Insurance Intermediaries as Distributors of Units in Investment Funds

• Updated February 2026- Insurance Intermediaries as Distributors of Units in Investment Funds

Following recent amendments to relevant regulations and frequent inquiries regarding the distribution of units in investment funds, the Croatian Financial Services Supervisory Agency (Hanfa) provides the following clarification on how insurance intermediaries may offer or distribute units in investment funds in accordance with the provisions of the Insurance Act (NN 30/15, 112/18, 63/20, 133/20, 151/22 and 152/24 hereinafter: ZOS), the Open-Ended Investment Funds with Public Offer Act (NN 44/16, 126/19, 110/21, 76/22 and 152/24 hereinafter: ZOIFJP), the Alternative Investment Fund Act (NN 21/18, 126/19, 110/21, 83/23 and 152/24 hereinafter: ZAIF), and the Capital Markets Act (NN 85/18, 17/20, 83/21, 151/22, 58/24 and 126/25 hereinafter: ZTK).

In accordance with Article 401(3) of the ZOS, in addition to insurance distribution activities under Article 399(1)(1) of the ZOS, an insurance intermediary listed in Article 402(1)(1)-(6) of the ZOS (insurance agent - natural person, self-employed insurance agent, insurance agency company, insurance broker - natural person, self-employed insurance broker, and insurance brokerage company) may, among other specifically listed activities, perform the activity of offering units in investment funds in accordance with the laws governing the operation of investment funds.

The 2019 amendments to the ZOIFJP replaced the term "offering of units" with "distribution of units", which, according to Article 4(1)(47) of the ZOIFJP, means the sale or advice regarding units in UCITS funds performed by asset management companies or persons under Article 164 of the ZOIFJP. This has been identically implemented in the amendments to the ZAIF.

According to Article 164 of the ZOIFJP, in addition to asset management companies under Article 144(1) of the ZOIFJP, the distribution of units may also be performed by persons authorized under the Capital Markets Act to provide investment services consisting in reception and transmission of orders and/or investment advice.

Below, we specify which entities are authorized to provide the aforementioned investment services of reception and transmission of orders or investment advice, under which conditions (excluding those specifically listed in Article 6 of the ZTK), with particular emphasis on providing such services regarding units or shares in undertakings for collective investment, which, according to Article 3(109) of the ZTK, implies units in UCITS funds under the ZOIFJP and units in alternative investment funds under the ZAIF.

1. Use of the exemption under Article 4(1)(3) of the ZTK According to Article 4(1)(3) of the ZTK, the provisions of the ZTK prescribing authorization for operation and conditions for providing investment services do not apply to a person who occasionally performs investment services as part of its professional activity, provided that the performance of such activity is prescribed by law, other regulations, or an ethical code that does not exclude the possibility of providing such service, and provided that the conditions prescribed by Article 4 of Delegated Regulation (EU) No 2017/565 (hereinafter: the Regulation) are met. The Regulation specifies the conditions a) existence of a link between the main/professional activity and the investment service, b) that the objective of providing investment services to clients of the main activity is not securing a steady income, and c) that the person performing the professional activity does not advertise or promote its capability to provide the investment service, unless it is communicated to clients as an addition to the main activity that does not prohibit providing investment services and is regulated by law, other regulations, or an ethical code. The following provides clarification on certain conditions that must be cumulatively met. If any of the aforementioned conditions is not met, an insurance intermediary wishing to participate in the distribution of units in investment funds must be licensed by Hanfa as a market intermediary (option under item 2.) or registered by an asset management company as a tied agent (option under item 3.). a) Link between the main activity and investment service There must be a link between insurance intermediation and the distribution of investment funds. Such a link exists, for example, when an insurance company and an asset management company from the same group use the same insurance intermediary as a sales channel, or when an insurance intermediary distributes so-called unit-linked insurance products and concurrently enables applications for purchasing units in investment funds to be submitted through it, which are somehow linked to the same asset management company or products (whether referring to the same funds or funds managed by the same asset management companies). b) Objective of providing investment services to clients of the main activity is not securing a steady income The objective of distributing units should, instead of ensuring a steady income, be, for example, facilitating users of the main service (in this case, insurance intermediation) to acquire a unit in a fund through the service provider, rather than contacting the asset management company directly. c) Service provider does not advertise or promote its capability to provide the investment service, unless communicated to clients as an addition to the main activity that does not prohibit providing investment services and is regulated by law, other regulations, or an ethical code Since the business of insurance intermediaries is regulated by law that does not exclude but permits performing these activities, this condition is met, provided that advertising and promoting the distribution of units in investment funds is limited exclusively to mentioning this possibility in the context of providing the main service, and not, for example, seeking new clients. In light of all the above, if all aforementioned conditions regarding the distribution of units in funds are met, all categories of insurance intermediaries listed in points 1 to 6 of Article 402(1) of the ZOS may perform distribution activities for units in funds, and no additional authorizations or actions by insurance intermediaries are required. If an asset management company engages an insurance intermediary in this manner, it must notify Hanfa thereof as a distribution channel in accordance with Article 165(2) of the ZOIFJP or Article 148(2) of the ZAIF.

2. Market Intermediary (Articles 130 to 136.a of the ZTK) The market intermediary institution also represents an exemption from the obligation for persons providing investment services of reception and transmission of orders (Article 5(1)(1) ZTK) and investment advice (Article 5(1)(5) ZTK) regarding units in investment funds to obtain authorization as an investment company, provided that: a) they do not hold client money and financial instruments (Article 131(4) ZTK), b) they perform the aforementioned services only regarding transferable securities and units in undertakings for collective investment, and c) they transmit orders only to persons under Article 6(1) ZTK and undertakings for collective investment and their managers who are authorized to publicly sell units or shares in undertakings for collective investment that they manage (Article 131(3) ZTK). There is no obstacle for an insurance intermediary, if it is a legal entity or sole proprietorship, to submit an additional application for authorization as a market intermediary, taking into account that Article 130(1) ZTK allows a market intermediary to be a sole