• 2007-10-03
  • From Sorainen
New guidelines for insurance market in Estonia
The Estonian Financial Supervision Authority (EFSA) has issued several advisory guidelines.

On 01.06.2007 guidelines on "Outsourcing Requirements for Supervised Entities" entered into force. These recommend establishing internal action instructions and regulations to regulate the outsourcing process. The outsourcing guidelines suggest analysing the need for outsourcing, screening the service provider, and performing a risk analysis. Certain principles have to be followed and certain questions addressed in drafting a contract with a service provider, e.g. supervision must not be hindered, while confidentiality, IT-security, and consistency of services must be ensured.

The EFSA has also adopted guidelines on "Requirements for Insurance Mediation". These will enter into force on 01.02.2008. The aim of the guidelines is to clarify the requirements of the Insurance Activities Act (IAA) and to protect policyholders. The guidelines specify the tasks of a mediator listed in the IAA and require mediators to disclose their fee separately for each insurance contract. A broker must be objective and impartial and must not be affected by contracts concluded with insurers. A broker must obtain an insurance offer from at least three insurers. A broker must recommend the policyholder the best offer in a format which can be reproduced in writing; this recommendation must be based on the entire insurance contract, not only on some of the conditions. Brokerage guidelines specify brokers' duty to explain the terms and conditions of insurance contacts. A broker must have a client file for each client.

The EFSA adopted amendments to the guidelines on "General Requirements for Insurance Contracts". The amendments require the insurable interest of the policyholder to be ascertained and advice to be given to the policyholder.
Additional information: Andrus Kattel, email:

New law for reinsurance industry in Latvia
New legislation has been developed to regulate the reinsurance industry in Latvia 's the Reinsurance Law, which lays down rules for commencing reinsurance services and the procedure for reinsurance services in Latvia.

The draft law provides for supervision of reinsurers by determining requirements for commencing activity and undertaking activity in Latvia, as well as for extending it by launching activities in other EU Member States.  The aim of the draft law is to introduce requirements of directives of the European Parliament and Council, ensuring unified regulation of reinsurance company supervision in the European Community, as well as securing international financial stability.

The draft law is directed at integrating Latvia into the EU and adjusting the international financial sector by providing for introduction of reinsurance company supervision and uniform regulations for such activity in EU Member States.

Notably, the law does not refer to:    
reinsurance services provided by or fully guaranteed by a government of a EU Member State, if it operates as a reinsurer in the name of significant public interests, as well as in circumstances when appropriate reinsurance cover in the market is impossible to acquire state social insurance export credit insurance transactions guaranteed by the state and the like.

The draft law introduces Directive 2005/68/EC of the European Parliament and of the Council on reinsurance and amending Council Directives 73/239/EEC, 92/49/EEC as well as Directives 98/78/EC and 2002/83/EC and ensures proper formation of regulating provisions for reinsurance transactions.

It should be taken into account that reinsurance activities are not regulated and no additional special supervision of reinsurance enterprises is carried out.
Additional information: Anete Rubene, email:

Changing regulatory regime for insurance brokers in Lithuania
In the spring edition we mentioned that on 09.03.2007 the Insurance Supervisory Commission announced that the draft law amending the Law on Insurance had been submitted to the Lithuanian Government, and that the main aim of the draft was to introduce a new regime requiring insurance brokers to be paid by the client (and not by insurers, as is now the case).

As the draft law provoked a negative reaction from insurance brokers' organizations, the Government set up a working group composed of representatives of the Ministry of Finance, the Insurance Supervisory Commission, Securities Commission insurance brokers and insurers.

A likely compromise between all counterparties is disclosure of brokers' remuneration at clients' request.
Additional information: Dr. Tomas Kontautas, email:

For more legal news please see the latest Baltic Legal Updates by Sorainen at .

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