Managing agents wanting to set up a service company in Spain must be aware of the following considerations and requirements that make up the local environment.
Key considerations
Financial considerations
No requirement to maintain trust funds, licences held with LIC.
Segregation of Accounts: Spanish service companies must set up separate bank accounts in relation to activities carried out for each insurer. Also, office expenses must be deposited in separate bank account.
Share Capital confirmed and deposited with the bank.
Insurance Premium Tax (IPT) applies on LIC insurance policies in Spain.
Applicability of premium tax are class dependent – see Crystal+ for more information.
Additional charges may apply:
Service companies should pay their own local taxes, depend upon the service company, group structure and location.
Insurance-related services are exempt from VAT. Other services may be subject to VAT, such as stand-alone loss adjustment or claims handling services as well as non-insurance related services).
Segregation of Accounts: Spanish service companies must set up separate bank accounts in relation to activities carried out for each insurer. Also, office expenses must be deposited in separate bank account.
Share Capital confirmed and deposited with the bank.
Insurance Premium Tax (IPT) applies on LIC insurance policies in Spain.
Applicability of premium tax are class dependent – see Crystal+ for more information.
Additional charges may apply:
- Consorcio charge for financing the winding-up of insurers (LEA, in Spanish)
- Consorcio charge for extraordinary risks
- Consorcio charge for financing its activity as national motor bureau
- Fire Brigade Charge.
Service companies should pay their own local taxes, depend upon the service company, group structure and location.
Insurance-related services are exempt from VAT. Other services may be subject to VAT, such as stand-alone loss adjustment or claims handling services as well as non-insurance related services).
Operational considerations
Spanish Companies House (“Registro Mercantil”): is the official registry for all businesses in Spain.
Key steps to registering a business include:
Requirements for statutes and share capital are defined by the legal entity structure chosen. For example:
Key steps to registering a business include:
- Choose a legal structure (e.g., SL, SA)
- Draft articles of association
- Open a bank account
- Deposit required minimum capital
- Submission of registration with the Companies House (Registro Mercantil)
Requirements for statutes and share capital are defined by the legal entity structure chosen. For example:
- SL: Private Limited Company
- SA: Public Limited Company
Employee considerations
Consulting industry experts on Spanish employment laws is strongly recommended.
Service companies must be effectively managed by persons who meet the legal requirements of good repute and professional competence.
To assess suitability, the DGS requests the following:
Service companies must be effectively managed by persons who meet the legal requirements of good repute and professional competence.
To assess suitability, the DGS requests the following:
- Declaration of previous activities, adequate experience and knowledge for the sound and prudent management of the company.
- Certificate of absence of criminal records
- Detailed Curriculum vitae to demonstrate the knowledge required of board members regarding financial matters, business strategy, governance systems, and financial and actuarial analysis.
Regulatory considerations
Lloyd’s Europe submits all Solvency II and statistical reports to the NBB.
No supplementary reporting from syndicates is currently required for the territory.
N.B reporting may be subject to change following ad hoc requests from the DGS.
Obtain the license to act as underwriting agency from the Insurance Regulator (the DGS)
No supplementary reporting from syndicates is currently required for the territory.
N.B reporting may be subject to change following ad hoc requests from the DGS.
Obtain the license to act as underwriting agency from the Insurance Regulator (the DGS)
Launch Crystal+Local Requirements
Spanish service companies are not intermediaries and their activities are not regarded as insurance distribution. They are not subject to IDD and cannot passport. They can only write Spanish risks.
Complaints arising from FOE business must be handled by the LIC Customer Service Department. The Service company is not allowed to contact the complainant.
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Operational Guidance - Complaints HandlingKey Requirements for setting up a Service Company
Service companies must be licensed as “underwriting agencies” by the DGS before starting the activity. It must apply before the DGS and demonstrates that it meets the legal requirements about qualification, fit and proper, technical and financial solvency as well as the support of, at least, an insurer (LIC).
Mandatory professional liability insurance (PI) is required for underwriting agencies as per Spanish Insurance Laws.
Details for being an underwriting agency can be found in Crystal + in the following section: Distribution Channels – Intermediary Regulation.
Lloyd’s registration process
Initiation
Co-ordinate with Lloyd’s teams to understand country interest, define service company and set timelines.
Register and setup
Managing agents will submit business plans and work with country managers for regional setup according to local regulations. In tandem the service company is registered on Atlas to complete necessary business and company details.
Due diligence
Managing agent’s maturity rating under PBO Principles is used to determine whether an Attestation or Decision Paper is completed, demonstrating satisfactory due diligence has been conducted.
Service Company Underwriting Agreement
Once all registration and set up requirements are met, formal service company underwriting agreement can be signed and service company can start trading on agreed date.