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NETHERLANDS: An Introduction to Insurance

Dutch insurance market 

The Dutch insurance market is the 4th largest EU insurance market. At the basis of the insurance market lie the contractual obligations in insurance contracts. Dutch insurance law limits the freedom to determine the validity and contents of insurance agreements in ways generally similar to those in other European countries. The contractual obligations are influenced by international practice and insurance is offered by insurers who often maintain an international presence.

Specifically healthcare insurance is different. Legislation contains detailed provisions on the allowed content of healthcare insurance agreements. Dutch residents are legally obliged to maintain healthcare insurance.

Many of the largest Dutch law firms specialize in limited areas of insurance only. Most Dutch law firms with a broader in-depth activity on the insurance market are smaller or mid-sized firms. Generally, firms active in the insurance market concentrate on the Dutch insurance market.

Healthcare insurance 

Healthcare insurance is provided by approximately 10 insurance companies. The four largest healthcare insurers have a joint market share of approximately 85%. Premium income of private healthcare insurance is approximately €55 billion. It is collected from the insured customers and out-of-income dependent contributions paid by employers. During the COVID-19 pandemic insurers have been supporting healthcare providers with financial aid to cover extra costs and losses of revenue. 

Healthcare insurance imposes various limits on the free choice by the insured of healthcare providers who do not have a contract with a healthcare insurer. These limits continue to raise legal debate. In the wake of the 2021 parliamentary elections, legislation to clarify this issue was at least temporarily postponed. The choice to provide insurance through competing private insurance companies occasionally causes discussion on the effectiveness of competition as opposed to cooperation. This debate for instance revived at the time of bankruptcy of several city and provincial hospitals during the COVID-19 pandemic. 

While the healthcare system is largely based on trust and most parties involved are worthy of that, fraud by healthcare providers continues to warrant and draw public and political attention. Legislation facilitating the screening of healthcare providers and permitting the sharing of information on fraudulent healthcare providers is enacted or is likely to be enacted. 

Life insurance  

Life insurance is provided by a large number of insurance companies. Premium income is approximately €13 billion. The increasing costs of compliance with the requirements of the supervising authorities induce smaller companies to transfer their portfolio.

The disappointing benefits on unit linked life insurance policies due to high cost levels and lack of transparency have initiated a long-running legal debate on the specific obligations of insurers, intermediaries and policyholders with respect to these policies. Many cases have been settled through alternative dispute resolution by a dispute resolution committee for the financial sector. Although the number of unit linked policies and the amount of premium income are relatively small, many cases are still pending. A case pending with the Supreme Court is likely to generate a landmark decision in or after the second half of 2021. Legislation has in the meantime imposed additional obligations on insurers.

The Dutch pension landscape is changing. Pension funds hold the largest market share. Many life insurance companies have an important role providing pension-related policies, as well as pension-related asset management. Many years of protracted negotiations between trade unions, employers’ associations and the government have finally resulted in an agreement. The negotiations were complicated due to lagging coverage ratios and the inability of pension funds to let pension benefits keep up with increasing costs of living. In the future pensions will be based upon defined contributions instead of defined benefits. Legislation to implement the pension agreement is forthcoming and is likely to affect the life insurance market as well.

Non-life insurance 

Non-life insurance is provided by a large number of Dutch and non-Dutch insurance companies in a highly competitive market. Premium income is approximately €18 billion. The largest portfolios are motor vehicles and fire/property, which generate approximately 55% of the premium volume. 

The coverage offered by insurers is broad, protecting and facilitating various business activities and safeguarding consumers against diverse risks. Only limited developments can be highlighted here. 

• Motor vehicle liability insurers entered into an agreement basically providing for settlement of claims for material damages directly with their insureds rather than through a debate with the insurer of the other party on liability.
• A broad commission advising on the jobs market advised to introduce a mandatory disability insurance for self-employed freelancers.
• A subsidiary of a legal aid insurer offers services by an attorney for a fixed fee, which has been made possible by a recent change of regulations of the Dutch bar association achieved under political pressure.
• Cyber insurance is offered by several insurers and has not yet generated guiding caselaw.
• Directors and officers insurance is likely to be affected by new legislation that expands the liability of managing and supervising directors of foundations and associations in the event of a bankruptcy. The exposure of D&O policies may at the other hand be limited by recent legislation that facilitates a debtor to force creditors to give up part of their claim and cooperate with debt restructuring. Courts are starting to apply this legislation.
• In the field of professional indemnity some large cases and court decisions on the care vis-à-vis third parties have drawn attention.  

Responsible investment policies 

The activities of insurers not only affect society through the choice of premiums, coverage and contracts entered with third parties. Insurers hold large investment portfolios of up to €450 billion to balance their often long-term obligations. Insurers obliged themselves to reduce the CO2 impact of their investments and to avoid negative impact of their investments on human rights, animal welfare and the environment. The latter obligations are laid down in an agreement entered with the government, trade unions and several non-governmental organizations. 

Facilitating settlement of claims 

In the recent past a law facilitating the submission of collective claims and enforcing of agreements on collective claims was enacted. This law may attract and facilitate the handling of collective claims. A recent proposal for a law submitted to parliament also has as its objective to facilitate the settlement of disputes. The proposal provides for obligations to exchange documentary and digital evidence prior to and during litigation. 

Facilitating restructuring of insurance companies   

A recently passed act facilitates restructuring a portfolio under the supervision of the Dutch National Bank to avoid a bankruptcy. Prior to the enactment of this law the government took over one of the larger banking and insurance companies to avoid a financial collapse caused by financing of risky real estate projects. Creditors who lost their claim as a consequence of the government takeover were recently successful: the court rendered an opinion that the government has to pay approximately €800 million compensation to creditors. The new law did not prevent the recent bankruptcy of one of the smaller life insurance companies that was not able to maintain a sufficient solvability ratio. One has to go back to the mid 90’s of the previous century for the last bankruptcy of a larger life insurance company.

Jan Ekelmans
Frank Schaaf
Ekelmans & Meijer Advocaten