Solvency II Basic authorisation

Factsheet

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If your company falls outside the scope of the Solvency II Directive, you can apply for Basic authorisation. Basic authorisation is suitable for small insurers, i.e. those with limited risk exposure.

Published: 20 February 2023

Funeral expenses and benefits in kind insurers can always apply for Basic authorisation, but life and non-life insurers can only do so if they meet specific requirements. This is because life and non-life insurers come under the scope of the Solvency II regime and therefore require Solvency II authorisation, except if they meet all of the following four requirements.

Gross annual premium income does not exceed EUR 5,400,000.

The company's technical provisions do not exceed EUR 26,600,000.

If the company forms part of a group, the group's total technical provisions do not exceed EUR 26,600,000.

Reinsurance activities do not involve more than EUR 600,000 in gross premium income or EUR 2,700,000 in technical provisions, or they do not involve more than 10% of total gross premium income or technical provisions.

Non-life insurers meeting all of these four requirements, may apply for Basic authorisation, but only if they do not provide insurance services in any of the following segments.

Motor vehicle liability;

Road transport liability;

Aircraft liability;

Liability for ships;

General liability;

Credit risks;

Suretyship

Non-life insurance companies providing insurance services in any of these segments must apply for Solvency II authorisation, irrespective of their size.

Life insurers meeting all of the above requirements can apply for Basic authorisation.

Please note that if life or non-life insurers holding Basic authorisation cease to meet any of the four requirements in a given year, they do not need to apply for Solvency II authorisation immediately. Only if they exceed the limits of one of the four requirements in three consecutive years, the Solvency II regime will apply in the fourth year.

No EU passport

If we issue Basic authorisation to your company, it will not include an EU passport, meaning it will not be permitted to provide insurance services in other EU Member States. If you want to provide insurance services in another EU Member State, you must first contact the competent supervisory authority in that Member State, which will tell you whether you can provide the envisaged services there and which requirements apply. Insurers must inform DNB of their activities in other Member States as they may impact sound and ethical business operations.

Voluntary application for Solvency II authorisation

Life or non-life insurers meeting the requirements for Basic authorisation may opt to apply for Solvency II authorisation on a voluntary basis. If you expect your company to grow and need Solvency II authorisation at some point or if you intend to provide insurance services abroad under an EU passport, this is a sensible option.

Exemption from Solvency II Basic

Non-life and in-kind funeral services insurers with gross annual premium income not exceeding €2,200,000 and annualised technical provisions not exceeding €10,700,000, will fall outside the scope of DNB’s supervision provided they meet the requirements set in Section 1 under e, f and g of the Exemption Regulation under the Wft (Vrijstellingsregeling Wft). To protect consumers, the additional requirement has been included that these small insurers may not effect insurance providing cover in excess of €14,000 per insured object or death. Small insurers falling outside DNB’s supervisory scope are required to disclose that they are not subject to supervision by DNB. However, these exempted insurers may still be subject to supervision by the Netherlands Authority for the Financial Markets (AFM). For more information, please consult our fact sheet on the Exemption regulation.