Insurers are not permitted to carry on any business activities other than insurance business. The basic reason for this is that the secondary activities must not jeopardise the financial health of the insurer. Policyholders may not be financially disadvantaged by the fact that an insurer carries on secondary activities.
The basic principle for complying with the statutory rules is that the insurer should always organise, manage and finance its activities in such a way that the resulting risks remain limited. Nor may the activities entail an unacceptable risk for the policyholders. The insurer should demonstrate to the satisfaction of De Nederlandsche Bank (DNB) in this connection that the risks associated with any secondary business activities are adequately covered.
What does DNB expect?
DNB bases its decision on whether or not secondary activities by health insurers are permissible on various factors. For example:
- Health care services may be offered within the insurer’s group if the benefits in kind are provided exclusively to its own insured. In principle, this is not a secondary activity.
- Participating interests of insurance companies in care institutions are treated as an investments. They are therefore subject to the same control requirements and statutory rules (including diversification rules).
- Business activities must be restricted to the own insured customer base. In principle, DNB regards providing health care services on a structural basis to persons other than the own insured as a prohibited secondary activity.
- Managing and operating other undertakings is permitted, provided that this is in support of the main business (i.e. insurance). This must be recorded in the articles of association.
- If an insurer provides health care services, it must have sufficient substantive know-how of the product offering at management board level. This is one of the measures for managing risk.