Insurance Code of the Republic of Bulgaria

INSURANCE CODE

Published - State Gazette, No. 102 of 29.12.2015, effective from 01.01.2016; amendments, No. 62 of 09.08.2016, effective from 09.08.2016; amendments and additions, No. 95 of 29.11.2016; additions, No. 103 of 27.12.2016; additions, No. 8 of 24.01.2017; additions, No. 62 of 01.08.2017; amendments and additions, No. 63 of 04.08.2017, effective from 04.08.2017; amendments and additions, No. 85 of 24.10.2017; amendments and additions, No. 92 of 17.11.2017; amendments and additions, No. 95 of 28.11.2017, effective 01.01.2018; amendments, No. 103 of 28.12.2017, effective from 01.01.2018; amendments, No. 7 of 19.01.2018; amendments and additions, No. 15 of 16.02.2018, effective from 16.02.2018; amendments, No. 24 of 16.03.2018; amendments, No. 27 of 27.03.2018; additions, No. 77 of 18.09.2018, effective from 01.01.2019; amendments and additions, No. 101 of 07.12.2018, effective from 07.12.2018; amendments and additions, No. 17 of 26.02.2019; additions, No. 42 of 28.05.2019, effective from 28.05.2019; amendments, No. 83 of 22.10.2019, effective from 22.10.2019; additions, No. 26 of 22.03.2020; affected by the Law on Measures and Actions during the State of Emergency, No. 28 of 24.03.2020, effective from 13.03.2020; additions, No. 34 of 09.04.2020, effective from 09.04.2020; affected by the Additional Amendment to the Health Act, No. 44 of 13.05.2020, effective from 14.05.2020; amendments, No. 64 of 18.07.2020, effective from 18.07.2020; amendments, No. 21 of 12.03.2021; amendments and additions, No. 16 of 25.02.2022; amendments and additions, No. 25 of 29.03.2022, effective from 29.03.2022; amendments, No. 66 of 01.08.2023; additions, No. 68 of 08.08.2023; additions, No. 80 of 19.09.2023, effective from 19.09.2023; amendments, No. 84 of 06.10.2023, as the amendments with the ZPK enter into force from 06.10.2023; amendments and additions, No. 85 of 10.10.2023, effective from 10.10.2023; amendments, No. 70 of 20.08.2024, effective from the date determined in the Decision of the Council of the European Union on the adoption of the euro by the Republic of Bulgaria, adopted in accordance with Article 140(2) TFEU, and the Council Regulation of the European Union, adopted in accordance with Article 140(3) TFEU; amendments, No. 79 of 17.09.2024; amendments and additions, No. 49 of 17.06.2025; amendments and additions, No. 54 of 04.07.2025; amendments and additions, No. 63 of 01.08.2025, effective from 01.08.2025; amendments and additions, No. 64 of 05.08.2025, effective from 06.09.2025; amendments and additions, No. 67 of 15.08.2025; additions, No. 16 of 10.02.2026; amendments and additions, No. 25 of 10.03.2026; amendments, No. 51 of 05.06.2026, effective from 05.06.2026.

PART ONE
GENERAL PROVISIONS
Chapter One
SUBJECT MATTER. OBJECTIVES. BASIC PRINCIPLES
Subject Matter and Scope of Application

Art. 1. (Amended - SG, No. 101 of 2018, effective from 07.12.2018.) (1) This Code regulates:

1. insurance and reinsurance activities;
2. (Amended - SG, No. 101 of 2018, effective from 07.12.2018.) the distribution of insurance and reinsurance products, including insurance and reinsurance mediation;
3. the conditions for commencing, conducting, and terminating the activities under items 1 and 2;
4. the rules for the distribution of insurance products and the settlement of insurance claims;
5. the insurance contract;
6. compulsory insurance;
7. the rehabilitation, liquidation, and insolvency of an insurer or reinsurer;
8. insurance supervision.
   (2) The provisions of this Code do not apply to additional social security activities, unless otherwise provided by law.
   (3) The provisions of this Code, with the exception of Part Four, do not apply to export credit insurance activities carried out by the Bulgarian Export Insurance Agency when carried out on behalf of the state or guaranteed by it, or when the insurer is the state.
   (4) The provisions of this Code do not apply to travel assistance activities that simultaneously meet the following conditions:
9. the assistance is provided by a legal entity or sole proprietor with a seat in the Republic of Bulgaria, which is not an insurer;
10. the assistance is provided in the event of an accident or technical breakdown of a vehicle, when the accident or technical breakdown occurred on the territory of the Republic of Bulgaria;
11. the assistance is provided by carrying out the following activities:
    a) repair of the technical breakdown on site, for which the person under item 1 uses primarily its own personnel and equipment; b) transport of the vehicle to the nearest or most suitable place where repair can be carried out, and if possible, transport of the driver and passengers in the same vehicle to the nearest place from where they can continue their journey with another vehicle; c) transport of the vehicle, if possible, together with the driver and passengers to their place of residence or to the starting or final point of the journey in the Republic of Bulgaria. (5) In the cases under para. 4, item 3, letters "a" and "b", the condition that the accident or technical breakdown must have occurred on the territory of the Republic of Bulgaria does not apply when the driver of the vehicle is a member of an organization of persons under para. 4, item 1 and the removal of the technical breakdown or the transport of the vehicle is carried out by a similar organization in the other country on the basis of a mutual agreement, if the removal of the technical breakdown or the transport of the vehicle is carried out upon presentation of a membership card and without payment of an additional premium. (6) The provisions of this Code do not apply to reinsurance activities carried out or fully guaranteed by the state, acting as a reinsurer of last resort, for reasons of essential public interest, including when such activity is necessary due to a market situation in which adequate commercial coverage cannot be obtained.

Objectives

Art. 2. (Added - SG, No. 101 of 2018, effective from 07.12.2018.) (1) The objectives of this Code are:

1. ensuring protection of the interests of users of insurance services, and
2. creating conditions for the development of a stable, transparent, and efficient insurance market.
   (2) (Added - SG, No. 101 of 2018, effective from 07.12.2018.) For the purposes of this Code, "user of insurance services" means the policyholder, the insured, the third-party beneficiary, the third-party injured party, other persons who have acquired rights under the insurance contract, as well as the natural or legal person who expresses interest in using the services of distribution of insurance products provided by an insurer or insurance intermediary in connection with its subject matter of activity, regardless of whether it is a consumer within the meaning of the Consumer Protection Act. (3) In exercising its functions, the Commission for Financial Supervision, hereinafter referred to as "the Commission", and its Deputy Chairman, heading the "Insurance Supervision" Directorate, hereinafter referred to as "the Deputy Chairman", take into account the potential impact of their decisions on the stability of the relevant financial systems in the European Union, particularly in urgent situations, taking into account the information available at the relevant time. At times of exceptional movements in financial markets, the Commission and the Deputy Chairman take into account the potential procyclical effects of their actions.

Insurance

Art. 3. (1) Insurance is an activity of providing insurance coverage for risks under a contract, consisting of collecting and spending funds intended for the payment of benefits and other monetary sums upon the occurrence of events or fulfillment of conditions provided for in the contract or by law, as well as in activities directly related thereto, including:

1. assessment of insurance risk;
2. determination of the insurance premium;
3. establishment of the occurrence of an insurance event;
4. determination of the amount of damage caused;
5. management of the insurer's assets;
6. transfer of all or part of the insurance risks covered by an insurer to a reinsurer or another insurer (passive reinsurance);
7. provision by the insurer of "Travel Assistance" insurance services under item 18, Section II, letter "A" of Appendix No. 1 through its employed persons and with its own technical means.
   (2) Carrying out insurance activities in the Republic of Bulgaria means covering risks located in the Republic of Bulgaria.

Reinsurance

Art. 4. (Amended and added - SG, No. 101 of 2018, effective from 07.12.2018.)
Reinsurance is an activity of assuming, under a reinsurance contract, all or part of the risks covered by an insurer or another reinsurer, in exchange for the cession of an insurance premium (active reinsurance) and activities directly related thereto. Reinsurance also includes the provision of coverage by reinsurers to an institution falling within the scope of Directive (EU) 2016/2341 of the European Parliament and of the Council of 14 December 2016 on the activities and supervision of institutions for occupational retirement provision (IORP) (OJ, L 354/37 of 23 December 2016).

Insurance and Reinsurance Mediation

Art. 5. (Amended - SG, No. 101 of 2018, effective from 07.12.2018.) (1) Insurance mediation is the activity of distributing insurance products, which is carried out for remuneration by a person other than an insurer or its employee.
(2) Reinsurance mediation is the activity of distributing reinsurance products, which is carried out for remuneration by a person other than an insurer, reinsurer, or their employees.
(3) The remuneration under para. 1 and 2 may be a commission, fee, or other payment, including economic benefits of any kind or any other financial or non-financial advantage or incentive, offered or given in connection with an activity of distribution of insurance products.

Voluntariness of Insurance and Insurance Mediation

Art. 6. (1) Insurance and insurance mediation are carried out on the principle of voluntariness.
(2) Compulsory insurance is established by law or by an international treaty ratified, published, and entered into force for the Republic of Bulgaria.

Insurance Supervision

Art. 7. Regulation and supervision of the activities under Art. 1, para. 1 are carried out by the Commission, as well as by the Deputy Chairman.

Language

Art. 8. (1) The language in which insurance and insurance mediation are carried out in the Republic of Bulgaria is Bulgarian. The general terms and conditions, consumer information, and other documents that insurers and insurance intermediaries provide to users of insurance services are prepared in the Bulgarian language. At the request of the user of insurance services, another language may be used in relations with the insurer. (2) The language in which insurance supervision is carried out in the Republic of Bulgaria is Bulgarian. In specific cases, the Commission and the Deputy Chairman may exchange information, including reporting, with bodies of the European Union, bodies of other Member States, insurers, reinsurers, and insurance intermediaries in another official language of the European Union.

Application of the Rules of International Treaties and the Practice of the European Insurance and Occupational Pensions Authority

Art. 9. (1) When an international treaty, ratified, published, and entered into force for the Republic of Bulgaria, respectively for the European Union, in the exercise of its international treaty legal personality provides for different rules regarding the activities under Art. 1, para. 1, these rules shall apply.
(2) The Commission adopts decisions, guidelines, or practices in connection with the application of the international treaties under para. 1, when this is necessary for the purposes of good supervisory practice or for the application of recommendations of the competent institutions of the European Union.
(3) The Commission and the Deputy Chairman may apply:

1. the acts of the European Insurance and Occupational Pensions Authority, hereinafter referred to as "the European Authority", established by Regulation (EU) No 1094/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/79/EC (OJ, L 331/48 of 15 December 2010), hereinafter referred to as "Regulation (EU) No 1094/2010";
2. the protocols and other documents adopted within the framework of the European Insurance and Occupational Pensions Committee.
   (4) When the European Authority has adopted a guideline or recommendation within the meaning of Art. 16 of Regulation (EU) No 1094/2010, the Commission may adopt decisions, guidelines, or practices in connection with the application of the guideline or recommendation, when this is necessary for good supervisory practice.

Advertising

Art. 10. Insurers, reinsurers, and insurance intermediaries who have the right to carry out activities in the Republic of Bulgaria may advertise their services through all means of mass media in the country in compliance with the rules established in protection of the public interest.

General Terms, Tariffs, and Other Documents Used in Relations with Users

Art. 11. (Amended - SG, No. 95 of 2017, effective from 01.01.2018.) (1) The requirement for prior approval or systematic notification for general terms of insurance contracts, premium tariff rates, or forms and other printed documents that an insurer intends to use in its transactions with users of insurance services is not permitted. (2) Competent authorities in the Republic of Bulgaria may require non-systematic notification of the general terms of the insurance contract and other documents only for the purposes of checking compliance with national provisions relating to insurance contracts. These requirements may not constitute a prior condition for the exercise of activity by an insurer. (3) (Amended - SG, No. 95 of 2017, effective from 01.01.2018.) For compulsory insurance, the Commission may require insurers to notify it of the general terms of these insurances prior to their distribution. (4) The requirement for prior notification or approval for proposed increases in premium tariff rates is not permitted, except as part of the general systems for price control in the state. (5) (Amended - SG, No. 95 of 2017, effective from 01.01.2018.) For insurance under Section I of Appendix No. 1, the requirement for prior approval or systematic notification is not permitted for the technical bases used for calculating premiums and technical reserves. The Commission may require systematic information on the technical bases solely for the purpose of checking compliance with provisions affecting actuarial principles.

Chapter Two
PERSONS WHO MAY CARRY OUT THE ACTIVITIES UNDER THIS CODE, AND BASIC REQUIREMENTS TOWARDS THEM
Section I
Insurers and Reinsurers
Insurers and Reinsurers

Art. 12. (1) An insurer is:

1. a joint-stock company, a European company, a mutual insurance cooperative, or a European cooperative society with a seat in the Republic of Bulgaria, having obtained a license under the conditions and procedure of this Code (local insurer);
2. a person having obtained a license for insurance in another Member State and carrying out activity on the territory of the Republic of Bulgaria under the conditions of the right of establishment or freedom to provide services (insurer from another Member State);
3. a branch of an insurer from a third country, registered under the Commerce Act, having obtained a license under the conditions and procedure of this Code.
   (2) A reinsurer is:
4. a joint-stock company or a European company, having obtained a license for active reinsurance under this Code (local reinsurer);
5. a person having obtained a license for active reinsurance by seat in another Member State (reinsurer from another Member State);
6. a person having obtained permission for active reinsurance by seat in a third country (reinsurer from a third country) through a branch, registered under the Commerce Act, and having obtained a license under this Code.
   (3) Reinsurance in the Republic of Bulgaria may also be carried out by a reinsurer with a seat in a third country.

European Company. European Cooperative Society

Art. 13. (1) An insurer - European company, respectively reinsurer - European company, is established, carries out activity, is transformed, and is terminated under the procedure of Council Regulation (EC) No 2157/2001 of 8 October 2001 on the Statute for a European Company (SE) and this Code. For an insurer - European company, the provisions for insurers - joint-stock companies under this Code apply. (2) An insurer - European cooperative society, is established, carries out activity, is transformed, and is terminated under the procedure of Council Regulation (EC) No 1435/2003 of 22 July 2003 on the Statute for a European Cooperative Society (SCE) and this Code. For an insurer - European cooperative society, the provisions for mutual insurance cooperatives under this Code apply.

Captive Insurer. Captive Reinsurer

Art. 14. (1) A captive insurer is an insurance joint-stock company, which is owned by a financial enterprise, other than an insurer or reinsurer, or by a group of insurers and/or reinsurers, or is owned by a non-financial enterprise, which insurer aims to provide insurance coverage exclusively for the risks of the person or persons who are its owners, or of the person or persons from the group in which the captive insurer participates. (2) A captive reinsurer is a reinsurer, which is owned by a financial enterprise, other than an insurer or reinsurer, or by a group of insurers and/or reinsurers, or is owned by a non-financial enterprise, which reinsurer aims to provide reinsurance coverage exclusively for the risks of the person or persons who are its owners, or of the person or persons from the group in which the captive insurer participates. (3) The fact that an insurance, respectively reinsurance, joint-stock company is captive is entered in its charter. (4) For a captive insurer, respectively captive reinsurer, the provisions for the insurance joint-stock company, respectively for the reinsurer, apply, insofar as otherwise provided in this Code.

Section II
Right of Access of Insurers and Reinsurers to the Single Market Right of Access of Insurers and Reinsurers

Art. 15. (1) Insurers and reinsurers with a seat in the Republic of Bulgaria have the right of access to the market of the European Union and the European Economic Area (the single market), when they have obtained a license under this Code and apply the requirements of Part Two, Title Three.
(2) Insurers and reinsurers under para. 1 are obliged to comply with this Code, with the exception of Part Two, Title Four, as well as to comply with the acts of the European Commission implementing Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (OJ, L 335/1 of 17 December 2009), hereinafter referred to as "Directive 2009/138/EC". (3) An insurer applying Part Two, Title Four, may not carry out activity in another Member State under the conditions of the right of establishment or freedom to provide services. (4) Insurers under para. 3 are obliged to comply with this Code, with the exception of Part Two, Title Three, as well as to comply with the provisions of the acts of the European Commission implementing Directive 2009/138/EC, when this is provided for in this Code. (5) The application of Part Two, Title Four is permitted by the Commission in the procedure for issuing a license or under the procedure of Art. 38, para. 6 - 9 and is noted in the issued license.

Conditions for Restricting Access to the Single Market

Art. 16. (Amended - SG, No. 25 of 2022, effective from 19.10.2022; amended, No. 70 of 2024, effective from the date determined in the Decision of the Council of the European Union on the adoption of the euro by the Republic of Bulgaria, adopted in accordance with Article 140(2) TFEU, and the Council Regulation of the European Union, adopted in accordance with Article 140(3) TFEU) An insurer without the right of access to the single market may only be an insurer with a seat in the Republic of Bulgaria, for whom the following requirements are simultaneously met:

1. (Amended - SG, No. 25 of 2022, effective from 19.10.2022; amended, No. 70 of 2024, effective from the date determined in the Decision of the Council of the European Union on the adoption of the euro by the Republic of Bulgaria, adopted in accordance with Article 140(2) TFEU, and the Council Regulation of the European Union, adopted in accordance with Article 140(3) TFEU) its annual gross amount of written premiums does not exceed 5,400,000 euros;
2. (Amended - SG, No. 25 of 2022, effective from 19.10.2022; amended, No. 70 of 2024, effective from the date determined in the Decision of the Council of the European Union on the adoption of the euro by the Republic of Bulgaria, adopted in accordance with Article 140(2) TFEU, and the Council Regulation of the European Union, adopted in accordance with Article 140(3) TFEU) the gross amount of its technical reserves without deduction of the shares of reinsurers or special purpose vehicles for alternative transfer of insurance risk does not exceed 26,600,000 euros;
3. (Amended - SG, No. 25 of 2022, effective from 19.10.2022; amended, No. 70 of 2024, effective from the date determined in the Decision of the Council of the European Union on the adoption of the euro by the Republic of Bulgaria, adopted in accordance with Article 140(2) TFEU, and the Council Regulation of the European Union, adopted in accordance with Article 140(3) TFEU) when the insurer is part of a group, the gross amount of the technical reserves of the group without deduction of the shares of reinsurers or special purpose vehicles for alternative transfer of insurance risk does not exceed 26,600,000 euros and if the following additional conditions are met:
   a) there is no other insurer in the group that has access to the single market, or reinsurer; b) all insurers in the group have a seat in the Republic of Bulgaria;
4. the activity of the insurer does not include insurance or active reinsurance of risks under items 10 - 15, Section II, letter "A" of Appendix No. 1, unless they are covered as additional risks within the meaning of Art. 30;
5. (Amended - SG, No. 70 of 2024, effective from the date determined in the Decision of the Council of the European Union on the adoption of the euro by the Republic of Bulgaria, adopted in accordance with Article 140(2) TFEU, and the Council Regulation of the European Union, adopted in accordance with Article 140(3) TFEU) for active reinsurance of the insurer:
   a) (Amended - SG, No. 25 of 2022, effective from 19.10.2022) its premium income does not exceed 600,000 euros or 10 percent of the gross premium income, respectively b) (Amended - SG, No. 25 of 2022, effective from 19.10.2022) its technical reserves without deduction of the shares of reinsurers or special purpose vehicles for alternative transfer of insurance risk do not exceed 2,700,000 euros or 10 percent of the gross amount of technical reserves without