Prudential expectations of the National Bank of Belgium regarding the governance system for the insurance and reinsurance sector

boulevard de Berlaimont 14 – BE-1000 Brussels phone +32 2 221 27 31 company number: 0203.201.340 RPM Brussels www.bnb.be

National Bank of Belgium
Eurosystem

Circular
Brussels, 17 June 2025

Reference: NBB_2025_08 your contact: Aurélie Leclercq phone +32 2 221 39 65 aurelie.leclercq@nbb.be

Prudential expectations of the National Bank of Belgium regarding the governance system for the insurance and reinsurance sector

Scope

• Belgian insurance or reinsurance undertakings (excluding small Belgian insurance undertakings referred to in Articles 275 and 276 or local undertakings referred to in Article 294 of the Solvency II Law¹).
• Branches in Belgium of insurance or reinsurance undertakings subject to the law of a third country.
• Responsible entities² of a Belgian insurance or reinsurance group within the meaning of Article 339, 2° of the Solvency II Law or of a Belgian financial conglomerate within the meaning of Article 340, 1° of the Solvency II Law.

Summary/Objectives
This circular constitutes a revision of Circular NBB_2016_31 on the same subject.
Its main objective is to clarify the Bank's expectations and recommendations regarding the implementation and interpretation of the aforementioned texts.

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1 Law of 13 March 2016 on the status and supervision of insurance or reinsurance undertakings.
2 And more precisely Belgian insurance or reinsurance undertakings that are a participating undertaking in at least one insurance or reinsurance undertaking of the European Economic Area or a third country, Belgian insurance or reinsurance undertakings whose parent undertaking is a mixed financial holding company or a mixed financial subsidiary of the European Economic Area or a third country, and Belgian insurance holding companies or mixed financial holding companies that are parent undertakings of a Belgian insurance or reinsurance undertaking insofar as they are subject to the legal provisions covered by this circular.

NBB_2025_08 – 17 June 2025
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Madam,
Sir,

Insurance and reinsurance undertakings play a crucial public role in the economy and the financial system. They enter into, in particular, a high number of long-term commitments (such as the provision of supplementary pensions) which require a high degree of confidence in their solvency and stability. They also contribute to economic growth by enabling the transfer of risks from other companies.

Therefore, ensuring that undertakings take all measures to guarantee good governance of their activities is important not only for their own management but is also essential for maintaining the confidence of the public, their clients, and the financial system. The organization of governance constitutes one of the cornerstones of the proper functioning of undertakings and the financial system in general.

The legal framework designed to preserve this confidence consists mainly of the Law of 13 March 2016 on the status and supervision of insurance or reinsurance undertakings, which transposed 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), by Delegated Regulation (EU) 2015/35 of the Commission of 10 October 2014 supplementing Directive 2009/138/EC of the European Parliament and of the Council on the taking-up and pursuit of the business of Insurance and Reinsurance, as well as by the Code of Companies and Associations.

The manner in which these texts must be interpreted and implemented in concrete situations is explained in guidelines from the European Insurance and Occupational Pensions Authority (EIOPA³) and in this circular. The International Association of Insurance Supervisors (IAIS) and the International Monetary Fund have also issued guidelines and recommendations on the governance of insurance and reinsurance undertakings, which are included in this circular where deemed appropriate.

The main objective of this circular is to clarify the Bank's expectations and recommendations regarding the implementation and interpretation of the aforementioned texts, incorporating, where appropriate, the guidelines and recommendations of EIOPA, IAIS, and the IMF.

This circular is divided into 16 chapters:

1. Management structure
2. Required qualities of senior management and heads of independent control functions
3. Risk management system
4. Organizational structure and internal control system
5. Independent control functions
6. Financial management
7. Outsourcing
8. Remuneration
9. Integrity policy
10. IT infrastructure
11. Continuity policy, emergency plans, and pre-emptive recovery plans
12. Required qualities of shareholders and members
13. Governance at group level

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3 For European Insurance and Occupational Pensions Authority.

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NBB_2025_08 – 17 June 2025

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14. Evaluation of the effectiveness of the governance system
15. Governance reporting
16. History of successive versions of the circular

At the beginning of each of these chapters, the applicable legal and regulatory framework is recalled and a reference is made to thematic circulars. This circular is thus a "umbrella" circular in that it coordinates and structures various thematic circulars, but it also contains explanations and recommendations on a series of topics. Thus, when an undertaking faces a governance question, it is now invited to consult this circular first, which will indicate whether there is a specific thematic circular on that subject.

This circular replaces, from its entry into force, Circular NBB_2016_31 on the prudential expectations of the National Bank of Belgium regarding the governance system for the insurance and reinsurance sector.

In addition to some minor or purely stylistic modifications or the rewriting of certain passages to improve readability, the modifications introduced in this circular compared to the previous version aim to take into account, on the one hand, the legal and regulatory changes that have occurred since 2016, and on the other hand, the experience gained from the supervisory practice exercised by the Bank within the Solvency II framework.

A copy of this circular is sent to the approved commissioner of your undertaking.

Please accept, Madam, Sir, the expression of our distinguished consideration.

Pierre Wunsch
Governor

NBB_2025_08 – 17 June 2025
Circular – Page 3/4

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Annex: Circular NBB_2025_08_01 on the prudential expectations of the National Bank of Belgium regarding the governance system for insurance and reinsurance undertakings

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NBB_2025_08 – 17 June 2025