Insurance Intermediaries

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How to commence insurance and reinsurance distribution?

You may commence insurance or reinsurance distribution only after registration in the relevant register.

The registration in the register is a regulated process whereby you can become a participant of Latvia’s financial market and commence business after registration in the relevant register.

Any person in accordance with the Insurance and Reinsurance Distribution Law is entitled to pursue insurance or reinsurance distribution.

An insurance distributor – an insurance merchant, a branch of a foreign insurer, an insurance intermediary, or an ancillary insurance intermediary.

A reinsurance distributor – an insurance or reinsurance merchant, a branch of a foreign insurer or a branch of a foreign reinsurer, a reinsurance broker.

An insurance or reinsurance broker may commence insurance or reinsurance distribution only after registration in the register of insurance and reinsurance brokers. The register of insurance and reinsurance brokers shall be maintained, and insurance and reinsurance brokers shall be registered by the Financial and Capital Market Commission (hereinafter — the FCMC).

An insurance agent may commence insurance distribution only after registration in the register of insurance agents. The register of insurance agents shall be maintained by an insurance merchant or a branch of a foreign insurer. For more information of the register of the insurance agents and the requirements for the registration of insurance agents and conditions for the conclusion of a distribution contract, please see Sections 10 and 11 of Insurance and Reinsurance Distribution Law.

An ancillary insurance intermediary may commence insurance distribution only after registration in the register of ancillary insurance intermediaries. The register of ancillary insurance intermediaries shall be maintained by an insurance merchant, a branch of a foreign insurer or an insurance agent. For more information of the register of ancillary insurance intermediaries and the requirements for the registration of the ancillary insurance intermediaries, please see Section 13 of Insurance and Reinsurance Distribution Law.

An insurance or reinsurance merchant or a branch of a foreign insurer which has obtained an insurance or reinsurance licence in accordance with the Insurance and Reinsurance Law may commence insurance or reinsurance distribution.

An insurance or reinsurance broker (furthermore also – the entrepreneur) is a legal person, who pursues insurance or reinsurance distribution on behalf and in the interests of the customer, starting with giving recommendations and offering insurance till the conclusion of the insurance contract and the provision of services.

The register of insurance and reinsurance brokers shall be maintained by the FCMC.

The FCMC shall enter into the register of insurance and reinsurance brokers:

  1. a capital company entered into the commercial register of the Register of Enterprises,
  2. a branch of a foreign insurance or reinsurance broker.
Qualification requirements for the insurance and reinsurance broker
  • The responsible person of an insurance or reinsurance broker and employees directly involved in insurance or reinsurance distribution:
    • have acquired appropriate higher education and the knowledge and skills necessary for insurance or reinsurance distribution recognized by the association of insurance distributors. (The information of the registered associations of insurance distributors is available here (in Latvian).),
    • have an impeccable reputation – none of the conditions referred to in Section 19 of Insurance and Reinsurance Distribution Law applies to such person, as well as such circumstances have not been detected which, upon continuation of obligations related to insurance or reinsurance distribution by such person, may harm the reputation of the insurance or reinsurance distributor, cause any risk that the insurance or reinsurance distributor is involved in illegal activities, or endanger the rights or interests of customers.
  • The share capital of an insurance or reinsurance broker may not be less than EUR 15 000.
  • If a branch of a foreign insurance or reinsurance broker wishes to carry out the distribution of insurance and reinsurance in the Republic of Latvia, the foreign insurance or reinsurance broker shall deposit EUR 15 000 as a security in a credit institution registered in the Republic of Latvia*.
  • If a branch of insurance or reinsurance broker of a foreign state, which has joined the Organization for Economic Cooperation and Development, wishes to carry out the distribution of insurance and reinsurance in the Republic of Latvia, it shall deposit no less than 25 percent of the EUR 15 000 as a security in a credit institution registered in the Republic of Latvia*.

* The deposit shall be freely available; it cannot be burdened, and it may only be transferred with the permission of the FCMC.

The following in accordance with the Insurance and Reinsurance Distribution Law shall not be considered insurance or reinsurance distribution:

  • the provision of information for advertising purposes as an ancillary service within the scope of another core activity and only the provision of data and information to an insurance or reinsurance intermediary or to the potential insurance or reinsurance policy holder if the data and information provider does not perform any additional measures to assist in concluding an insurance or reinsurance contract,
  • the administration of insurance or reinsurance claims or loss assessment or the calculation of the insurance compensation.

For more detailed information of all exceptions please see Section 3(3) of the Insurance and Reinsurance Distribution Law.

The process of the registration in the register of the insurance and reinsurance brokers comprises several steps:

  1. Preparation for the submission of application.
  2. Submission of application.
  3. Assessment of application.
  4. Registration in the register or refusal to make an entry.

Apply for advice! Please apply in advance to agree on the meeting time: fktk@fktk.lv, +371 67 774 800.

Preparation for the submission of application

Preparation for the submission of application: an introductory stage, during which the entrepreneur, if necessary, communicates with the FCMC to agree on a meeting time to clarify the applicable regulatory framework and the information on the documents to be submitted.

What does the entrepreneur do?

  • Prepares information on the entrepreneur.
  • Prepares information on the shareholder or members and on such persons which have close links with the entrepreneur.
  • Prepares information on the responsible person of an entrepreneur.
  • Opens the separate cash account in the credit institution if it is expected to receive insurance or reinsurance premiums.
  • Starts the drafting of the necessary documents.

What does the FCMC do?

  • Provides advice regarding the applicable regulatory framework.
  • Provides advice regarding the documents to be submitted.

What should be taken into account?

  • Please refer carefully to the regulatory requirements.
  • If an entrepreneur expects to provide life insurance distribution, it shall prepare and submit to the FCMC all the documents related to internal control systems in order to ensure conformity with the principal requirements in the field of prevention of money laundering and terrorism and proliferation financing.
  • Please assess the necessity to attract qualified experts or consultants.

Costs

Provision of advice by the FCMC is free of charge.

Submission of application

Submission of application: The entrepreneur prepares and submits an application regarding entering in the register of insurance and reinsurance brokers.

What does the entrepreneur do?

  • Submits a fully completed application and all necessary information, documents in accordance with the requirements of Section 8(1) of Insurance and Reinsurance Distribution Law.
  • Receives information from the FCMC on the deficiencies identified which need to be addressed in the submitted application and provides the necessary additional explanations if the application is incomplete.

What does the FCMC do?

Carries out an assessment of the completeness of the application and whether the entrepreneur has submitted all the documents and information according to the list of the documents to be submitted.

What should be taken into account?

  • If necessary, before submitting the application, please apply for advice offered by the FCMC experts.
  • If an entrepreneur expects to provide life insurance distribution, make certain that all the documents of internal control system for the prevention of money laundering and terrorism and proliferation financing have been drawn up in accordance with the specifics of the entrepreneur’s activities and its customer base.
  • Make certain that the documents to be submitted are complete and of high-quality, as well as they have been drawn up in accordance with the laws and regulations regarding the procedures for the development and drawing up of documents.
  • Please check that all the necessary documents have been submitted (see a list of documents to be submitted).

List of documents to be submitted

Requirements for the list of documents to be submitted are laid down in Article 8(1) of the Insurance and Reinsurance Distribution Law.

In order to register in the register of insurance and reinsurance brokers, an insurance or reinsurance broker shall submit to the FCMC:

1. an application for the entry in the register of insurance and reinsurance brokers,

2. the following information about the responsible person* and documents certifying that the person complies with the requirements of Section 16(1) of the Insurance and Reinsurance Distribution Law:

  • given name, surname, personal identity number,
  • copies of educational documents,
  • an opinion issued by the association of insurance distributors that the person has the necessary knowledge and skills for the distribution of insurance and reinsurance in conformity with the requirements of the Insurance and Reinsurance Distribution Law,
  • a document issued by the competent authority of the State attesting that the responsible person (non-resident only) is not subject to any of conditions referred to in Section 19(1) of the Insurance and Reinsurance Distribution Law,

*The responsible person must be a member of the board of an entrepreneur or a person who is employed as the manager or in another senior office by an entrepreneur.

3. the list of such shareholders or members which have a qualifying holding in the insurance or reinsurance broker, indicating the amount of holding**,

**Qualifying holding – a holding acquired directly or indirectly by a person or several persons acting in concert on the basis of the agreement which comprises 10 per cent and more of the equity capital or the number of the stocks with voting rights of a commercial company or which makes it possible to exercise a significant influence over the determination of the financial and operational policy of the commercial company.

4. the list of such persons which have close links with the insurance or reinsurance broker***,

***Close links – a mutual link of two or more persons:

  • by participation – a person owns directly or by way of control 20 per cent or more of the voting rights in a commercial company or a person directly or by way of control has acquired a holding which comprises 20 per cent or more of the equity capital or the number of the stocks with voting rights, or stocks of the commercial company,
  • by control,
  • if they are linked with the same person by a relationship of control.

5. a certification that the qualifying holding and close links referred to in Clauses 3 and 4 of this Paragraph do not restrict the possibilities of the FCMC to carry out the supervisory functions,

6. information regarding the insurance or reinsurance broker, indicating the firm name, registration number, legal address, telephone number, electronic mail address, and website address****, where public access to the information specified in the Insurance and Reinsurance Distribution Law will be ensured,

****Insurance and reinsurance broker must ensure a public access to the information specified in the Insurance and Reinsurance Distribution Law on the website of the insurance broker or on another website available to the public with which the insurance or reinsurance broker has agreed upon posting of such information.

7. a copy of the civil liability insurance contract referred to in Section 28 of the Insurance and Reinsurance Distribution Law or a guarantee issued by a credit institution*****,

*****The insurance or reinsurance broker is entitled to submit the copy of the civil liability insurance contract, or a guarantee issued by a credit institution after the favourable decision of the FCMC to make an entry in the register of insurance and reinsurance brokers has been taken. Take into consideration that with the Commission Delegated Regulation of 12 June 2020 the amounts of the civil liability have been amended. The minimums amount of civil liability per year may not be less than EUR 1 924 560 and for a single insurance case – less than EUR 1 300 380. The insurance contract shall be in effect in the territory of all the Member States and in the territory of such foreign states in which the insurance or reinsurance intermediary has the right to pursue insurance or reinsurance distribution. The civil liability insurance contract shall provide three years (36 months) long time period for bringing of the claim. The civil liability insurance contract may provide for deductible of the insurance or reinsurance intermediary up to EUR 10 000 if the conditions laid down in the Section 28(5) of the Insurance and Reinsurance Distribution Law are met.

8. a copy of the contract concluded with the credit institution regarding opening of a separate cash account****** which indicates that the monies in the account are monies acquired as a result of the activities of the insurance or reinsurance broker in accordance with the requirements of Section 31 of the Insurance and Reinsurance Distribution Law (The requirements of this Clause shall apply to insurance or reinsurance brokers which are planning to receive premiums or other payments according to the insurance or reinsurance contract concluded),

******A separate cash account of the insurance and reinsurance broker where the funds obtained from insurance or reinsurance distribution are held should not be burdened. The obligations between third parties (including credit institutions) and insurance or reinsurance broker should not provide any burdens for the separate cash accounts of the insurance and reinsurance broker where the funds obtained from insurance or reinsurance distribution are held.

9. information regarding the procedure by which transfer of the funds received from customers into a separate cash account in the credit institution will be ensured (The requirements of this Clause shall apply to insurance or reinsurance brokers which are planning to receive premiums or other payments according to the insurance or reinsurance contract concluded.),

11. information regarding the procedure for the protection of an information system, including a description of IT systems, resources and procedures for the control and safeguarding of the data processing systems. The procedure for the protection of an information system should be developed according to the requirements laid down in the FCMC regulations No 150 Regulatory provisions for information technology and security risk management regulatory enactments (available here (in Latvian)),

12. information regarding the procedure for the fulfilment of the requirements of the laws and regulations for the prevention of money laundering and terrorism and proliferation financing, assessment of the sanctions risk and the procedure for sanctions risk management and control, as well as information of the responsible persons (more information of the Legal acts in the AML/CFT area is available here),

13. information regarding the procedure by which the insurance or reinsurance broker examines complaints of customers. The requirement laid down in Section 46 of the Insurance and Reinsurance Distribution Law and FCMC regulations No 91 Regulatory provisions for the examination of complaints against insurance and reinsurance distributors (available here (in Latvian)) should be considered for developing this procedure,

14. information regarding the organisational structure of the insurance or reinsurance broker, as well as regarding the division of authorisation and obligations of the board and the responsible person for insurance or reinsurance distribution,

15. information regarding the procedure by which fulfilment of the requirements of Section 13 of this Insurance and Reinsurance Distribution Law is ensured (The requirements of this Clause shall apply to insurance or reinsurance brokers which are planning to use the services of ancillary insurance intermediary in insurance or reinsurance distribution and therefor to maintain the relevant register.),

16. information regarding the procedure by which fulfilment of the requirements of Section 23(6) of Insurance and reinsurance Distribution Law is ensured,

17. a document certifying the payment performed for examination of the documents submitted to the register of insurance and reinsurance brokers – EUR 250.

Costs

EUR 250 for examining documents and information submitted to the register of insurance and reinsurance broker (should be paid upon official submitting of the application) (The FCMC account details are available here.)

Time limit for examining the application

Within 30 days after receipt of all the documents according to the list of documents to be submitted if they have been drawn up in accordance with the laws and regulations regarding the procedures for the development and drawing up of documents. If the information provided in the application is not sufficient or there are some deficiencies identified in the documents submitted, the time period is suspended until the day when deficiencies are eliminated, but not later that for 30 days.

Assessment of application

Assessment of application: The FCMC carries out the assessment of the application as to the substance.

What does the entrepreneur do?

  • Provides answers to additional information requests by the FCMC as soon as possible.
  • Corrects the submitted documents according to the FCMC instructions.

What does the FCMC do?

  • Carries out the assessment of the application as to the substance.
  • Contacts the contact person of the entrepreneur in case of identification of any deficiencies.
  • Draws up a letter if deficiencies are identified in the application.
  • Continues the examination of the application pursuant to the additions submitted.
  • Completes the examination of the application.

What should be taken into account?

Please provide additional explanations and make the necessary corrections as soon as possible.

Costs

No additional costs associated with the examination of documents during the assessment stage of the application are applied.

Registration in the register or refusal to make an entry

Registration in the register or refusal to make an entry: The FCMC finalises the examination of the application and takes a decision on making an entry* or a refusal to make an entry in the register of the insurance and reinsurance brokers.

*If the copy of the civil liability insurance contract or a guarantee issued by a credit institution have not been submitted with the application, the FCMC makes an entry in the register only after receiving the mentioned policy.

What does the entrepreneur do?

  • When the information from the FCMC on the decision to make an entry in the register has been received, the entrepreneur concludes the civil liability insurance contract and its copy submits to the FCMC (if the above policy has not been submitted with the application).
  • Designates users of the FCMC Data Reporting System for future communication with the FCMC and submission of performance reports.

What does the FCMC do?

  • Prepares the decision on making an entry or a refusal to make an entry in the register of the insurance and reinsurance brokers.
  • If the copy of the civil liability insurance policy has been submitted with the application:
    • The FCMC informs the entrepreneur of the decision taken and makes the entry in the register,
    • Places information on the website, where public access to the register of the insurance and reinsurance brokers is available.
  • If the copy of the civil liability insurance policy has not been submitted with the application:
    • The FCMC informs the entrepreneur of the decision taken and asks to submit the copy of the civil liability insurance policy,
    • When the copy of the civil liability insurance policy has been received the FCMC makes the entry in the register and informs the entrepreneur of the entry.

Places information on the website, where public access to the register of the insurance and reinsurance brokers is available.

What should be taken into account?

  • Please refer to the information provided by the FCMC on access to the Data Reporting System (for detailed information, please see here (available in Latvian)).
  • Please refer to information related to the requirements and procedures for reporting (for detailed information, please see here (available in Latvian)).
  • Please refer to the information related to the requirements and procedures laid down in the Insurance and Reinsurance Distribution Law, issued on the basis thereof laws and regulations and the directly applicable acts issued by the EU institutions that should be taken into account when pursuing insurance or reinsurance distribution.

Costs

No additional costs applied related to registration with the register of insurance and reinsurance brokers at the stage of registration.

Supervision

Supervision: The FCMC supervises activities of the company in accordance with requirements of Insurance and Reinsurance Distribution Law.

What does the insurance or reinsurance broker do?

  • Provides answers to the FCMC’s requests.
  • Prepares reports in accordance with laws and regulations.
  • Notifies the FCMC of changes in documents submitted for registration.
  • Gets acquainted with the enterprise’s curator designated by the FCMC.

What does the FCMC do?

  • Designates the insurance and reinsurance broker’s curator.
  • Assesses compliance of insurance or reinsurance broker with the regulatory requirements.
  • Requests additional information on the business and performance of the insurance and reinsurance broker.
  • Examines the reports submitted and supervisory information.

What should be taken into account?

  • In case of uncertainties, please contact the curator designated by the FCMC.
  • Submit reports and requested supervisory information on a regular basis.
  • Notify of changes in documents submitted for registration.

Costs

After entering in the register of the insurance and reinsurance brokers, the insurance or reinsurance broker shall make a payment 0.7 per cent of the commissions received in a quarter, but not less than EUR 150 and not more than EUR 1 000 per year, for the financing of the FCMC’s activities.

Process of registration in the register of insurance and reinsurance brokers

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Meeting with the potential market participants

The FCMC’s experts offer advice to potential market participants to help better understand the regulatory requirements for the registration process of insurance and reinsurance brokers.

Please apply in advance to agree on the meeting time: fktk@fktk.lv, +371 67 774 800.

Information on the registers of insurance intermediaries in the Member States

Contacts


Address:
Kungu iela 1, Riga, LV-1050
Phone:
6 7774800
E-mail:
To report on unauthorised firms
Data protection

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