Insurance laws Lithuania
Lithuania's insurance legal framework is comprehensive and largely aligns with European Union (EU) directives, given its membership in the EU. The primary body responsible for supervising the insurance industry in Lithuania is the Bank of Lithuania (Lietuvos bankas).
Here are the key aspects of insurance laws in Lithuania:
I. Primary Legislation:
Republic of Lithuania Law on Insurance (IX-1737): This is the fundamental law regulating insurance, reinsurance, and distribution of reinsurance products. It aims to ensure a credible, efficient, safe, and stable insurance system. It covers aspects such as:
The right to engage in insurance and reinsurance activities.
State regulation principles for these activities.
Pre-contractual relations, terms and conditions of insurance contracts, and other related matters.
Definitions of key terms like "insured person," "insurance against civil liability," "insurance undertaking," and "insurable interest."
Republic of Lithuania Law on Compulsory Insurance Against Civil Liability in Respect of the Use of Motor Vehicles (IX-378): This law specifically governs mandatory motor third-party liability insurance. It outlines:
The obligation to conclude such contracts for vehicles used in Lithuania.
Responsibilities of vehicle owners/users.
Minimum coverage amounts (e.g., currently EUR 6,450,000 for personal injury and EUR 1,300,000 for property damage, effective from January 23, 2023).
Procedures for compensation and settlement of claims.
Law of the Republic of Lithuania on Health Insurance (I-1343): This law establishes the compulsory health insurance system in Lithuania, which obliges residents to obtain health insurance coverage. It defines:
Persons insured under compulsory health insurance.
Principles of budget formation for the Compulsory Health Insurance Fund.
Functions of the National Health Insurance Fund (NHIF) and Territorial Health Insurance Funds (THIFs).
Rights and obligations of insured persons.
Provisions for additional (voluntary) health insurance.
Law on State Social Insurance Pensions: This law governs various aspects of social security, including old-age pensions, work incapacity pensions, and widow's/widower's and orphan's pensions, all of which fall under the broader umbrella of social insurance.
II. Regulatory Body:
Bank of Lithuania (LB): Since January 1, 2012, the Bank of Lithuania has been the main regulator of the insurance industry. Its key responsibilities include:
Monitoring and supervision of insurance and reinsurance companies.
Supervision of insurance intermediaries.
Issuing licenses for insurance undertakings and intermediaries.
Ensuring compliance with legal acts and consumer protection.
III. Key Aspects of the Lithuanian Insurance Market:
Compulsory Insurances: Beyond motor third-party liability and compulsory health insurance, other mandatory insurance types in Lithuania include:
Marine Liability Insurance.
Social Security Insurance.
Certain types of Liability Insurance.
Licensing and Operation:
Insurers and domestic reinsurers require a license from the Bank of Lithuania to operate.
Foreign reinsurers typically do not need a separate license.
Insurance intermediaries also need a license to sell insurance contracts.
Non-Admitted Insurance: Generally, non-admitted insurance (insurance purchased from an insurer not licensed in Lithuania) is not permitted, with some exceptions.
Composite Insurance: Composite insurance (where a single insurer offers both life and non-life insurance) is generally not permitted, although both life and non-life insurers can operate accident and health insurance businesses.
Taxation: Taxes are imposed on insurance premiums, corporate income, corporate capital gains, and value-added tax.
IV. EU Influence:
As an EU member state, Lithuania's insurance laws are heavily influenced by and compliant with EU directives and regulations, such as Solvency II for prudential regulation of insurance and reinsurance undertakings. This ensures a harmonized approach to insurance supervision across the European Economic Area (EEA).
It's important to note that specific regulations and minimum coverage amounts can be updated, so for the most current and detailed information, it is advisable to consult the official publications of the Seimas (Parliament) of the Republic of Lithuania and the Bank of Lithuania.
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