On December 24, 2021, the Law amending the Law on Insurance was adopted.
The new law excluded the previous right of insurers (reinsurers) to grant interest-bearing loans from available and debt-free funds – if the solvency ratio is twice the limit set in the regulations of the National Financial Market Commission and does not allow a shortage of eligible assets admitted to the policyholder fund for the entire loan period.
The argument for adopting the new solution is that the practice of lending to third parties is not typical and does not follow from the insurance business, which consists in offering, negotiating and concluding insurance contracts, collecting premiums, liquidating damages, carrying out regression and recovery.
In case of violation of the insurance legislation, the Law on Insurance, as well as the Code of Contraventions provide for sanctions, including:
– a fine of up to 1% of the minimum share capital applied to the insurer (reinsurer) and up to 20% of the minimum share capital applied to the insurance and / or reinsurance broker;
– limitation of operations,
partial or total suspension or withdrawal of the license.
Recommendation: Inform employees in charge of the provisions of the new law to make sure that the provisions about loans are being met.
Law no. 245/2021 for the amendment of article 28 of Law no. 407/2006 on insurance can be accessed at the following link .