Act on Insurance Undertakings in Cross-Border Pension Funds, Life Insurance Companies and Non-Life Insurance Companies etc. (Act on Insurance Business)1)

This Act promulgates Act No. 718 of 13 June 2023 on insurance undertakings in cross-border pension funds, life insurance companies and non-life insurance companies etc. (Act on Insurance Business) with the amendments resulting from Section 9 of Act No. 1546 of 12 December 2023, Section 11 of Act No. 480 of 22 May 2024, Section 8 of Act No. 481 of 22 May 2024, Section 4 of Act No. 639 of 11 June 2024, Section 24 of Act No. 1602 of 17 December 2024, Section 10 of Act No. 1666 of 30 December 2024, Section 13 of Act No. 1668 of 30 December 2024 and Section 76 of Act No. 52 of 28 January 2025.

Part I

General Provisions

Chapter 1

Scope of Application

Insurance Undertakings

Section 1. This Act applies to insurance undertakings, cf. Section 9, subsection 1, no. 1, and business covered by Sections 2-7.

Financial Holding Undertakings and Insurance Holding Undertakings

Section 2. For financial holding undertakings and insurance holding undertakings, Section 67, subsection 1, Section 82, Chapter 10, Section 95, Section 100, Section 105, subsection 7, Section 107, subsection 1, Sections 133, 138, 165, 170-172 and 174, Chapter 17, Sections 259-262 and 267-275, Section 277, subsection 3, Section 280, subsections 1, 2 and 5-8, and Sections 283, 284, 301-307, 309 and 312-319 shall apply.

Subsection 2. For financial holding undertakings, Sections 142-144, 146 and 151 shall additionally apply.

Subsection 3. For insurance holding undertakings, Sections 127, 166 and 167 shall additionally apply.

Subsection 4. For financial holding undertakings, cf. Section 9, subsection 1, no. 9, which are the top-level parent undertaking in a group, and for insurance holding undertakings, cf. Section 9, subsection 1, no. 10, which are the top-level parent undertaking in a group where at least one of the subsidiary undertakings is a Group 1 insurance undertaking, Sections 126-130 shall apply.

1. The Act contains provisions implementing parts of Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II), OJ EU 2009, No. L 335, p. 1, parts of Directive 2013/58/EU of the European Parliament and of the Council of 11 December 2013 amending Directive 2009/138/EC (Solvency II) as regards the dates for its implementation and application and the date of repeal of certain Directives (Solvency I), OJ EU 2013, No. L 341, p. 1, parts of Directive 2014/50/EU of the European Parliament and of the Council of 16 April 2014 on minimum requirements for promoting worker mobility between Member States by improving the acquisition and preservation of supplementary pension rights, OJ EU 2014, No. L 128, p. 1, parts of Directive 2014/51/EU of the European Parliament and of the Council of 16 April 2014 amending Directives 2003/71/EC and 2009/138/EC and Regulations (EC) No 1060/2009, (EU) No 1094/2010 and (EU) No 1095/2010 as regards the powers conferred on the European Supervisory Authority (European Insurance and Occupational Pensions Authority) and the European Supervisory Authority (European Securities and Markets Authority), OJ EU 2014, No. L 153, p. 1, parts of Directive 2015/849/EU of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council and repealing Directives 2005/60/EC and Commission Directive 2006/70/EC, OJ EU 2015, No. L 141, p. 73, parts of Directive 2002/87/EC of the European Parliament and of the Council of 16 December 2002 on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate, OJ EU 2003, No. L 35, p. 1, parts of Directive (EU) 2016/97 of the European Parliament and of the Council of 20 January 2016 on insurance distribution (recast), OJ EU 2016, No. L 2, p. 19, parts of Directive 2014/50/EU of the European Parliament and of the Council of 16 April 2014 on minimum requirements for promoting worker mobility between Member States by improving the acquisition and preservation of supplementary pension rights (the portability directive), OJ EU 2014, No. L 128, p. 1, parts of Directive (EU) 2017/828 of the European Parliament and of the Council of 17 May 2017 amending Directive 2007/36/EC as regards the encouragement of long-term active ownership (the Shareholders' Rights Directive), OJ EU 2017, No. L 132, p. 1, parts of Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC, OJ EU 2013, No. L 182, p. 19, and parts of Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU as regards corporate sustainability reporting, OJ EU 2022, No. L 322, p. 15.

Danish Law Journal A
2025 Published on 20 February 2025
16 February 2025. No. 169.
Ministry of Industry, Business and Financial Supervision,
Ref. No. 24-016061
CQ003132

Branches

Section 3. For branches in this country of foreign undertakings which have been granted authorization to carry on the business mentioned in Sections 14-18 in a country within the European Union or a country with which the Union has concluded an agreement in the financial area, Sections 49-51, 55-59, 67, 69, 71-76, 174, 259, 260 and 269, Section 270, subsections 1 and 3, and Sections 271, 272, 274, 275, 281, 283, 291, 294-296, 299, 302, 305-307 and 312-319 shall apply with the deviations provided for in or pursuant to international agreements.

Subsection 2. This Act shall apply to branches in this country of insurance undertakings which have been granted authorization in a country outside the European Union, with which the Union has not concluded an agreement in the financial area, with the deviations that the branch relationship necessitates, or which are provided for in or pursuant to international agreements.

Subsection 3. The Danish Financial Supervisory Authority may lay down further rules for branches covered by subsection 2, including rules on capital requirements etc., and rules that branches covered by subsection 2 must carry out their activities in a subsidiary.

Subsection 4. The provisions of the Companies Act on branches of foreign public limited liability companies shall apply to the branches mentioned in subsection 2.

Services

Section 4. For services provided in this country by insurance undertakings which have been granted authorization in another country within the European Union or a country with which the Union has concluded an agreement in the financial area, Sections 52-54, 59, 67 and 71-76, Section 269, subsection 1, and Sections 283 and 305-307 shall apply with the deviations provided for in or pursuant to international agreements.

Subsection 2. For services provided in this country by insurance undertakings which have been granted authorization in a country outside the European Union, with which the Union has not concluded an agreement in the financial area, Section 60 and Sections 305-307 shall apply with the deviations provided for in or pursuant to international agreements.

SE Companies

Section 5. The provisions on the board of directors or board members in Section 9, subsection 1, no. 6, Section 111, subsection 1, Section 112, Section 117, subsection 1, nos. 1 and 3, Section 139, subsection 2, Section 193, subsections 11 and 12, and Section 245 shall apply only to the supervisory organ or members thereof in SE companies with a two-tier management system with the necessary adaptations.

Subsection 2. The provisions on the board of directors or board members and the provisions on the management in Section 19, subsection 1, no. 1, Sections 42, 82, 96, 97, 105, 110, 121-124 and 138, Section 170, no. 2, Section 171, no. 2, Sections 181, 182 and 208, Section 244, subsection 1, Section 267, subsections 2 and 3, Section 272, Section 276, subsection 2, no. 2, Section 280, Section 302, subsection 2, no. 7, and subsection 3, and Sections 312-319 shall, in addition to the management organ and members thereof, also apply to the supervisory organ or members thereof in SE companies with a two-tier management system with the necessary adaptations.

Suppliers and Sub-suppliers

Section 6. For suppliers and sub-suppliers to outsourcing undertakings, Section 269, subsection 1, Section 270, subsection 4, and Sections 305-307 shall apply.

Co-insurance Business

Section 7. The Danish Financial Supervisory Authority may lay down special rules or deviations for co-insurance business.

Section 8. (Repealed)

Chapter 2

Definitions

Section 9. In this Act, the following terms shall have the following meanings:

1. Insurance Undertaking: a) Non-life Insurance Undertaking: A public limited liability company which has been granted authorization to carry on non-life insurance business, cf. Section 14. b) Mutual Society: A company owned by the policyholders, cf. Section 237, which has been granted authorization to carry on life or non-life insurance business, cf. Section 14. c) Life Insurance Undertaking: A public limited liability company, including an employment-related life insurance undertaking, cf. Section 250, which has been granted authorization to carry on life insurance business, cf. Section 14. d) Cross-Border Pension Fund: An association or federation, cf. Section 247, which has been granted authorization to carry on life insurance business, cf. Section 14. e) Reinsurance Undertaking: A public limited liability company which has been granted authorization to carry on reinsurance business, cf. Section 14.

2. Credit Institutions, cf. Section 5, subsection 1, no. 1, letter a, in the Act on Financial Business.

3. Mortgage Credit Institutions, cf. Section 5, subsection 1, no. 1, letter b, in the Act on Financial Business.

4. Securities Firms, cf. Section 13, subsection 2, cf. subsection 1, in the Act on Securities Firms and Investment Services and Activities.

5. Asset Management Companies, cf. Section 5, subsection 1, no. 1, letter c, in the Act on Financial Business.

6. Parent Undertaking: An undertaking which has one or more subsidiary undertakings.

7. Subsidiary Undertaking: An undertaking over which a parent undertaking exercises controlling influence.

8. Group: A parent undertaking and its subsidiary undertakings, cf. Section 10.

9. Financial Holding Undertaking: A parent undertaking which is not a credit institution, a mortgage credit institution, a securities firm or an asset management company, in a group where at least one of the subsidiary undertakings in the group is an insurance undertaking, and where at least 40 per cent of the total balance sheet total of the group and the parent undertaking's associated undertakings relates to the financial sector, cf. however the second sentence and subsection 5. A parent undertaking is not a financial holding undertaking if the financial subsidiary undertakings in the group are exclusively insurance undertakings. The parent undertaking will instead be an insurance holding undertaking, cf. no. 10, or a mixed insurance holding undertaking, cf. no. 11.

10. Insurance Holding Undertaking: A parent undertaking whose main activity is to acquire and hold shareholdings in subsidiary undertakings, when these subsidiary undertakings are exclusively or mainly insurance or reinsurance undertakings or third-country insurance or reinsurance undertakings, and at least one of these subsidiary undertakings is an insurance or reinsurance undertaking. An insurance holding undertaking is not a financial holding undertaking, cf. no. 9.

11. Mixed Insurance Holding Undertaking: A parent undertaking which is neither a credit institution, a mortgage credit institution, a securities firm, an asset management company, a third-country insurance or reinsurance undertaking, a financial holding undertaking nor an insurance holding undertaking, and which owns at least one subsidiary undertaking which is an insurance or reinsurance undertaking.

12. Associated Undertaking: An undertaking in which another undertaking and its subsidiary undertakings hold shareholdings and exercise significant influence on its operational and financial management, but which is not a subsidiary undertaking of the other undertaking. An undertaking and its subsidiary undertakings are presumed to exercise significant influence if they together hold 20 per cent or more of the voting rights.

13. Exposure: The sum of all dealings with a customer or a group of interconnected customers which entails a credit risk for the undertaking, and shareholdings issued by the customer or by one of a group of interconnected customers. As far as provisions on exposures in Sections 117-120 and 173 are concerned, the following dealings are exempted: a) In the case of foreign exchange transactions: Dealings arising in connection with the normal settlement of a transaction, within a period of 48 hours after payment has been made. b) In the case of purchase or sale of transferable securities: Dealings arising in connection with the normal settlement of a transaction, within a period of 5 working days after payment has been made or the transferable securities have been delivered, whichever date is earlier. c) In the case of payment services, including the execution of payment orders, clearing and settlement of transferable securities in any currency and correspondent bank or offers of clearing, settlement and deposit of financial instruments to customers: Dealings relating to delayed receipt of financing and other dealings arising as a result of customer activity, and which do not last longer than the following working day. d) In the case of payment services, including the execution of payment orders, clearing and settlement of transferable securities in any currency and correspondent bank: Intraday dealings with institutions providing these services.

14. Close Links: a) Direct or indirect links of the type specified in no. 8, b) Capital interests, meaning a company's direct or indirect holding of 20 per cent or more of the voting rights or capital in a company, or c) Several companies' or persons' common link, cf. letter a, with a company.

15. Branch: A division which legally constitutes a non-independent part of an insurance undertaking and which carries on business of the type for which the undertaking has been granted authorization.

16. Captive Reinsurance Undertaking: A reinsurance undertaking which is owned by a mortgage credit institution, a credit institution, a securities firm or an asset management company or by a group or group subject to group supervision under Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) or by an undertaking which is not a mortgage credit institution, a credit institution, a securities firm or an asset management company, and which has the sole purpose of providing reinsurance cover for the risks in the company or companies to which the undertaking belongs, or in the company or companies in the group of which it is a part.

17. Group 1 Insurance Undertaking: An insurance undertaking which carries on cross-border business in accordance with Sections 61, 62 or 63 or insurance or reinsurance business covered by one or more of the insurance classes 10-15 in Annex 1, unless they constitute accessory risks, or a company which in 3 consecutive years has met at least one of the following conditions, cf. however Sections 15 and 17: a) The company's annual gross premium exceeds EUR 5 million. b) The company's total insurance technical provisions for gross reserves, excluding reinsurance contracts and contracts with ISPVs, exceed EUR 26.6 million. c) The company is part of a group, and the group's total insurance technical provisions for gross reserves, excluding reinsurance contracts and contracts with ISPVs, exceed EUR 26.6 million. d) The company carries on reinsurance business which exceeds EUR 0.6 million of the company's gross premium, EUR 2.7 million of its insurance technical provisions for gross reserves, excluding reinsurance contracts and contracts with ISPVs, 10 per cent of its gross premiums or 10 per cent of its insurance technical provisions for gross reserves, excluding reinsurance contracts and contracts with ISPVs.

18. Group 2 Insurance Undertaking: An insurance undertaking which is not a Group 1 insurance undertaking.

19. Accessory Risks: Insurance risks which are covered by an insurance class in Annex 1 and which do not require separate authorization under Section 14, subsection 1, because the risks are included in the primary risk for which the insurance undertaking has been granted authorization, and because the risks concern a matter covered by the contract covering the primary risk. Insurance classes 14, 15 and 17 cannot be accessory risks to other insurance classes.

20. Outsourcing: An arrangement of any kind between an insurance undertaking and a service provider, where the service provider either directly or through sub-outsourcing performs a process, a service or an activity which the insurance undertaking would otherwise have performed itself.

21. Outsourcing Undertaking: An insurance undertaking which outsources activities to a supplier.

22. Supplier: An undertaking which performs outsourced tasks for the outsourcing undertaking.

23. Sub-outsourcing: A supplier's outsourcing of tasks which it performs in accordance with an agreement with the outsourcing undertaking to a sub-supplier and the sub-supplier's possible sub-outsourcing of the tasks to the next link in the chain of sub-suppliers and possible sub-outsourcing to other links in the chain of sub-suppliers.

24. Competent Authorities: The national authorities which are empowered by law or other regulations to exercise supervision over the types of business covered by this Act.

25. Solvency Certificate: A certificate showing that the Group 1 insurance undertaking meets the solvency capital requirement and the minimum capital requirement in accordance with Sections 154 and 155.

26. ISPV (Insurance Special Purpose Vehicle): A legal person which covers risks for insurance undertakings and which finances its coverage of such risks exclusively by means of proceeds from bond issues or other financing arrangements, where the repayment requirements for those who have provided capital are subordinated to the reinsurance obligations resulting from an agreement concluded between the legal person and the insurance undertaking.

27. Standard Formula: A mathematical formula for calculating a Group 1 insurance undertaking's solvency capital requirement, cf. Section 154, which is established by the European Commission pursuant to Article 111 of Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II).

28. Matching Adjustment: An adjustment of the risk-free interest curve under Section 158, subsection 1, for a selected portfolio of insurance liabilities, where the Group 1 insurance undertaking has invested in assets whose cash flows reflect the cash flows of the insurance liabilities.

29. Volatility Adjustment: An adjustment of the risk-free interest curve under Section 158, subsection 1, which ensures that the present value of the insurance technical provisions for solvency is calculated taking into account the investments made by the Group 1 insurance undertaking.

30. Beneficial Owner: A natural person who ultimately directly or indirectly owns or controls a sufficient part of the shareholdings or voting rights, or who exercises control by other means.

31. Captive Insurance Undertaking: An insurance undertaking which is owned either by a mortgage credit institution, a credit institution, a securities firm or an asset management company or by a group or a group subject to group supervision under Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) or an undertaking which is not a mortgage credit institution, credit institution, securities firm or asset management company, and which has the sole purpose of providing insurance cover for the risks in the company or companies to which the undertaking belongs, or in the company or companies in the group of which it is a part.

32. Home Member State for Group 1 Insurance Undertakings: a) In the case of non-life insurance, the Member State where the insurance undertaking covering the risk has its head office. b) In the case of life insurance, the Member State where the insurance undertaking assuming the obligation has its head office. c) In the case of reinsurance, the Member State where the reinsurance undertaking's head office is located.

33. Host Member State for Group 1 Insurance Undertakings: Another Member State than the home Member State where an insurance undertaking has a branch or provides services. In connection with life insurance and non-life insurance, the host Member State is a) the Member State where an insurance or reinsurance undertaking provides services, b) the Member State where the obligation exists, if the obligation is covered by an insurance undertaking or a branch in another Member State, or c) the Member State where the risk exists, if the risk is covered by an insurance undertaking or a branch in another Member State.

34. Group Supervision under the Solvency II Directive is the supervision exercised with: a) Undertakings covered by Section 166, subsections 1 and 2. b) Group 1 insurance undertakings, where the parent undertaking is a mixed insurance holding undertaking. c) Group 1 insurance undertakings, where the parent undertaking has its head office in a country outside the European Union, and where the parent undertaking is a third-country insurance undertaking, an insurance holding company or a mixed financial holding company as defined in Article 212, subsection 1, letters f and g, of Directive 2009/138/EC on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) with later amendments.

35. Group Supervisor under the Solvency II Directive: The supervisory authority which, among the supervisory authorities of several countries concerned, is designated as responsible for coordinating and exercising group supervision of cross-border groups covered by Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) with later amendments.

36. Finite Reinsurance: Reinsurance where the explicit maximum loss risk expressed as the maximum transferred economic risk, which arises as a result of a significant transfer of insurance and timing risk, exceeds the premium for the entire duration of the agreement by a limited but significant amount, when at least one of the following characteristics is present: a) Explicit and comprehensive consideration of the time value of money, or b) Agreement provisions for balancing the relationship between the parties with regard to economic experience over time in order to achieve the intended risk transfer.

37. Large Risks: a) Risks under insurance classes 4-7, 11 and 12 in Annex 1. b) Risks under insurance classes 14 and 15 in Annex 1, when the policyholder carries on industrial or commercial business or liberal profession and the risks concern this business. c) Risks under insurance classes 3, 8-10, 13 and 16 in Annex 1, when the policyholder meets at least two of the following conditions: i) The policyholder has a balance sheet total of at least EUR 6.2 million. ii) The policyholder has an annual net turnover of at least EUR 12.8 million. iii) The policyholder had 250 or more full-time employees in the most recent financial year.

38. Insurance Distribution: a) The business consisting of advising on, proposing or carrying out the preliminary work in connection with the conclusion of insurance contracts, concluding such contracts or participating in the administration and performance of such contracts. b) The business consisting of the provision of information...