Insurance laws Czech Republic
The Czech Republic's insurance sector is primarily regulated by the Czech National Bank (Česká národní banka - ČNB). As a member of the European Union, its insurance laws are heavily influenced by EU directives, particularly the Solvency II Directive, which establishes capital and governance requirements for insurance companies.
Here's a breakdown of the key aspects of insurance laws in the Czech Republic:
Regulatory and Legal Framework
Czech National Bank (ČNB): The ČNB is the central bank and the main supervisory authority for the financial market, including insurance. It is responsible for licensing, supervision, and enforcing consumer protection rules for insurance companies and intermediaries.
Key Legislation: The main laws governing the insurance industry are the Civil Code (Act No. 89/2012 Coll.), the Insurance Act, and the Act on the Distribution of Insurance and Reinsurance. These laws regulate the formation of insurance contracts, the rights and obligations of insurers and policyholders, and the activities of insurance intermediaries.
EU Influence: Czech insurance law follows EU regulations, meaning that insurance companies from other EEA (European Economic Area) countries can operate in the Czech Republic through the "freedom of services" or "freedom of establishment" principles without a separate Czech license, as long as they notify the ČNB.
Mandatory Insurance
Motor Third-Party Liability Insurance: This is a compulsory insurance for all motor vehicles operating on public roads in the Czech Republic. It is regulated by a specific law, Act No. 30/2024 Coll., and its purpose is to cover damages for bodily injury and property damage caused by the operation of a vehicle. The law sets minimum statutory limits for coverage, which are currently CZK 50 million for bodily injury per injured party and CZK 50 million for property damage.
Health Insurance:
Public Health Insurance: This is mandatory for all permanent residents of the Czech Republic and for individuals who are employed by a company registered in the country. The state pays contributions for certain groups, such as children, students, pensioners, and the unemployed.
Foreigners and Travel Medical Insurance: Visitors and non-EU citizens on long-term stays or those applying for a Schengen visa are generally required to have private medical insurance that meets specific criteria. For example, for a Schengen visa, the insurance must have a minimum coverage of €30,000 for medical repatriation and emergency care. For long-term stays, more comprehensive coverage is required.
Other Mandatory Insurance: Certain professions and businesses are required to have professional indemnity or liability insurance. For example, tour operators and employment agencies must have insurance to protect consumers in case of their bankruptcy.
Consumer Protection
Fair Practices: Czech insurance law is generally considered to be more favorable to the insured than to insurers. Insurers have a duty to actively seek information relevant to the policy and ask specific, clear questions. The insured's duty is to provide truthful and complete answers to these questions.
Remedies for Misrepresentation: If an insured provides false or incomplete information, the insurer may have remedies, such as reducing the insurance benefit, refusing it, or withdrawing from the policy.
Dispute Resolution: If a dispute arises with an insurer, an injured party can turn to the Czech National Bank to file a complaint about the company's procedures. The Ombudsman of the Czech Insurance Association and the competent courts are also available for resolving disputes.
Add-on Insurance: The ČNB has taken steps to tighten regulations on add-on insurance products (e.g., insurance sold with electronics or travel packages), requiring greater transparency and ensuring that customers understand the terms and conditions of these policies.
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