Conditions Attached to Operations by Way of the Freedom to Provide Services in Latvia

Transcription

1 Conditions Attached to Operations by Way of the Freedom to Provide Services in Latvia A Member State insurer intending to provide insurance services in Latvia under the freedom to provide services must take account of the following essential provisions required by Latvian legislation: I. Insurance Supervision The authority responsible for supervising the insurance business in Latvia is the Financial and Capital Market Commission. Its address is as follows: Financial and Capital Market Commission Kungu iela 1, Rīga, LV-1050 Phone: Mobile phone: Fax: fktk@fktk.lv, single.passport@fktk.lv II. Legislative Requirements 1. Insurance Legislation 1.1. The Insurance Contract Law (available on the official website of the Financial and Capital Market Commission in English: The Insurance Contract Law applies to all insurance contracts unless otherwise provided by law, e.g. it does not apply to reinsurance. According to Article 2, Paragraph 2, when concluding an insurance contract, parties to the contract are entitled to agree on the application of the relevant laws of any country to the regulation of their contractual relations arising out of the insurance contract. Pursuant to Article 2, Paragraph 7, prior to entering into an insurance contract, the insurer is obliged to notify the policyholder of the law applicable to the regulation of the contractual relations arising out of the insurance contract. Also, the insurer is obliged to notify the policyholder natural person of the procedures for out-of-court settlement of complaints and disputes arising out of the insurance contract. Pursuant to Article 6, Paragraph 2, an insurance contract shall include the place and date of conclusion of the contract, the start date and expiration date of the contract, the information concerning the insurer and the insured (if the latter is not also the policyholder) and the policyholder, the risk insured, the insurance object, the sum insured, the insurance premium, procedures and due dates for the payment of the premium, the recipient of the insurance indemnity, the time limit for taking a decision regarding the insurance indemnity payment or refusal to pay such indemnity, the conditions for termination of the contract, duties of the parties, their responsibility for the failure to meet the terms and conditions of the contract, the procedure for dispute resolution.

2 2 Pursuant to Article 55, Paragraph 1, in addition to the requirements set out in Article 6 of this Law, the personal insurance contract shall include: 1) the amount of insurance premiums and the sum insured for each insured risk separately and the benefit or the procedure for the determination of the benefit in each insured event; 2) in the life insurance contract, the surrender value and the conditions to be met in order to receive it, the policyholder s right to alter the policy by changing the sum insured, the insurance premium and its payment arrangements, conditions for the conclusion of a new (renewed) life insurance contract and types of gratuities (bonuses) including the procedure for their calculation and granting; the unitlinked life insurance contract shall specify the type of assets and the procedure for the calculation of the sum insured. Pursuant to Article 55, Paragraph 2, throughout the personal insurance contract that is valid for a period of more than a year, the insurer shall notify the policyholder and the insured in writing of: 1) taxes applicable to insurance premiums and benefits and the tax collection procedure and changes, if any; 2) gratuities (bonuses) granted at least once every 12 months. In accordance with Article 6, Paragraph 4, throughout the duration of the insurance contract, the insurer shall, without delay, notify the policyholder and the insured (where the insured is not also the policyholder) of any changes in the insurer s telephone number, contact address and contact persons and similar information that is necessary for the policyholder (the insured) to meet his/her contractual liabilities. Pursuant to Article 6¹, the insurance contract shall be drawn up and entered into in the official language (Latvian). If the policyholder wishes to conclude the insurance contract in a foreign language, such a wish of the policyholder shall be explicitly stated in the insurance contract. Under Article 24¹ of the Law, if the insurance policyholder is a natural person, the insurer is obliged to, not later than within a one-month period from the date of receipt of an insurance indemnity application, notify in writing the insurance policyholder of the documents missing for taking a decision on the insurance indemnity payment. If the insurance policyholder is a natural person, the insurer shall take a decision on the insurance indemnity payment within a one-month period from the date of receipt of all the documents specified by the insurance contract. If, due to objective reasons, the insurer cannot comply with this time limit, it may be extended for a time period not exceeding six months from the date of receipt of the insurance indemnity application. The insurer shall forward a reasoned notification of the extension of the time limit to the person who has the right to receive the insurance indemnity in compliance with the concluded insurance contract. Pursuant to Article 27, the insurer and the policyholder may terminate the insurance contract within the period between the date the contract is concluded and the date the contract takes effect. The other party shall be notified of such termination not later than

3 3 fifteen days before the date the contract takes effect. If the termination of the insurance contract is initiated by the policyholder, the insurer shall refund part of the premium to the policyholder. The amount to be refunded shall be calculated by subtracting the insurer s expenses arising from the conclusion of the insurance contract, which shall not exceed twenty-five percent of the insurance premium. In other events, the insurer shall refund the paid premium to the policyholder. The policyholder may terminate life and health insurance contracts every year on the date when the insurance cover was first effected, or on the date when the annual premium is to be paid, by notifying the insurer in writing not later than fifteen days before the aforementioned date, provided the insurance contract does not state otherwise. In that event, the insurer shall refund the policyholder in compliance with the insurance contract. All obligations arising from the insurance contract shall terminate for the policyholder as of the date of forwarding the notification regarding the termination of the contract. The policyholder has the obligation to prove the fact that the notification of the contract termination has been forwarded. The policyholder individual has the right to terminate an individual life insurance contract within a 15-day period as from the date of concluding the contract. In that event, the insurer shall reimburse the entire insurance premium paid by the policyholder. The aforementioned provisions shall not apply to individual life insurance contracts with the validity of less than six months Compulsory insurance Latvian legislation provides for the following types of compulsory insurance in Latvia: Class 2. Sickness Health insurance for foreigners arriving and staying in the Republic of Latvia Class 10. Compulsory Third Party Liability Insurance for Inland Motor Vehicle Owners Class 13. General liability General liability insurance for operators of ionizing radiation-producing sources; General liability insurance for cash register sellers, installers, service providers; Professional liability insurance for administrators (liquidators); Professional liability insurance for insurance brokers; Professional liability insurance for medical personnel (compulsory class of insurance for regulated professions); Professional liability insurance for certified auditors; General liability insurance for clinical researchers in medical and pharmaceutical products; General liability insurance for bailiffs; General liability insurance for notaries; General liability insurance for reliable certification service providers; General liability insurance for toy licensing authorities; General liability insurance for members of public services regulators. General liability insurance for designers, construction supervisors and other persons involved in the construction process; General liability insurance for hydroelectric power station possessors;

4 4 General liability insurance for construction firms. Class 15. Suretyship Possible customs, excise tax and added-value tax debt suretyship insurance Life assurance Recommendations for offering indirect investment products to retail clients. 2. Consumer Protection Consumer Rights Protection Law (available on the official website of the Consumer Rights Protection Centre in English: The Consumer Rights Protection Law applies to all contracts concluded between consumers and service providers (insurers). It should be particularly noted that pursuant to the Latvian Consumer Rights Protection Law, a consumer is a natural person who expresses a wish to purchase, purchases or might purchase, or use goods or a service for a purpose, which is not related to his or her economic or professional activity. The Consumer Rights Protection Centre supervises the legality of the use of contract conditions from the point of view of consumer protection. In accordance with Article 26 of this Law, consumers are entitled to submit complaints regarding violations of the requirements of this Law and other regulatory enactments on consumer rights protection, to the Consumer Rights Protection Centre. 3. Data Protection Personal Data Protection Law (available on the official website of the Data State Inspection in English: The Personal Data Protection Law applies to the automatic processing of personal data when these data constitute, or will be used to constitute, a register of personal data or part thereof. The Law contains provisions on general principles related to personal data processing, the processing of sensitive information and personal codes, the rights of registered parties, data security and the storage of data. 4. Parafiscal charge According to Article 283, Paragraph 1 of the Law on Insurance and Reinsurance, in order to protect the interests of the insured in case of an insurer s bankruptcy, the Fund for the Protection of the Insured has been established in Latvia. Pursuant to Article 287, Paragraph 1, the Fund for the Protection of the Insured is formed of deductions of the insurer in the amount of 0.1 percent of the total amount of gross insurance premiums thereof which have been received from natural persons for the following classes of insurance: accident insurance; health insurance (insurance against sickness);

5 5 land vehicle (excluding railway rolling stock) insurance; property insurance against damage by fire and natural disasters; property insurance against other losses; liability for transport ownership insurance; general liability insurance; assistance insurance; life assurance, except for insurance related to unit-linked life insurance contract. Payments should be made in whole euro via the settlement account held by the Financial and Capital Market Commission (Taxpayer registration No ) with the Bank of Latvia (Code LACBLV2X): For life assurance: IBAN Code LV18LACB ; For other insurance: IBAN Code LV93LACB According to the Regulations of the Financial and Capital Market Commission on the Procedure for Making Payments into the Fund for the Protection of the Insured dated , an insurer shall, by the 30th of the first month of each quarter, submit to the Financial and Capital Market Commission a report on the gross premiums received from natural persons in the previous quarter and the payments made into the Fund for the Protection of the Insured. The format of the report and the above regulations are available on the official website of the Financial and Capital Market Commission in English at The provisions for payments into the Fund for the Protection of the Insured are not binding on foreign insurers operating under the freedom to provide services if the regulatory enactments of the respective states provide for at least identical protection of the insured when operating under the freedom to provide services in foreign states; moreover, the guaranteed insurance compensation in the event of an insurer s default shall not be less than that specified by the Law. 5. Taxes Law on Taxes and Fees (available on the official website of the State Revenue Service in English: ) The State Revenue Service is a state institution which ensures the accounting of tax payments and taxpayers, the collection of taxes, duties and other mandatory payments specified by the State in the territory of the Republic of Latvia, collects taxes, duties and other mandatory payments into the budget of the European Union and implements the customs policy and organizes customs matters. Website- Latvian tax legislation does not provide for VAT (Value Added Tax) on premiums collected under insurance contracts. For more detailed information on tax regime in relation to cross-border services, please, refer to the State Revenue Service.

6 6 6. Other Provisions Furthermore, the Financial and Capital Market Commission would like to draw your attention to the following general legislation: Law on the Compulsory Third Party Liability Insurance for Inland Motor Vehicle Owners (in case a foreign insurer intends to provide services of compulsory third party liability insurance for inland motor vehicle owners); The Civil Law; The Competition Law; The Law on Advertising. Apart from that, we would like to note that the insurer exercising the freedom to provide services in Latvia has to follow other requirements that have not been referred to above, but are provided for in the Latvian legislation applicable to the insurer exercising the freedom to provide services in Latvia.