Insurance Companies

The persons involved in the administration (the members of the board and the council, as well as key function holders) have an impeccable reputation, adequate education and experience to manage the insurance company.

Shareholders holding at least 10% of the voting rights of the insurance company (or a group of shareholders where each holds less than 10%, but the group acts in concert with regard to the management of the insurance company and thereby it has more than 10% of voting share capital) have an impeccable reputation, professional experience, financial stability and sufficient financial means to ensure further activities of the insurance company.

The absolute minimum value of the insurance company's minimum capital requirement:

• for non-life insurance companies intending to carry out insurance in the form of insurance for the civil liability of motor vehicle owners, insurance for civil liability of aircraft owners, insurance for civil liability of shipowners, general civil liability insurance, credit insurance, guarantee insurance, the minimum initial capital shall be 4 million euros. For other non-life insurance companies, including captive insurance companies, the minimum initial capital shall be 2.7 million euros
• for life insurance companies intending to obtain a life insurance operating licence, shall be 4 million euros
• insurance companies carrying on both life and non-life insurance shall have the absolute minimum value of the minimum capital requirements referred to in paragraphs 1 and 2

Preparation for the submission of application: an introductory stage, during which Latvijas Banka organises a meeting with an entrepreneur to discuss the planned activities.

At this stage, the company does not necessarily have to be established yet.

What does the entrepreneur do?

• Prepares information on the potential shareholders and officials of the company
• Prepares information on the planned amount of share capital of the insurance company and the origin of funds
• Prepares a draft action plan
• Starts the drafting of the necessary documents

What does the Latvijas Banka do?

• Provides advice regarding the applicable regulatory framework
• Explains document review and decision-making processes by Latvijas Banka and deadlines
• Explains the cooperation process between Latvijas Banka and the entrepreneur
• Carries out an assessment of the initial business project
• Assesses whether the authorisation process can be continued
• Provides advice on documents to be submitted

Taken into account

• Please refer carefully to the regulatory requirements
• Assess the need to attract qualified experts or consultants

Documents to be submitted

• the CVs of the potential officials;
• the CVs of the major potential shareholders, information on funding for setting up the insurance company, information on financial stability (summary of assets and liabilities), origin of wealth
• the draft action plan

Costs

Preparing the application for submission and provision of advice by Latvijas Banka are free of charge.

Submission of application: The entrepreneur prepares and submits an application for authorisation.

What does the entrepreneur do?

Submits a fully completed licensing application and all necessary information, documents in accordance with the requirements of:

• Sections 22 and 23 of the Insurance and Reinsurance Law;
• FCMC Regulations No 179 of 29.09.2020 "Procedures for Submission of Information and Documents for Obtaining Insurance or Reinsurance Licences, Individual Insurers or Reinsurers Operating Authorisation and Agreement and for Provision of Information and Notifications" (Licensing Regulations);
• Latvijas Banka Regulations No 241 of 22.05.2023 "Regulation on Acquiring or Increasing a Qualifying Holding in the Financial Institution" (Shareholders' Regulations).

Receives information from Latvijas Banka regarding deficiencies to be addressed in the submitted application.

Provides the necessary additional explanations.

What does Latvijas Banka do?

• Carries out an assessment of the completeness of the application within one month
• If the application is incomplete, Latvijas Banka sends a letter to the entrepreneur indicating the deficiencies identified which need to be addressed
• Latvijas Banka designates the project manager and gives the entrepreneur access to the project management tool, to facilitate following the process

Taken into account

• Before submitting the application, please apply for advice offered by Latvijas Banka experts
• Make certain that the documents to be submitted are complete and of high-quality
• Check that all necessary documents have been submitted (see a list of documents to be submitted)

List of documents to be submitted

The documents to be submitted derive from the Insurance and Reinsurance Law, Licensing Regulations and Shareholders' Regulations.

1. The application signed by an authorised person of the legal person addressed to Latvijas Banka for the issue of a licence for one or more classes of insurance, which lists the documents attached thereto.

2. The application shall be accompanied by:

2.1. an action plan, which includes information specified in Section 23 of the Insurance and Reinsurance Law;

2.2. a document issued by a credit institution which certifies the minimum capital requirements for cash contributions in the amount of an absolute minimum value;

2.3. documents confirming that the management system thereof complies with Chapters VII and VIII of the Insurance and Reinsurance Law:

2.3.1. a list of shareholders or members who have a qualifying holding in the insurance company, (Annex 1 to the Licensing Regulations) and information regarding the structure of the group, including information regarding shareholders or members of the insurance company:

2.3.1.1. copies of the documents identifying shareholders or members of the insurance company: for commercial companies (non-residents only) - a certified copy of the registration certificate or another type of identification document in force in the relevant foreign state (evidence of registration); for other persons who are not natural persons, a copy of another identification document,

2.3.1.2. documents attesting financial stability: copies of the audited annual accounts of commercial companies of the Republic of Latvia – for the last two years of activity; for foreign commercial companies - copies of the annual audited accounts for the last two years of operation; for natural persons (residents) - a copy of the annual income declaration certified by the State Revenue Service, for natural persons (non-residents) - a copy of the tax (income) declaration certified by the relevant tax administration authority, as well as other documents certifying financial stability and documents attesting the legal origin of the referred to funds (capital),

2.3.1.3. information regarding the address of the shareholders of insurance company, as well as registration number and country of registration (territory), the amount of participation, specifically indicating if the commercial company is an insurer, credit institution, financial institution or financial holding company,

2.3.1.4. information regarding the owners of shareholders or members of an insurance company - commercial companies - until the information regarding the owners (actual beneficial owners) - natural persons has been obtained, and copies of all documents identifying the shareholders or owners of such insurance company (natural, legal and other persons), as well as information regarding the qualifying holding of such owners in other commercial companies, indicating their name (firm), legal address, amount of holding (amount and percentage of share capital). Where the shares of the shareholder of the insurance company are quoted in a regulated market organiser, or a regulated market organiser established in a Member State which is a full-fledged member of the World Federation of Exchanges, information only on those owners who have a qualifying holding shall be submitted,

2.3.1.5. where the shareholders of an insurance company or their parent undertakings with a qualifying holding of 20% and more of the share capital of the insurance company or the number of shares with voting rights are foreign insurers, reinsurers, credit institutions, financial institutions or financial holding companies, they shall, in addition to those documents, submit the relevant authorisation of the supervisory authority of the foreign insurers or financial institutions concerned for the acquisition of a qualifying holding in an insurance company, if the regulatory requirements of that State prescribe the need for such authorisation; or the confirmation by the foreign authority that such authorisation is not necessary and that it does not object to the participation of the particular foreign insurer, reinsurer, credit institution, financial institution or financial holding company in an insurance or reinsurance company. In addition to that information, a statement from the relevant foreign insurance supervisory authority regarding the carrying out supervision of insurers on the basis of global consolidated financial statements shall be submitted and that the regulatory enactments in force in the relevant foreign state allow the insurance supervisor to provide the insurance supervisory authority of another country and to receive from its insurers the financial statements and other information in the amount required for the performance of supervisory functions, and that the regulatory enactments of the relevant foreign state provide for liability for the disclosure of confidential information;

2.3.1.6. other information according to the Shareholders'' Regulations;

2.3.2. a list of persons with whom the insurance company has close relations;

2.3.3. information regarding officials verifying that these persons comply with Sections 58 and 61 of the Insurance and Reinsurance Law, including documents characterising the nomination of a member of the board or the council an insurance company, a person responsible for the risk management function, a person responsible for the compliance function, a person responsible for the internal audit function, a person responsible for the actuarial function, and also a person who, in taking major decisions on behalf of the relevant insurance or reinsurance company, creates civil obligations to an insurance company: a statement (Annex 2), an expanded professional biography (CV), copies of educational documents;

2.3.4. the policy and procedure for calculating technical provisions,

2.3.5. the policies and procedures for the underwriting of insurance and reinsurance risks and setting insurance premiums,

2.3.6. information regarding the organisational structure of the insurance company with an explicit indication of the division of the powers and duties of its managers, the tasks of the departments and the duties of their managers,

2.3.7. risk management policies and procedures,

2.3.8. internal control policy and procedure,

2.3.9. the internal information exchange procedure,

2.3.10. the internal audit policy and procedure,

2.3.11. the outsourcing policy and the outsourcing quality monitoring procedure, if the insurance company intends to use outsourced services,

2.3.12. the main principles of accounting policies, procedures and accounting organisation,

2.3.13. the policy and procedure for the protection of information systems,

2.3.14. the policy and procedure for identifying unusual and suspicious financial transactions. A more detailed list of requirements is available in this document. The policy and procedure shall be submitted by an insurance company that intends to obtain a life-insurance licence;

2.3.15. the internal procedures by which:

2.3.15.1. providing insurance services, fair and open treatment shall be ensured for the policyholder, the insured person and the person who has the right to apply for insurance indemnity in accordance with the insurance contract,

2.3.15.2. the insurer shall provide:

2.3.15.2.1. the information requested by the policyholder regarding the insurance transaction entered into by the insurer with the relevant policyholder,

2.3.15.2.2. the insured person and the person who has the right to apply for insurance indemnity in accordance with the insurance contract, the information requested, which relates to the right of such persons to receive insurance indemnity and obligations towards the insurer,

2.3.15.2.3. information regarding the time period (which does not exceed 30 days) whereby the information referred to in this paragraph shall be provided,

2.3.15.3. the insurer shall ensure the prevention of the potential conflict of interest of its employees by receiving and using the information necessary for the insurance transaction;

2.3.16. the policies and procedures for ceded reinsurance and retrocession,

2.3.17. the policies and procedures for making investment;

2.4. a document describing and explaining how the investment strategy of an insurance company includes the use of shareholder rights in the management of a joint stock company in accordance with Section 138¹ of the Insurance and Reinsurance Law, if the investment-making policy requires that an insurance company wishing to carry out life insurance invests its assets in the shares of a joint stock company having its registered office in a Member State and whose shares are admitted to trading on the regulated market of a Member State;

2.5. a true copy of the contract (decision) establishing the insurance company;

2.6. a true copy of the articles of association of insurance company, which have been prepared in conformity with the requirements of the law, determining the procedures for the establishment of a joint stock company or a European commercial company or a cooperative company;

2.7. if the insurance company wishes to receive an insurance licence for aid insurance, it shall submit to Latvijas Banka information regarding the funds at its disposal and the contracts entered into, which shall ensure the provision of assistance to the insured in conformity with the obligations which it has undertaken in this class of insurance;

2.8. if a non-life insurance company wishes to receive a civil liability insurance licence for owners of road vehicles and intends to perform compulsory civil liability insurance of motor vehicle owners, it shall submit to Latvijas Banka a written confirmation that the insurance company is a member of the Motor Insurers' Bureau of Latvia (within the meaning of the Compulsory Civil Liability Insurance of Owners of Motor Vehicles Law) and a participant in a relevant guarantee fund, and shall notify the name (given name, surname) of the representatives of the insurance company and the registered office thereof in each Member State who takes the decision to pay the insurance indemnity or the decision to refuse to pay the insurance indemnity and also ensures the payment of the insurance.

Costs

Examining documents and information submitted for authorisation is free of charge.

Time limit for examining the application

The application for authorisation shall be examined within 6 months of receipt of the application.

Assessment of application: Latvijas Banka carries out the assessment of the application as to the substance.

What does the entrepreneur do?

• Follows the examination process by using the project management tool
• Provides answers to additional information requests by Latvijas Banka as soon as possible
• Corrects the submitted documents according to Latvijas Banka instructions
• Participates in meetings held by Latvijas Banka

What does Latvijas Banka do?

• Carries out the assessment of the application as to the substance
• Carries out consultations with other supervisory authorities of a Member State, where necessary
• Contacts the contact person of the entrepreneur in case of identification of deficiencies
• Draws up a letter if deficiencies are identified in the application
• Continues the examination of the application pursuant to the additional information submitted
• Completes the examination of the application

Taken into account

• Follow the course of the examination of the application.
• Provide additional explanations and make the necessary corrections as soon as possible.
• Representatives of the entrepreneur are invited to participate in meetings of Latvijas Banka, not only consultants (if any).

Costs

No costs associated with the examination of application are applied.

Receipt of authorisation: Latvijas Banka finalises the examination of the application and takes a decision on the issue or refusal to issue authorisation.

What does the entrepreneur do?

• Prepares to obtain authorisation and commence operations in accordance with the business plan
• Designates users of Data Reporting System of Latvijas Banka for future communication with Latvijas Banka and submission of performance reports

What does Latvijas Banka do?

• Prepares a decision on the issue or refusal to issue authorisation
• Informs the entrepreneur of the decision taken
• Places information on the website and sends the decision to the EIOPA

Taken into account

• Please refer to information provided by Latvijas Banka on access to the Data Reporting System
• Please examine information related to the requirements and procedures for reporting
• Prepare to commence activities in accordance with the approved business plan and procedures

Costs

No costs are associated with obtaining authorisation.

Supervision: Latvijas Banka activities of the company in accordance with the requirements of the Insurance and Reinsurance Law.

What does the entrepreneur do?

• Provides answers to Latvijas Banka's requests
• Prepares reports in accordance with laws and regulations
• Notifies Latvijas Banka of changes in documents submitted for authorisation
• Notifies Latvijas Banka of intention to provide new services or essential changes in existing services
• Reports on material incidents in the course of the provision of insurance services
• Gets acquainted with the insurance company's curator designated by Latvijas Banka

What does Latvijas Banka do?

• Designates the insurance company's curator
• Assesses compliance of the insurance company with the regulatory requirements
• Requests additional information on the business and performance of the insurance company
• Examines the reports submitted and supervisory information
• Cooperates with the EIOPA, supervisory authorities and public authorities of a Member State regarding supervisory issues

Taken into account

• In case of uncertainties, please contact the curator designated by Latvijas Banka
• Submit reports and requested supervisory information on a regular basis
• Notify of changes in the process of the provision of services, as well as changes in documents submitted for authorisation, including in case of changes in the officials or shareholders' structure

Costs

After obtaining authorisation, the insurance company shall make payments for financing the activities of Latvijas Banka from the total amount of insurance premiums received during the quarter in the following amount:

• up to 0.4% (inclusive): of life insurance transactions related to the accrual of funds;
• up to 0.2% (inclusive): of transactions of compulsory civil liability insurance of motor vehicle owners;
• up to 0.7% (inclusive): of other insurance transactions.