български deutsch italiano
Varadinov & Co.
Legal Bulletin

Varadinov & Co Attorneys at law is recognised in the IFLR1000
Varadinov & Co Attorneys at law is listed in Legal 500

State Gazette, issue 101 /December 7th, 2018
Increased transparency, better protection for users of insurance services, increased requirements for insurance brokers and brokers foresee changes in the Insurance Code, which introduce the provisions of the European Parliament and Council Directive (EC) 2016/97 of 20 January 2016 year on the distribution of insurance products. The Directive repeals Directive 2002/92 / EC of the European Parliament and of the Council on insurance mediation by revising and expanding the arrangements for the distribution of insurance products, both at the level of insurance intermediation and at the level of the direct supply of insurance products by the insurers themselves. Separate changes are also introduced in relation to the application of the requirements of Directive (EU) 2016/2341 on the activities and supervision of institutions for occupational retirement provision, Directive 2009/103 / EC of the European Parliament and of the Council on Third Party Liability Insurance of motor vehicles and to control the obligation to take out such insurance.
The standard of knowledge and competence that insurers, insurance intermediaries and their employees directly involved in the distribution of insurance products have to raise seriously increases. There are basic requirements for three groups depending on the nature of the offered insurance products: non-life insurance products, life insurance products and investment insurance products. Along with the basic requirements for knowing the terms of insurance contracts, the rules for filing claims and for dealing with complaints by insurance service users to distributors of insurance products are required requirements for knowledge of relevant legislation, for the availability of knowledge allowing a proper assessment of the needs of the users of insurance services, knowledge of the insurance market, applicable standards of business ethics and financial competence OCT. Against the intermediaries distributing investment insurance products, additional requirements are set for knowing the advantages and disadvantages of the different investment options offered, the financial risks to which the insured persons are exposed, the pension system and the benefits guaranteed by it. Every employee is required to increase his / her qualification as a distributor of insurance services equal to a minimum period for annual vocational training or development.
Several categories of insurance intermediaries are differentiated as follows: First category - current insurance intermediaries (insurance brokers and insurance agents) that have to meet the highest standard of knowledge and skills requirements. New category of intermediaries distributing insurance products as a supplementary activity subject to registration and must meet more limited knowledge and skills criteria (knowledge of insurance contract terms, claims rules and complaint handling) by the users of insurance services). These intermediaries will have a more limited scope of business - they will only distribute insurances related to a product or service and will not be able to offer Life and Third Party Liability insurance. These intermediaries are tied to a particular insurer similar to existing insurance agents and are registered in the same order. The third category of intermediaries will carry out the distribution of insurance products as an additional activity and is not subject to registration. These mediators have no formal criteria for market access knowledge and skills and will be supervised by the insurers whose products they distribute. Such a category of intermediaries also exists according to the current order but introduces requirements for the insurers who will distribute their products through such intermediaries. The aim is to ensure that those intermediaries comply with minimum standards for the provision of information to insurance service users as well as the basic principles of good faith in the dissemination of insurance products and to assess the needs and requirements of persons who are interested in insurance.
Before registering an insurance intermediary or an intermediary distributing insurance products as an ancillary activity, the applicant must disclose the identity of the partners and shareholders with a stake in the intermediary that exceeds 10% and of the persons with whom the firm has close links, as and that such existing links do not prevent the effective exercise of oversight by the intermediary. New rules are introduced for the cross-border conduct and supervision of insurance mediation activities. There is a detailed procedure for the transmission of notifications between supervisory authorities as well as a mechanism for the allocation of powers between the supervisory authorities of the home Member State and the Member State of the branch of the insurance intermediaries. A new regime for updating insurance sums is introduced, according to the growth of consumer prices, where the changes will be made by a regulation of the European Commission, adopted on a proposal of the European Insurance and Occupational Pensions Authority. This will avoid the need for any updating of the Insurance Code to be amended as the new size changes will have a direct effect. Narylica is required to provide a standardized information document for the insurance product when insuring non-life insurance, which must be short, clear, comprehensible and readable.

State Gazette, issue 106 /December 21st, 2018
Recent changes in the Law on the Bulgarian National Bank are in line with the commitment to Bulgaria’s participation in Currency Mechanism II (ER II), which was submitted to the European Central Bank (ECB) for close cooperation under Art. (7) of Council Regulation (EU) No 1024/2013 of 15 October 2013 assigning the European Central Bank specific tasks concerning policies relating to the prudential supervision of credit institutions in the framework of the Single European Monetary Oversight Mechanism. The aim is to ensure the necessary legislative changes governing the role of the ECB in the national supervisory framework of banking financial institutions as of the date of the close cooperation. The adoption of the necessary changes in legislation related to the ECB’s powers in the close cooperation period is one of the measures of the Action Plan adopted by the Bulgarian Government, including measures to implement the Republic of Bulgaria’s intentions to join ERM II, and to the Banking Union. The draft law was developed in accordance with the provisions of Regulation (EU) No 1024/2013 which governs the legal framework for close cooperation between the ECB and a participating Member State whose unit is not the euro requiring the competent national authority or the authority designated at national level to comply with the guidelines , guidelines, measures or requests issued by the ECB in respect of supervised entities established within its territory designated pursuant to Decision ECB / 2014/5.

Additions are made to the provisions related to the powers of the Governing Council of the Bulgarian National Bank in close cooperation. Supervision of the banking system is carried out by the Deputy Governor in charge of the Banking Supervision Department, in the conditions of close cooperation according to a statutory order and the normative acts issued for its implementation. The exchange of information is ensured within the framework of the close cooperation established with the ECB. The Bulgarian National Bank will collect annual fees to cover the administrative costs arising from the oversight and restructuring functions of supervised institutions. The Transitional and Final Provisions make amendments and additions to the Credit Institutions Act, which create Chapter Eleven “a” - “Close Cooperation”. As of the date of its inception, the BNB will follow the guidelines and requests issued by the ECB and will take the necessary steps to implement the ECB’s legal acts, including by issuing the necessary administrative acts. The powers of the BNB to issue individual administrative acts in respect of regulated entities are defined at the request of the ECB. Regarding the significant supervised entities or significant supervised groups established in the Republic of Bulgaria, the BNB will only issue individual administrative acts upon a request issued by the ECB in pursuance of its prudential supervision tasks. With regard to less significant supervisors or less significant supervised groups established in the Republic of Bulgaria, the BNB will only issue individual administrative acts upon a request issued by the ECB and in full compliance with it, unless in Regulation (EU) No 1024/2013 or in a legal act of the ECB is not otherwise provided.
The BNB shall apply the ECB’s requests for the application of higher capital buffers requirements or for the implementation of measures aimed at eliminating systemic or macro-prudential risks at the level of credit institutions where the ECB considers that such risk- higher requirements or stricter measures are needed. The draft law provides for the exchange of information, providing that the BNB provides the ECB with all the information necessary to carry out its tasks - including that which constitutes banking and professional secrecy. In connection with the ECB’s performance of the assessments required to participate in the European Union’s Uniform Oversight Mechanism by establishing close cooperation, credit institutions in the Republic of Bulgaria will provide the ECB with the data and documents provided for by law. Within the framework of the assessment, credit institutions shall provide the ECB with the opportunity to carry out on-the-spot checks at their premises and at the premises of other undertakings included in the supervision.