Order on Life Insurance Companies' Health and Accident Insurance Activities

Order on Life Insurance Companies' Health and Accident Insurance Activities1)

Pursuant to Section 27, Paragraph 3 and Section 316, Paragraph 1, of Act No. 718 of 13 June 2023 on Insurance Undertakings, it is hereby prescribed:

Scope of Application and Definitions

Section 1. This Order applies to insurance companies that conduct both life insurance business and health and accident insurance business within the same company.

Section 2. In this Order, the following definitions apply:
1) Life insurance business: Insurance business covered by Annex 2 to the Act on Insurance Undertakings.
2) Health and accident insurance business: Insurance business covered by insurance classes 1 and 2 in Annex 1 to the Act on Insurance Undertakings.

Separate Management of Life Insurance and Health and Accident Insurance Business

Section 3. Insurance companies shall manage life insurance business and health and accident business separately. The management shall be conducted in such a way that:
1) the respective interests of life insurance and non-life insurance policyholders are not disregarded, and
2) the profit from life insurance benefits only the life insurance policyholders in the same manner as if the company only conducted life insurance business.

Paragraph 2. Insurance companies shall ensure that necessary measures are taken in business processes, policies, and guidelines to comply with the requirement for separate management between life insurance business and health and accident insurance business.

Section 4. Insurance companies shall calculate:
1) A theoretical minimum capital requirement in relation to its life insurance business. The minimum capital requirement shall be calculated as if the insurance company only conducted life insurance business.
2) A theoretical minimum capital requirement in relation to its health and accident insurance business. The minimum capital requirement shall be calculated as if the insurance company only conducted health and accident insurance business.

Paragraph 2. Insurance companies shall at all times possess a basic capital base that can cover the theoretical minimum capital requirement for life insurance business, and a basic capital base that can cover the theoretical minimum capital requirement for health and accident insurance business.

Paragraph 3. The financial minimum obligations, pursuant to Paragraph 2, which are required to be met in relation to respectively life insurance business and health and accident insurance business, may not be borne by the other form of business.

Paragraph 4. When the insurance company meets the theoretical minimum capital requirements, pursuant to Paragraphs 2 and 3, the insurance company may use:
1) recognized elements in the capital base for health and accident insurance business, which exceed the business's theoretical minimum capital requirement within health and accident insurance business, to wholly or partially cover the difference between the theoretical solvency capital requirement for life insurance business, as defined in Article 252, Paragraph 11, of the Commission Delegated Regulation (EU) 2015/35 of 10 October 2014 supplementing Directive 2009/138/EC of the European Parliament and of the Council on the access to and the exercise of the activities of insurance and reinsurance undertakings (Solvency II), and the theoretical minimum capital requirement for life insurance business, and
2) recognized elements in the capital base for life insurance business, which exceed the business's theoretical minimum capital requirement within life insurance business, to wholly or partially cover the difference between the theoretical solvency capital requirement for health and accident insurance business, as defined in Article 252, Paragraph 6, of the Commission Delegated Regulation (EU) 2015/35 of 10 October 2014 on the access to and exercise of the activities of insurance and reinsurance undertakings (Solvency II), and the theoretical minimum capital requirement for health and accident insurance business.

Paragraph 5. The insurance company shall notify the Danish Financial Supervisory Authority before the insurance company makes use of the option in Paragraph 4.

Section 5. Insurance companies shall maintain internal separate statements showing how the result for respectively life insurance and health and accident insurance was achieved.

Paragraph 2. All income and expenses shall be allocated according to their origin in the internal separate statements. Income includes in particular premiums, payments from reinsurance, and investment returns. Expenses include in particular insurance benefits, additions to insurance provisions, reinsurance premiums, and insurance administration expenses.

Paragraph 3. The Danish Financial Supervisory Authority shall approve the allocation methods by which items that are common to both forms of business are recorded in the internal separate statements.

Paragraph 4. Insurance companies shall prepare a document based on the internal separate statements, in which the basic capital elements referred to in Articles 69-73 of the Commission Delegated Regulation (EU) 2015/35 of 10 October 2014 supplementing Directive 2009/138/EC of the European Parliament and of the Council on the access to and exercise of the activities of insurance and reinsurance undertakings (Solvency II), and which contribute to covering each of the calculated theoretical minimum capital requirements, pursuant to Section 4, Paragraph 1, are clearly identified and comply with the requirements for covering the minimum capital requirements.

Section 6. Insurance companies shall report the internal separate statements for respectively life insurance business and health and accident business to the Danish Financial Supervisory Authority. The reports shall for each of the two forms of business contain the following:
1) Income statement.
2) Balance sheet.
3) Capital base, divided in accordance with Section 5, Paragraph 4.
4) Capital plan, including relevant stress scenarios.

Paragraph 2. Insurance companies shall compare the achieved results, which are calculated in accordance with the internal separate statements, with the expected results, which appear from the capital plan for the relevant reporting period. Based on the comparison, insurance companies shall explain which decisions have been made in the event of significant deviations from the expected results regarding the operation of respectively life insurance business and health and accident insurance business. As part of the explanation, insurance companies shall illuminate the expected effects of the decisions based on the business model and capital plan. The explanations shall be submitted to the Danish Financial Supervisory Authority simultaneously with the other reporting of the internal separate statements, pursuant to Paragraph 1.

Paragraph 3. Reporting of the internal separate statements, pursuant to Paragraph 1, and submission of explanations, pursuant to Paragraph 2, shall be made once a year, no later than 14 weeks after the end of the calendar year.

Paragraph 4. The Danish Financial Supervisory Authority may, upon request, grant dispensation from the supervisory reporting requirements, pursuant to Paragraphs 1 and 2, if reporting of parts or all of these information may be considered disproportionately burdensome in relation to the nature, scope, and complexity of the risks associated with the company's business.

Section 7. Insurance companies shall prepare a financing plan in accordance with Section 224 of the Act on Insurance Undertakings for the relevant form of business, if the basic capital elements mentioned in Section 5, Paragraph 4, are not sufficient to cover the theoretical minimum capital requirement for one of the forms of insurance business.

Paragraph 2. The Danish Financial Supervisory Authority may allow the transfer of basic capital elements from one form of business to the other, in the cases mentioned in Paragraph 1, regardless of the requirement in Section 4, Paragraph 3.

Penal Provisions

Section 8. Violation of Section 3, Section 4, Paragraphs 1-3 and 5, Section 5, Paragraphs 1-2 and 4, and Section 7, Paragraph 1, is punishable by a fine.

Paragraph 2. Companies etc. (legal persons) may be subject to criminal liability according to the rules in Chapter 5 of the Criminal Code.

Entry into Force

Section 9. This Order enters into force on 1 January 2025.

Paragraph 2. Order No. 2003 of 1 November 2021 on life insurance companies' health and accident insurance business is repealed.

Danish Financial Supervisory Authority, 5 December 2024 Louise Mogensen / Line Bergmann

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1) The Order contains provisions that implement parts of Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the access to and the exercise of the activities of insurance and reinsurance undertakings (Solvency II), OJ EU 2009, No. L 335, page 1, as amended by 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 Regulation (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, page 1.

Official Gazette A
2024 Published on 10 December 2024
5 December 2024. No. 1424.
Ministry of Industry, Business and Financial Affairs, Danish Financial Supervisory Authority, file no. 24-019102 CQ003061