Iceland Insurance Industry – Governance, Risk and Compliance

Iceland Insurance Industry Report Overview

The Iceland insurance industry is regulated mainly by the Central Bank (CB). Other bodies that oversee the industry are IAIS, EIOPA, and SFF. The Iceland insurance industry research report provides a detailed analysis of the insurance regulations for life, property, motor, liability, personal accident, and health, and marine, aviation, and transit insurance. The report specifies various requirements for the establishment and operation of insurance and reinsurance companies and intermediaries. It also gives insurers access to information on prevailing insurance regulations, and recent and upcoming changes in the regulatory framework, taxation, and legal system in the country. Moreover, it includes the scope of non-admitted insurance in the country.

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Iceland Insurance Industry – Key Regulators and Legislation

Central Bank (CB): On January 1, 2020, the Central Bank of Iceland, and the Financial Supervisory Authority (Fjármálaeftirlitið) merged under the name of the Central Bank. The Agency began operating with immediate effect under Act No. 92/2019 on the Central Bank of Iceland. The objective of the newly merged Agency includes increasing the level of consumer confidence; and promoting stability in prices, transparency, and efficiency in the management of economic affairs and financial supervision in Iceland.

International Association of Insurance Supervisors (IAIS): The IAIS represents regulators and supervisors of 190 jurisdictions in more than 140 countries. It formulates and issues various global principles, standards, and guidance provides training and support on issues related to supervision, and organizes meetings and seminars for supervisors. The primary objectives of the IAIS are to promote effective and globally consistent supervision of the industry to develop and maintain a fair, safe, and stable market for the benefit and protection of policyholders, and to contribute to global financial stability.

The key laws and regulations in the Icelandic insurance industry are as follows:

• Act on Insurance Groups No. 60 of June 14, 2017
• Insurance Act No. 100/2016 of October 4, 2016, which regulates insurance and reinsurance companies
• Law on Insurance Contracts No. 30/2004, effective from January 1, 2006

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Iceland Insurance Industry - Compulsory Insurance

Some of the key compulsory insurances required within the Iceland insurance industry are:

• Motor Third-Party Liability Insurance
• Aviation Liability Insurance
• Marine Liability Insurance
• Professional Indemnity Insurance
• Social Security Insurance

Iceland Insurance Industry Analysis by Compulsory Insurances

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Iceland Insurance Industry - Company Registration and Operation

A license is required to operate in the Iceland insurance industry. Article 2 of the act states that only authorized domestic companies and branches of foreign companies can provide products in the country. According to the legislation, foreign companies with head offices in the European Economic Area (EEA) that have obtained an operating license in their home state can underwrite and sell insurance contracts without obtaining a license in Iceland. In addition, intermediaries are also required to obtain authorization and licenses from the FME to operate as mediators. However, there are no restrictions related to licensing, operations, deposit requirements, and credit ratings for reinsurers to comply.

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Iceland Insurance Industry - Taxation

The different types of taxes in the Iceland insurance industry are tax on insurance premiums, corporate income tax, corporate capital gains tax, and value-added tax.

Corporate Income Tax: The Ministry of Finance and Economic Affairs and the Directorate of Internal Revenue administer and supervise the taxation in Iceland. Its Taxation legislature includes the Income Tax Act 1987, the Withholding Tax Act 1996, the VAT Act 1988, the Act on Stamp Duty 1978, the Financial Activities Tax Act 2011, the Lodging Tax Act 2011, and the Act on Special Tax on Financial Institutions 2010. The Directorate of Internal Revenue under the jurisdiction of the Ministry of Finance and Economic Affairs is also responsible for the investigation of tax evasion.

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Scope

• The report covers details of the insurance regulatory framework in Iceland.
• The report contains details of the rules and regulations governing insurance products and insurance entities.
• The report lists and analyzes key trends and developments in the country’s insurance regulatory framework.
• The report analyzes the rules and regulations about the establishment and operation of insurance businesses in the country.
• The report provides details of taxation imposed on insurance products and insurance companies.

Key Highlights

• The FME regulates and governs the Icelandic insurance industry.
• Solvency II was incorporated into the Insurance Act on October 1, 2016, when the new Act No. 100/2016 on Insurance Activity came into effect.
• Fire insurance for buildings, personal accident insurance for drivers of motor vehicles, motor third-party liability insurance, and Iceland catastrophic insurance are the classes of compulsory insurance in the Icelandic insurance industry.
• Non-admitted insurance is not permitted in Iceland. However, EEA member state insurance companies are permitted to underwrite and sell non-admitted insurance contracts.

Reasons to Buy

• Provides FAQ-style analytical insights comprising 129 knowledge elements on insurance compliance applicable to the country.
• Gain insights into the insurance regulatory framework in Iceland.
• Track the latest regulatory changes and expected changes impacting the Iceland insurance industry.
• Gain detailed information about the key regulations governing the establishment and operation of insurance entities in the country.
• Understand key regulations and market practices pertaining to various types of insurance products.