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Definition of insurance


Published: 26 June 2017

Institutions wanting to engage in insurance activities need authorisation to do so.

Whether its planned activities qualify as insurance activities must be assessed on the basis of the Financial Supervision Act (Wet op het financieel toezicht – Wft) and the Dutch Civil Code. The Wft states that a company qualifies as an insurance company if it provides insurance on a commercial basis and for its own account, referring to the Dutch Civil Code's definition of insurance.

Definition of insurance

The definition of insurance in the Civil Code has four key elements.
An insurance policy is an agreement under which an insurer undertakes to provide one or several benefits in exchange for one or more premium payments by the policyholder. There is no certainty when they enter into the agreement.


The premium is the compensation that the policyholder pays to the insurer for providing one or several benefits. The name given to the compensation is irrelevant for it to qualify as premium, as are its amount and adequacy. Premiums may be periodic or in lump sum. It is irrelevant whether it is paid by the policyholder itself or a third party. Finally, there is no need for it to be traced back to an individual, i.e. it can be hidden in the price that consumers pay for specific products or services.


In exchange for the premium it receives, the insurer provides one or more benefits if a specific event occurs. The benefit does not need not be a cash payment; it can also be provided in kind as a product or service.

No certainty

The key element of insurance is uncertainty. At the time of entering into the agreement, there must be no certainty on the timing or amounts of any benefits paid or the duration of premium payments. This means that either the benefits or the duration of premium payments is subject to uncertainty.

On a commercial basis and for the company's own account

If the activities your company plans to undertake include the four elements of insurance as listed in the Dutch Civil Code, you require authorisation only if the activities are undertaken on a commercial basis, i.e. not occasionally, and for the company's own account.

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