Thursday, 2 February 2012
Commission acts to protect Bulgarian policyholders
The European Commission late last week acted to ensure that Bulgarian voluntary health insurance undertakings are subject to EU insurance rules because it fears that the Republic of Bulgaria has failed to apply the First and Third Non-life Insurance Directives (73/239/EEC and 92/49/EEC) to voluntary health insurance undertakings.
If these rules are not properly applied there is a risk of insufficient prudential regulation and supervision of the insurance sector, warned the EC.
“The Bulgarian rules are liable to deter or impede cross-border investments. In addition, by not applying EU insurance rules to all health insurers, Bulgaria precludes a level playing field on the health insurance market,” stated the Commission.
The Republic of Bulgaria is also requested to waive restrictions on the free movement of capital, as guaranteed by Article 63 of the Treaty on the Functioning of the European Union (TFEU).
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The Commission's request to the Republic of Bulgaria takes the form of a reasoned opinion.
If the national authorities do not reply satisfactorily within two months, the Commission may refer the matter to the Court of Justice, it warned Sofia.
The Commission said that it had decided to act because its ‘preliminary view’ is that the Bulgarian Health Insurance Act is not in line with the free movement of capital laid down in the Treaty and Non-Life Directives.
It explained that the Bulgarian Act prescribes that voluntary health insurance undertakings can only invest health insurance reserves and own funds into foreign assets with an approval of the Financial Supervision Commission.
“In the Commission's view, this obligation impinges on the free movement of capital (Article 63 of the TFEU),” stated the EC.
The Commission also said that voluntary health insurance undertakings cannot be exempt from the Non-life Insurance directives and that the Health Insurance Act does not transpose them.
“Therefore, the Commission upholds that voluntary health insurance undertakings ought to have been fully subjected by Bulgarian law to the requirements of EU non-life insurance legislation, including notably the requirements concerning authorisation, financial supervision, establishment of technical provisions, establishing a solvency margin including the guarantee fund, investment in and matching of assets,” concluded the EC.
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