New deadlines and sanctions for insurance payments (law of 17 March 2024

The law of 17 March 2024 concerning the deadlines and sanctions for insurance payments will enter into force on 1 October 2024 (publication in the Belgian Official Gazette on April 2, 2024). The law of 17 March2024 applies to claims filed from 1 October 2024 onwards. This law introduces general payment deadlines and sanctions for insurers. For certain branches, such as Motor Third-Party Liability, Fire, Life, and Supplementary Pensions, the payment deadlines were already carefully regulated. With the law of 17 March 2024, the legislator now also introduces a general scheme of payment terms and sanctions. The legislator aims to expedite the payment of compensation by insurers. The law of 17 March 17 2024 establishes a general rule for the following insurance products:

• liability insurances (e.g., private liability insurance, objective liability for fire and explosion in premises accessible to the public, …)
• property insurances (e.g., car insurances for material damage, theft, baggage insurances, …)
• other insurances (e.g., assistance, health insurances, accident insurances, except for the work accident insurance which is subject to a specific legal regulation)

In addition, the law of 17 March 2024 provides for the amendment of article 121 of the Law of 4 April 2014 concerning insurance (“Insurance Act”) to ensure coherence between that article and the new regime for property insurances. The regulation already provided for in articles 13 and 14 of the Law of 21 November 1989 concerning compulsory motor vehicle liability insurance (“MTPL Law”) is also amended by a separate law of 17 March 2024.

This blog post summarizes the new and amended regulations.

1. New general rules for liability insurances

The law of 17 March 2024 introduces articles 145/1 to 145/5 into the Insurance Act. These provisions contain the new general rules on payment deadlines and sanctions for liability insurances.

We distinguish 2 scenarios.

In the first scenario, there is no dispute. Within 3 months of a compensation request from the injured party, the insurer must formulate a compensation proposal if (i) the coverage of liability under the insurance contract is not disputed; (ii) liability is not disputed; (iii) the damage is not disputed and is quantified. Once the compensation proposal is accepted by the injured party, the insurer must pay it within 30 working days.
If the damage has not been fully quantified, the insurer must submit a proposal for an advance within 3 months. For bodily injury, the advance must cover at least the costs already incurred and the undisputed amount in light of the already known consequences or those expected based on a medical assessment. The injured party can submit a new request for an advance no earlier than 6 months after the previous request.

If the insurer fails to comply with the 3-month deadline, it is subject to a sanction. The insurer is then liable for: an additional amount equivalent to the legal interest rate applied to the compensation or advance proposed by the insurer or awarded by the court to the injured party for a period starting on the day after the 3-month period has expired until the day following the day of receipt of the proposal by the injured party or decision awarding compensation that has become final.
In the second scenario, there is a dispute. Within 3 months, the insurer must provide a reasoned response to the compensation request if (i) the coverage of liability under the insurance contract is disputed; (ii) liability is disputed or not clearly established; (iii) the damage is disputed or not quantified.

The insurer who fails to comply with this deadline is automatically liable for a lump sum of EUR 300 to the beneficiary of the insurance benefit. This amount is due without any formal notice. Furthermore, the beneficiary is entitled to a lump sum payment of EUR 300 per day of delay if the beneficiary has put the insurer in default and the insurer has not responded to the reminder within 11 days.

2. Amended regulation of articles 13 and 14 of the MTPL Law

The law of 17 March 2024 amending the Motor Insurance Law aligns the regulation of articles 13 and 14 of MTPL Law with the new general regulation regarding liability insurances (the law also contains a number of other important amendments, which are not addressed here).

3. New general rules for property insurances

The new law introduces a new article 111/1 into the Insurance Act which applies to property insurances in the absence of other specific legal provisions (e.g., fire).

In case of dispute over coverage by the insurer following a compensation request, the insurer has a period of 3 months to provide a reasoned response to the compensation request. In the absence of a timely response, the insurer is exposed to the same sanctions as in the case of disputes with liability insurances (EUR 300 lump sum + EUR 300 per day of delay after formal notice).
If the coverage is not disputed, the insurer must pay the undisputed portion within 30 days. In case of dispute over the extent of the insurance benefit, the law introduces a scheme whereby an expertise is organized. The compensation must then be paid within 30 days following the termination of the expertise or determination of the amount of damage. In case of non-compliance with this payment deadline, the insurer is automatically liable for: an interest at twice the legal interest rate on the portion not paid on time.

4. New general rules for other insurances

The law of 17 March 2024 introduces a new article 73/1 into the Insurance Act. This article contains a general provision applicable to other insurances in the absence of other specific legal provisions.

As with property insurances, in case of dispute over coverage, the insurer has a period of 3 months to provide a reasoned response to the compensation request. The same sanctions as for property insurances apply here as well.

The insurer must proceed with the payment of the insurance benefit within 30 days from the moment that (i) the insurer has all the necessary information; (ii) there is no longer any dispute over the coverage of the event and the amount of the due insurance benefit. If there is still a dispute over the final amount of the benefit, the insurer must pay the undisputed portion within 30 days. The sanction for non-compliance with this deadline is identical to the sanction for property insurances.