual debts and credits recognised in an insolvency proceeding involving an insurer or reinsurer?

The possibility to set-off mutual debts is expressly regulated by the Spanish Civil Code (Articles 1195 to 1202). Set-off is permitted when two persons or entities are both creditors and debtors of each other, provided that the following requirements are met (Article 1196, Civil Code):

  • The claims to be set off must be between the same parties and those parties must be acting in the same capacity.

  • Both debts consist of a sum of money or other fungible assets of the same kind and quality (if such quality has been defined).

  • Both debts must have matured.

  • Both debts are liquidated and enforceable.

  • No party is subject to any retention right or dispute proceedings brought by a third party of which due notice has been given to the debtor.

However, it is not possible to set-off mutual claims and debts once a party is declared insolvent, unless the requirements above were satisfied before the commencement of insolvency proceedings (Article 58, Insolvency Act). Any dispute over this issue must be resolved through an insolvency procedural plea (Article 58, Insolvency Act).

However, a large number of scholars consider that this prohibition does not apply (so that set-off is permitted on insolvency of one of the contracting parties) when the credits and debts to be offset have the same origin or cause (ex eadem causa) (that is, when the credits and debts derive from the same contract that envisages such set-off (in this case, the reinsurance contract)). Under this interpretation, a set-off carried out in such cases is not a general set-off of credits and debts of the insolvent company for all the contracts to which it is a party. Rather, such set-off is a performance of the contract agreed by the parties; instead of the losses being paid by the reinsurer as they arise, the insurer keeps the amounts that will be used to pay those losses.

However, a minority of scholars consider that there are no exceptions to the general rule. They argue that if the legislator had intended to exclude credits ex eadem causa, this would have been expressly stated in Article 58 of the Insolvency Act.

 

Taxation of insurance and reinsurance providers

32. What is the tax treatment for insurers, reinsurers, and other persons or entities providing insurance and reinsurance-related services?

Insurance/reinsurance providers

Insurance and reinsurance companies are subject to the following taxes:

  • Corporate income tax.

  • Business activity tax. This is a local tax levied annually depending on the office space and other elements of the activity.

  • Insurance premium tax.

  • Insurance Compensation Consortium surcharges (an indirect tax on the premiums paid to insurance undertakings). After the reforms on the Consortium's legal regime (Act 12/2006, dated 16 May), life insurance contracts are also subject to the surcharge in the insurance of extraordinary risks.

In addition, if the insurer underwrites policies covering fire risks, it must collect the fire brigade tax from policyholders as an intermediary. The most efficient system for such collection is through the economic interest group created by the Association of Insurers and Reinsurers (Unión Española de Entidades Aseguradoras y Reaseguradoras) (UNESPA).

Insurance and reinsurance companies' insurance operations are exempt from value added tax (VAT), but such companies must comply with some formal obligations relating to VAT.

At the end of each year, the insurer must file with the Tax Authority annual information regarding insurance operations with third parties. The tax return must indicate the name and tax identification number of the policyholders, taking into account the surrender value of the policy as at 31 December.

Insurance/reinsurance intermediaries

Mediation operations are exempt from VAT. However, other activities or services provided by the intermediary that are not strictly related to mediation (for example, risks management and reports) are not VAT exempt. Intermediaries are subject to income tax (individuals) or corporate income tax (legal entities).

Tax representatives

Insurance undertakings operating in Spain under the freedom of services regime must have a tax representative before starting their operations in Spain. This role can be carried out either by a person or entity, provided that he/it is resident in Spain. Tax representatives are liable to the Spanish Administration jointly with their clients. This causes large and professional corporations (for example, international law firms) providing this service to stop doing so, resulting in tax representation being mainly provided through small law firms.

Tax representatives have the following filing duties before the Spanish Administration on the entry of contracts:

  • Liquidation of the Consortium extraordinary risks and liquidation of companies surcharge. Even if the operations of the insurer are exempt from the surcharge, the tax return must be filed monthly.

  • Income tax of non residents must also be filed monthly after the premium is received by an insurer working on the freedom of services basis.

  • Communication to the Death Cover Insurance Contract Registry (Registro de Contratos de Seguro de Cobertura de Fallecimiento) (regulated by the Act 20/2005, dated 14 November). Insurance entities (even entities working in Spain on the freedom of services basis) must communicate to the Registry the name and passport/national identity number, policy number of the insured person of a life policy covering the insured's death, unless the policyholder and beneficiary are the same person. No information about premiums, policyholders or indemnities must be submitted. This information must be sent electronically (Royal Decree 398/2007).

On surrender or payment of indemnities (either partial or total), 19% must be withheld by the insurer (through its tax representative). Withholding tax is declared and paid quarterly. Every year, during the first 20 days of January, the annual pro-forma Model 188 must be filed, indicating the identity of the policyholders to whom the withholdings are attributed.

 

Insurance and reinsurance dispute resolution

33. Are there special procedures or venues for dealing with insurance or reinsurance complaints or disputes?

The insured can bring a claim before the Insurance Authority (Act 44/2002 on Amending Measures of the Finance Sector). However, the claimant must first make its claim to the customer service of the insurance company.

There are otherwise no special procedures or venues for dealing with insurance or reinsurance complaints or disputes in Spain other than judicial courts or arbitration. However, arbitration is not often used for insureds' claims.

 
34. Are arbitration clauses in insurance and reinsurance agreements enforceable?

Arbitration clauses in insurance and reinsurance agreements are enforceable. To be enforceable, the arbitration clause must express the will of the parties to submit to arbitration all or some of the disputes that have arisen or may arise. The arbitration clause must be in writing in a document signed by the parties or in an exchange of correspondence between the parties. The arbitration clause can be incorporated in the contract or agreed separately.

 
35. Are choice of forum, venue and applicable law clauses in an insurance or reinsurance contract recognised and enforced?

All actions derived from the insurance policy are heard by the court of the insured's domicile (Article 24, Insurance Contract Act). The Insurance Contract Act is applicable where both:

  • The policy refers to risks located on Spanish territory.

  • The policyholder has its usual place of residence in Spain (for an individual) or its registered office or central administrative office and business management (for a legal entity) in Spain.

However, for large risks insurance contracts, parties can freely include forum and applicable law clauses in the policy. These clauses are recognised and enforced by Spanish courts.

 

Reform

36. What proposals are there for reform of the law, regulation or rules relating to the provision of insurance or reinsurance services?

Proposals for reform include the:

  • Draft of the Act on the Organisation, Supervision and Solvency of Insurance and Reinsurance Entities (ALOSSEAR).

  • Draft of a second Directive on insurance mediation (IMD 2), which should lead to a new drafting of the Insurance Mediation Act (Act 26/2006).

  • Draft of the Insurance Contract Act.

Recent reforms include the:

  • Regulation (EU) 2015/35 supplementing Directive 2009/138/CE on the taking-up and pursuit of insurance and reinsurance activity (Solvency II Directive).

  • Regulation 1286/2014 on key information document for packaged retail and insurance-based investment products (PRIPS).

  • Amendment of the Regulation on the Organisation and Supervision of Private Insurance, regarding the calculation of life insurance provisions.

 

Main insurance/reinsurance trade organisations

Association of Insurers and Reinsurers (Unión Española de Entidades Aseguradoras y Reaseguradoras) (UNESPA)

Main activities. UNESPA is an association that represents over 95% of the insurance industry. Among its functions, it represents, manages and defends professional, economic and social interests that are common to the whole industry against any person, entity or organisation, national or international.

W www.unespa.es/frontend/unespa/base.php

Investigation Association of Insurers and Pension Funds (Investigación Cooperativa entre Aseguradoras y Fondos de Pensiones) (ICEA)

Main activities. This organisation studies the insurance market and publishes a number of reports and statistics related to the insurance sector. Its activities also include training, lecturing and on-line advising.

W www.icea.es

Association of Insurance Brokers (Asociación Española de Corredurías de Seguros) (ADECOSE)

Main activities. This organisation, among other things, defends the interests of its associates, innovate and internationalises brokers' activity through the provision of international networks that allow interaction, and represents its associates against other legal entities.

W www.adecose.com

Insurance Brokers Professional Organisations Federation (Federación de Organizaciones Profesionales de Corredores y Corredurías de Seguros de España) (FECOR)

Main activities. This organisation aims to defend the interests of brokers before public entities and insurance companies, and to enhance the role of brokers among the general public.

W www.fecor.org

Association of Reinsurance Brokers (Asociación Española de Corredores de Reaseguros) (ASECORE)

Main activities. This organisation provides legal advice, services during negotiation and the duration of the operations, and responsibility pending negotiations.

W www.asecore.org/index.htm



Contributor profiles

Luis Alfonso Fernández, Partner

Hogan Lovells International LLP

T +34 91 349 82 00
F +34 91 348 82 01
E luisalfonso.fernandez@hoganlovells.com
W www.hoganlovells.com

Professional qualifications. Spain, Lawyer (Abogado)

Areas of practice. Insurance and reinsurance.

Languages. English, Spanish

Publications

  • "Tort Law Practicum", Aranzadi, 2015.
  • "The insurance contract in the Commercial Code", La Ley, 2014.
  • "Moral damages and its insurance cover in the 'Yak 42' case", Contentious Yearbook 2010.
  • "The insurance sector faced with the new Anti-Money Laundering and Countering Financing of Terrorism Act", FEF, 2010.

Virginia Martínez, Senior Associate

Hogan Lovells International LLP

T +34 91 348 82 00
F +34 91 349 82 01
E Virginia.martinez@hoganlovells.com
W www.hoganlovells.com

Professional qualifications. Spain, Lawyer (Abogado)

Areas of practice. Insurance and reinsurance.

Languages. English, French, Spanish

Publications

  • "Professional Indemnity Report", Iberian Lawyer, 2014.
  • ''Cross-border mergers in the insurance market", Tirant lo Blanch, 2013.
  • "Takaful Insurance in the Spanish market", Expansión, 2009.
  • ''PRIIP the KID'', BDS, 2015.

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