Agencias de suscripción (underwriting agencies) have traditionally been considered as the equivalent of MGAs under Spanish law and need prior regulatory authorization from and are supervised by the General Directorate of Insurance and Pension Funds (Dirección General de Seguros y Fondos de Pensiones). These Spanish underwriting agencies are not distributors/insurance intermediaries.

The authorization process for underwriting agencies in Spain takes three months from submission of a complete application.

A critical limitation applies; underwriting agencies aren’t intermediaries and don’t fall under the umbrella of the IDD. So they cannot passport their services to other EEA states.

Spain operates a regulatory sandbox that’s available to any entities or individuals. The sandbox provides a controlled environment for testing financially innovative propositions with a technological basis.

For an underwriting agency to obtain (and keep) the relevant authorization to operate, the shareholders directly or indirectly holding a significant stake (generally, 10% or any controlling stake or material influence) have to comply with fit and proper requirements.

Spain has transposed the IDD’s product oversight and governance (POG) requirements. However, to the extent underwriting agencies aren’t distributors subject to the IDD, POG requirements won’t apply to them, but to the relevant insurers and/or the intermediaries involved in the distribution activities, as applicable.

Underwriting agencies have to maintain a different account for each one of the insurers they’re working with, so that the monies managed in the name and on behalf of each insurer are completely separated from the rest of the agency’s economic resources.

Professional liability insurance is required. No minimum regulatory capital requirements apply; share capital will depend on corporate regulations.

The inability of underwriting agencies to passport is the single most important consideration for MGAs in Spain. In practice, this puts Spanish underwriting agencies at a competitive disadvantage compared to EU MGAs (if benefiting from the EU passport).

Spanish underwriting agencies can only represent/bind insurers and cannot represent policyholders. There is also a complex incompatibility regime (eg brokerage activity cannot be carried out by MGAs) which should be considered.