Insurance laws Moldova
nsurance laws Moldova
Moldova's insurance legal framework has undergone significant reforms, particularly with the aim of aligning with European Union standards, most notably the Solvency II Directive. The primary legislation governing insurance and reinsurance activities in Moldova is Law No. 92/2022 on the Business of Insurance or Reinsurance, which came into force on January 1, 2023. This law repealed the previous Law on Insurance (Law No. 407 dated December 21, 2006).
Here are key aspects of Moldova's insurance laws:
1. Regulatory Authority:
Since July 1, 2023, the National Bank of Moldova (NBM) is the supervisory authority for the insurance sector. Previously, it was the National Commission for Financial Markets (NCFM). The NBM is responsible for regulating, authorizing, and supervising insurance market players to ensure stability and protect the rights of policyholders.
2. Key Legislation:
Law No. 92/2022 on the Business of Insurance or Reinsurance: This is the cornerstone law, partially transposing the EU's Solvency II Directive. It covers authorization, carrying out insurance/reinsurance business, prudential requirements, supervision of insurance groups, and regimes for troubled companies. Its purpose is to ensure stability, transparency, and freedom of services in the insurance sector, prevent systemic risks, and protect the rights of all involved parties.
Law on Compulsory Motor Third-Party Liability Insurance (e.g., Law No. 414 dated December 22, 2006, and subsequent amendments): This law specifically regulates compulsory motor third-party liability insurance.
Law No. 1585-XIII of 27 February 1998 on Compulsory Medical Insurance: This law establishes the mandatory health insurance system, which operates on principles of solidarity and equality, providing access to healthcare services regardless of upfront payment ability. The National Health Insurance Company (CNAM) manages this fund.
3. Licensing and Capital Requirements:
Insurance (reinsurance) business and insurance brokerage are subject to licensing by the NBM. Licenses are issued for an indefinite period but can be suspended or withdrawn for legal breaches.
An insurer must be established as a joint-stock company and is considered an "entity of public interest," implying extensive reporting and disclosure requirements.
Share capital must be paid in full upon incorporation, only in cash (in-kind contributions are disallowed).
There are gradual increases in minimum capital requirements for existing insurance companies, aiming for full compliance with the new standards over several years. For instance, the minimum share capital for general insurance is equivalent to €3.2 million, and for life insurance, it is higher.
Insurance brokerage also has minimum capital requirements (e.g., MDL 400,000, approximately €20,000).
4. Solvency II Transposition:
Moldova is committed to implementing the Solvency II Directive, and Law No. 92/2022, along with Law No. 133/2018, partially transposes its provisions. This introduces new prudential, corporate governance, and risk management requirements for insurance companies. Insurers are also obliged to publish information about their solvency and financial situation.
5. Types of Insurance:
Moldovan law distinguishes between compulsory and voluntary (facultative) insurance.
Compulsory insurance: Examples include internal motor third-party liability insurance and military state insurance. These can often only be procured from Moldovan insurers.
Voluntary insurance: Terms are mutually agreed upon between the insurer and the insured, in accordance with the insurer's conditions.
Composite insurance (offering both life and general insurance by a single entity) was generally not permitted, but recent amendments allow insurance companies to simultaneously hold licenses for life insurance and general insurance, aiming to increase competition and diversify products.
6. Foreign Participation:
Moldovan residents can generally only procure insurance from foreign insurers if certain types of insurance are not offered by Moldovan insurers or as established by international conventions.
100% Foreign Direct Investment (FDI) is permitted in the Moldovan insurance industry.
However, a person registered in a jurisdiction that does not apply international transparency standards or is deemed risky by the NBM cannot directly or indirectly own equity interest in a Moldovan insurer.
Non-admitted insurance is generally not permitted, though resident insurance and reinsurance companies can place reinsurance business with reinsurers not registered in Moldova, provided they meet certain criteria (e.g., credit rating of at least BBB+).
7. Other Key Provisions:
Actuary Services: Compulsory use of actuary services, with actuaries obliged to notify the insurer's board and the NBM of any inconsistencies or breaches.
Bancassurance: The concept of bancassurance is recognized, allowing banks and other financial institutions to act as corporate agents for insurance companies.
Consumer Protection: The NBM is mandated to regulate, supervise, and control compliance with consumer rights and legislation by insurance market players.
These laws are continually being updated to further align with international best practices and foster a stable and competitive insurance market in Moldova.
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