INSURANCE CODE

Promulgated - State Gazette No. 102 of 29.12.2015, in force from 01.01.2016; supplemented, No. 62 of 09.08.2016, in force from 09.08.2016; amended and supplemented, No. 95 of 29.11.2016; supplemented, No. 103 of 27.12.2016; supplemented, No. 8 of 24.01.2017; supplemented, No. 62 of 01.08.2017; amended and supplemented, No. 63 of 04.08.2017, in force from 04.08.2017; amended and supplemented, No. 85 of 24.10.2017; amended and supplemented, No. 92 of 17.11.2017; amended and supplemented, No. 95 of 28.11.2017, in force 01.01.2018; amended, No. 103 of 28.12.2017, in force from 01.01.2018; amended, No. 7 of 19.01.2018; amended and supplemented, No. 15 of 16.02.2018, in force from 16.02.2018; amended, No. 24 of 16.03.2018; amended, No. 27 of 27.03.2018; supplemented, No. 77 of 18.09.2018, in force from 01.01.2019; amended and supplemented, No. 101 of 07.12.2018, in force from 07.12.2018; amended and supplemented, No. 17 of 26.02.2019; supplemented, No. 42 of 28.05.2019, in force from 28.05.2019; amended, No. 83 of 22.10.2019, in force from 22.10.2019; supplemented, 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, in force from 13.03.2020; supplemented, No. 34 of 09.04.2020, in force from 09.04.2020; affected by the Act Amending and Supplementing the Health Act, No. 44 of 13.05.2020, in force from 14.05.2020; amended, No. 64 of 18.07.2020, in force from 18.07.2020; amended, No. 21 of 12.03.2021; amended and supplemented, No. 16 of 25.02.2022; amended and supplemented, No. 25 of 29.03.2022, in force from 29.03.2022; amended, No. 66 of 01.08.2023; supplemented, No. 68 of 08.08.2023; supplemented, No. 80 of 19.09.2023, in force from 19.09.2023; amended, No. 84 of 06.10.2023, the amendments with the Act Amending and Supplementing the Insurance Code entering into force from 06.10.2023; amended and supplemented, No. 85 of 10.10.2023, in force from 10.10.2023; amended, No. 70 of 20.08.2024, in force 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) of the TFEU, and the Regulation of the Council of the European Union adopted in accordance with Article 140(3) of the TFEU; amended, No. 79 of 17.09.2024; amended and supplemented, No. 49 of 17.06.2025; amended and supplemented, No. 54 of 04.07.2025; amended and supplemented, No. 63 of 01.08.2025, in force from 01.08.2025; amended and supplemented, No. 64 of 05.08.2025, in force from 06.09.2025; amended and supplemented, No. 67 of 15.08.2025; supplemented, No. 16 of 10.02.2026; amended and supplemented, No. 25 of 10.03.2026; amended, No. 51 of 05.06.2026, in force from 05.06.2026; amended and supplemented, No. 67 of 24.07.2026; amended, No. 87 of 24.09.2026, in force from 24.09.2026; amended and supplemented, No. 97 of 23.10.2026, in force from 23.10.2026.

PART ONE

GENERAL PROVISIONS

Chapter One

SUBJECT MATTER. OBJECTIVES. BASIC PRINCIPLES

Subject matter and scope of application

Article 1. (Amended - State Gazette No. 101 of 2018, in force from 07.12.2018) (1) This Code regulates:
1. insurance and reinsurance activity;
2. (amended - State Gazette No. 101 of 2018, in force from 07.12.2018) the activity of distribution of insurance and reinsurance products, including insurance and reinsurance intermediation activity;
3. the conditions for commencing, carrying out and terminating the activities under items 1 and 2;
4. the rules for distribution of insurance products and for settlement of insurance claims;
5. the insurance contract;
6. compulsory insurance;
7. the rehabilitation, liquidation and insolvency of an insurer or a reinsurer;
8. insurance supervision.
(2) The provisions of this Code shall not apply to supplementary social insurance activity, insofar as otherwise is not provided by law.
(3) The provisions of this Code, with the exception of Part Four, shall not apply to export credit insurance activity carried out by the Bulgarian Export Insurance Agency, where it is carried out for the account of the State or is guaranteed by it, or where the insurer is the State.
(4) The provisions of this Code shall not apply to travel assistance activity which simultaneously meets the following conditions:
1. the assistance is provided by a legal entity or a sole trader with registered office in the Republic of Bulgaria which is not an insurer;
2. the assistance is provided in the event of an accident or technical breakdown of a vehicle, where the accident or technical breakdown has occurred on the territory of the Republic of Bulgaria;
3. the assistance is provided through the performance of the following activities:
(a) repair of the technical breakdown on the spot, for which the person under item 1 uses predominantly its own personnel and equipment; (b) transportation of the vehicle to the nearest or most suitable place where repair can be carried out, and where possible transportation, using the same vehicle, of the driver and passengers to the nearest place from which they can continue their journey by another vehicle; (c) transportation of the vehicle, where possible together with the driver and passengers, to their place of residence or to the starting or ending point of the journey in the Republic of Bulgaria. (5) In the cases under paragraph 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 shall not apply where the driver of the vehicle is a member of an organization of persons under paragraph 4, item 1 and the elimination of the technical breakdown or the transportation of the vehicle is carried out by a similar organization in the other State on the basis of a mutual agreement, if the elimination of the technical breakdown or the transportation 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 shall not apply to reinsurance activity which is carried out or fully guaranteed by the State, in its capacity as reinsurer of last resort, for reasons of substantial public interest, including where this activity is necessary due to a market situation in which adequate commercial cover cannot be obtained.

Objectives

Article 2. (Supplemented - State Gazette No. 101 of 2018, in force from 07.12.2018) (1) The objectives of this Code are:

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

Insurance

Article 3. (1) Insurance is an activity of providing insurance cover for risks under a contract, consisting in the collection and expenditure of funds intended for the payment of indemnities and other monetary amounts upon the occurrence of events or the fulfilment of conditions provided for in a contract or in law, as well as the activities directly related thereto, including:

assessment of the insurance risk;
determination of the insurance premium;
establishment of an insured event having occurred;
determination of the amount of the damage caused;
management of the assets of the insurer;
transfer of all or part of the insurance risks covered by an insurer to a reinsurer or to another insurer (passive reinsurance);
provision by the insurer of "Travel assistance" insurance services under item 18, Section II, letter "A" of Annex No. 1 through persons hired by it and with its own technical means.
(2) Carrying out insurance activity in the Republic of Bulgaria means covering risks located in the Republic of Bulgaria.

Reinsurance

Article 4. (Amended and supplemented - State Gazette No. 101 of 2018, in force 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 by another reinsurer, against the cession of an insurance premium (active reinsurance) and the activities directly related thereto. Reinsurance is also the provision of cover 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 (IORPs) (OJ, L 354/37 of 23 December 2016).

Insurance and reinsurance intermediation

Article 5. (Amended - State Gazette No. 101 of 2018, in force from 07.12.2018) (1) Insurance intermediation is the activity of distribution of insurance products carried out for remuneration by a person other than an insurer or its employee.
(2) Reinsurance intermediation is the activity of distribution of reinsurance products carried out for remuneration by a person other than an insurer, a reinsurer or their employees.
(3) The remuneration under paragraphs 1 and 2 may be a commission, a fee or another 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 intermediation

Article 6. (1) Insurance and insurance intermediation shall be carried out on the principle of voluntariness.
(2) Compulsory insurance shall be established by law or by an international treaty ratified, promulgated and in force for the Republic of Bulgaria.

Insurance supervision

Article 7. The regulation and supervision of the activities under Article 1, paragraph 1 shall be carried out by the Commission, as well as by the Deputy Chairperson.

Language

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

Application of the rules of international treaties and the practice of the European Insurance and Occupational Pensions Authority

Article 9. (1) Where an international treaty ratified, promulgated and in force for the Republic of Bulgaria, respectively for the European Union, in the exercise of its international treaty legal personality, provides for different rules concerning the activities under Article 1, paragraph 1, those rules shall apply.
(2) The Commission shall adopt decisions, guidelines or practices in connection with the application of the international treaties under paragraph 1 where 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 Chairperson may apply:

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";
the protocols and other documents adopted within the framework of the Committee on European Insurance and Occupational Pensions Supervision.
(4) Where the European Authority has adopted a guideline or recommendation within the meaning of Article 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 where this is necessary for good supervisory practice.

Advertising

Article 10. Insurers, reinsurers and insurance intermediaries which are entitled to carry out activity in the Republic of Bulgaria may advertise their services through all mass media in the country in compliance with the rules established in protection of the public interest.

General conditions, tariffs and other documents used in relations with users

Article 11. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) (1) The requirement of prior approval or systematic notification of general conditions of insurance contracts, premium tariff rates or specimen forms and other printed documents which an insurer intends to use in its transactions with users of insurance services shall not be permitted. (2) The competent authorities in the Republic of Bulgaria may require non-systematic notification of the general conditions of the insurance contract and other documents only for the purposes of verifying compliance with the national provisions relating to insurance contracts. These requirements may not constitute a prior condition for the exercise of activity by an insurer. (3) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) For compulsory insurances, the Commission may require insurers to notify it of the general conditions of those insurances prior to their distribution. (4) The retention or introduction of an obligation of prior notification or approval for proposed increases in premium tariff rates shall not be permitted, except as part of general price control systems in the State. (5) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) For the insurances under Section I of Annex No. 1, the requirement of prior approval or systematic notification shall also not be 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 verifying compliance with the 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

Article 12. (1) An insurer is:
1. a joint-stock company, a European company, a mutual insurance cooperative or a European cooperative society with registered office in the Republic of Bulgaria which has obtained a licence under the conditions and procedure of this Code (local insurer);
2. a person which has obtained an insurance licence in another Member State and carries out activity on the territory of the Republic of Bulgaria under the conditions of the right of establishment or the freedom to provide services (insurer from another Member State);
3. a branch of an insurer from a third country, registered under the Commerce Act, which has obtained a licence under the conditions and procedure of this Code.
(2) A reinsurer is:
1. a joint-stock company or a European company which has obtained a licence for active reinsurance under this Code (local reinsurer);
2. a person which has obtained a licence for active reinsurance at its registered office in another Member State (reinsurer from another Member State);
3. a person which has obtained authorisation for active reinsurance at its registered office in a third country (reinsurer from a third country) through a branch registered under the Commerce Act and which has obtained a licence under this Code.
(3) Reinsurance in the Republic of Bulgaria may also be carried out by a reinsurer with registered office in a third country.

European company. European cooperative society

Article 13. (1) An insurer - European company, respectively a reinsurer - European company, shall be established, carry out activity, be transformed and be terminated in accordance with Council Regulation (EC) No. 2157/2001 of 8 October 2001 on the Statute for a European company (SE) and this Code. The provisions on insurers - joint-stock companies under this Code shall apply to an insurer - European company. (2) An insurer - European cooperative society shall be established, carry out activity, be transformed and be terminated in accordance with Council Regulation (EC) No. 1435/2003 of 22 July 2003 on the Statute for a European Cooperative Society (SCE) and this Code. The provisions on mutual insurance cooperatives under this Code shall apply to an insurer - European cooperative society.

Captive insurer. Captive reinsurer

Article 14. (1) A captive insurer is an insurance joint-stock company which is owned by a financial undertaking other than an insurer or reinsurer, or by a group of insurers and/or reinsurers, or is owned by a non-financial undertaking, which insurer has the purpose of providing insurance cover exclusively for the risks of the person or persons which own it, or of the person or persons of the group in which the captive insurer participates. (2) A captive reinsurer is a reinsurer which is owned by a financial undertaking other than an insurer or reinsurer, or by a group of insurers and/or reinsurers, or is owned by a non-financial undertaking, which reinsurer has the purpose of providing reinsurance cover exclusively for the risks of the person or persons which own it, or of the person or persons of the group in which the captive insurer participates. (3) The circumstance that an insurance, respectively reinsurance, joint-stock company is captive shall be entered in its articles of association. (4) The provisions on the insurance joint-stock company, respectively on the reinsurer, shall apply to a captive insurer, respectively reinsurer, insofar as otherwise is not provided in this Code.

Section II

Right of access of insurers and reinsurers to the single market

Right of access of insurers and reinsurers

Article 15. (1) Insurers and reinsurers with registered office in the Republic of Bulgaria shall have the right of access to the market of the European Union and the European Economic Area (the single market) where they have obtained a licence under this Code and apply the requirements under Part Two, Title Three.
(2) The insurers and reinsurers under paragraph 1 shall be 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 which applies Part Two, Title Four may not carry out activity in another Member State under the conditions of the right of establishment or the freedom to provide services. (4) The insurers under paragraph 3 shall be 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 where this is provided for in this Code. (5) The application of Part Two, Title Four shall be authorised by the Commission in the licensing procedure or under the procedure of Article 38, paragraphs 6 - 9 and shall be noted in the licence issued.

Conditions for restricting access to the single market

Article 16. (Amended - State Gazette No. 25 of 2022, in force from 19.10.2022; amended, No. 70 of 2024, in force 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) of the TFEU...

140, paragraph 2 of the TFEU, and a Council Regulation of the European Union adopted in accordance with Article 140, paragraph 3 of the TFEU) An insurer without the right of access to the single market may only be an insurer with its registered office in the Republic of Bulgaria for which the following requirements are simultaneously met:

(amended - State Gazette, No. 25 of 2022, in force from 19.10.2022; amended, No. 70 of 2024, in force from the date determined in a 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, paragraph 2 of the TFEU, and a Council Regulation of the European Union adopted in accordance with Article 140, paragraph 3 of the TFEU) its annual gross amount of written premiums does not exceed EUR 5,400,000;
(amended - State Gazette, No. 25 of 2022, in force from 19.10.2022; amended, No. 70 of 2024, in force from the date determined in a 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, paragraph 2 of the TFEU, and a Council Regulation of the European Union adopted in accordance with Article 140, paragraph 3 of the 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 EUR 26,600,000;
(amended - State Gazette, No. 25 of 2022, in force from 19.10.2022; amended, No. 70 of 2024, in force from the date determined in a 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, paragraph 2 of the TFEU, and a Council Regulation of the European Union adopted in accordance with Article 140, paragraph 3 of the TFEU) where 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 EUR 26,600,000 and if the following additional conditions are met:
a) there is no other insurer that has access to the single market, or reinsurer, in the group; b) all insurers in the group have their registered office in the Republic of Bulgaria;
the activity of the insurer does not include insurance or active reinsurance of risks under items 10 - 15, Section II, letter "A" of Annex No. 1, unless they are covered as additional risks within the meaning of Article 30;
(amended - State Gazette, No. 70 of 2024, in force from the date determined in a 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, paragraph 2 of the TFEU, and a Council Regulation of the European Union adopted in accordance with Article 140, paragraph 3 of the TFEU) for active reinsurance of the insurer:
a) (amended - State Gazette, No. 25 of 2022, in force from 19.10.2022) its premium income does not exceed EUR 600,000 or 10 per cent of the gross premium income, respectively b) (amended - State Gazette, No. 25 of 2022, in force 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 EUR 2,700,000 or 10 per cent of the gross amount of the technical reserves without deduction of the shares of reinsurers or special purpose vehicles for alternative transfer of insurance risk.
Section III

Main requirements for insurers and reinsurers
General requirements for insurers and reinsurers Art. 17. (1) An insurance, respectively a reinsurance joint-stock company is established, carries out activity, is transformed and is terminated in accordance with the procedure of the Commerce Act, insofar as otherwise is not provided for in this Code.
(2) A mutual insurance cooperative is established, carries out activity, is transformed and is terminated in accordance with the procedure of the Cooperatives Act, insofar as otherwise is not provided for in this Code.
(3) The central management of a local insurer, respectively of a local reinsurance joint-stock company, shall mandatorily be located at its registered address of management in the Republic of Bulgaria. The insurance joint-stock company may open more than one branch under the Commerce Act in one settlement, including in the settlement of its seat. (4) The insurance joint-stock company has the right to carry out insurance activity only in the classes of insurance specified in the licence, except in the cases of covering additional risks under the conditions of Article 30. (5) The mutual insurance cooperative has the right to carry out insurance activity only in the classes of insurance specified in the licence, except in the cases of covering additional risks under the conditions of Article 30. The subject of activity of the mutual insurance cooperative may cover one or more classes of insurance under Section I of Annex No. 1 with or without accident insurance and/or sickness insurance. (6) The statutes of the mutual insurance cooperative must contain, in addition to the data provided for in the Cooperatives Act, the following information:
1. the classes of insurance;
2. the funds of the mutual insurance cooperative, the type, manner of payment and amount of the contributions, the scope of liability of the members for the obligations of the mutual insurance cooperative.
Company name
Art. 18. (1) The company name of the insurance joint-stock company shall contain the word "insurance" or its derivatives in the Bulgarian language and may contain the word "insurance" or its derivatives in a foreign language as well.
(2) A person who does not hold a licence to carry out insurance activity may not use in its company name, in its advertising or other activity the word "insurance" or its derivatives in Bulgarian or in a foreign language.
(3) Paragraphs 1 and 2 shall apply respectively to the mutual insurance cooperative. The name of the mutual insurance cooperative may not contain the name of a member-cooperator.
(4) The company name of the reinsurer shall mandatorily contain the word "reinsurance" or its derivatives in the Bulgarian language. The company name of the reinsurer may contain the word "reinsurance" or its derivatives in a foreign language as well.
(5) A person who does not hold a licence as a reinsurer has no right to use in its company name, respectively name, in its advertising or other activity the word "reinsurance" or its derivatives in Bulgarian or in a foreign language.
Share capital and shares
Art. 19. (Amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) (1) Upon establishment of an insurance, respectively a reinsurance joint-stock company, the amount of the registered capital of:
1. an insurer or reinsurer under Art. 15, para. 1 may not be less than the amount of the minimum capital requirement under Art. 192, para. 2;
2. (amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) an insurer under Art. 15, para. 3 may not be less than the amount of the minimum guarantee capital under Art. 210.
(2) The capital under para. 1 must be fully subscribed and paid up as at the date of submission of the application for issuance of a licence. In the event of a subsequent increase of the capital, it must be fully paid up as at the date of submission of the application for registration in the commercial register and the register of legal entities with non-profit purpose. (3) The contributions to the capital of a joint-stock company under para. 1 shall be only in cash and may not be made with funds of unproven origin or with funds obtained as a result of illegal activity. (4) The joint-stock company under para. 1 shall issue only registered dematerialised shares with the right to one vote each. (5) In the event of an increase of the capital, the insurer, respectively the reinsurer, shall submit to the commission:
1. a statement of the changes in the shareholding and of the changes in the composition of the shareholders, if any have occurred;
2. documents certifying the payment of the capital increase.
Founders and member-cooperators
Art. 20. (1) The mutual insurance cooperative shall be established by at least 500 persons. A founder and member-cooperator may be a natural person who has reached the age of 18 and has not been placed under guardianship.
(2) The founders shall insure themselves with the mutual insurance cooperative after it receives a licence to carry out insurance and shall pay an insurance contribution under an insurance chosen by them under Section I of Annex No. 1 for the first year.
(3) Membership in the mutual insurance cooperative shall arise or be terminated simultaneously with the conclusion or termination of the insurance contract in accordance with the general conditions.
Contributions and payments of the member-cooperators Art. 21. (Supplemented - State Gazette, No. 92 of 2017; amended, No. 95 of 2017, in force from 01.01.2018; amended, No. 85 of 2023, in force from 01.01.2023) (1) Each member-cooperator shall make an entrance contribution and a share contribution, the amount of which shall be determined in the statutes, and shall conclude with the mutual insurance cooperative a life insurance contract under Section I of Annex No. 1 with a term of validity not shorter than three years. The share contributions shall serve to replenish the minimum guarantee capital. (2) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018; amended, No. 85 of 2023, in force from 01.01.2023) In order to reach the absolute minimum amount of the minimum capital requirement and the solvency capital requirement, respectively of the minimum guarantee capital, the general meeting may, by a majority of two thirds of the member-cooperators present at the meeting, adopt a decision to collect additional and targeted contributions from the member-cooperators. All contributions to the capital of the cooperative shall be in cash. The additional and targeted contributions may be returned to the member-cooperators only when in this way the own funds of the mutual insurance cooperative will not decrease below the amount of the absolute minimum amount of the minimum capital requirement and the solvency capital requirement, respectively of the minimum guarantee capital. The return of additional and targeted contributions shall be carried out with one month's written notice to the commission. During the notice period the commission shall prohibit the return if as a result of it the own funds of the mutual insurance cooperative would decrease below the absolute minimum amount of the minimum capital requirement or the solvency capital requirement, respectively below the amount of the minimum guarantee capital. After the termination of the mutual insurance cooperative, the share, additional and targeted contributions shall be returned after all other obligations have been paid. (3) Article 19, para. 3 shall apply to the mutual insurance cooperative. Where the additional or targeted contribution exceeds one per cent of the minimum guarantee capital of the cooperative, Article 73 shall apply. (4) The premiums of the member-cooperators and the obligations of the mutual insurance cooperative under the insurance contracts shall be equal if the conditions of the insurance are equal. (5) The general meeting of the mutual insurance cooperative may adopt a decision to reduce the payments under the insurances by a majority of two thirds of the member-cooperators present at the meeting. (6) (New - State Gazette, No. 92 of 2017) A mutual insurance cooperative that carries out life insurance activity shall not apply the requirements of Part Two, Title Three of this Code if the insurance payments vary depending on the available funds and the contributions
of each one of the members of the cooperative are of an equal amount for all. Part Two, Title Four of this Code shall apply to the mutual insurance cooperative under the first sentence. Legal entity identifier of insurers and reinsurers and personal profile in the secure electronic delivery system Art. 21a. (New - State Gazette, No. 63 of 2025, in force from 01.08.2025; amended and supplemented, No. 25 of 2026) (1) (Supplemented - State Gazette, No. 25 of 2026) A local insurer, a local reinsurer and a branch of an insurer and reinsurer from a third country that has received a licence under this Code shall be obliged to have a legal entity identifier and a personal profile registered in the information system for secure electronic delivery as a module of the Electronic Governance Portal within the meaning of the Electronic Governance Act. (2) (Amended and supplemented - State Gazette, No. 25 of 2026) The person under para. 1 shall notify the commission of its identifier and profile through the secure electronic delivery system within 7 days of the issuance of the code, respectively of the registration of the profile. (3) When providing information to the European Authority on the activity of a person under para. 1, its identifier shall also be indicated.
Section IV
Special purpose vehicle for alternative transfer of insurance risk. Persons distributing insurance or reinsurance products (Title amended - State Gazette, No. 101 of 2018, in force from 07.12.2018) Carrying out activity through a special purpose vehicle for alternative transfer of insurance risk Art. 22. (1) A special purpose vehicle for alternative transfer of insurance risk is a legal entity or an unincorporated undertaking, other than an insurer or reinsurer, which assumes risks from an insurer or reinsurer on the basis of a contract and which fully finances its risk exposure through the issuance of debt or through another financing mechanism, provided that the rights of the creditors, respectively of the participants in the financing mechanism, are subordinated to the reinsurance obligations of the vehicle. (2) The establishment of a special purpose vehicle for alternative transfer of insurance risk in the Republic of Bulgaria shall be permitted after obtaining a licence from the commission under the conditions and in accordance with the procedure of Commission Delegated Regulation (EU) 2015/35 of 10 October 2014 supplementing Directive 2009/138/EC of the European Parliament and of the Council on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (OJ, L 12/1 of 17 January 2015), hereinafter referred to as "Regulation (EU) 2015/35". (3) The conditions for carrying out activity through a special purpose vehicle for alternative transfer of insurance risk, the ongoing supervision over it, the measures for remedying established infringements, the conditions and procedure for withdrawal of the issued licence shall be determined by Commission Implementing Regulation (EU) 2015/462 of 19 March 2015 laying down implementing technical standards with regard to the procedures for supervisory approval to establish special purpose vehicles and with regard to the procedures for cooperation and exchange of information between supervisory authorities in relation to special purpose vehicles, as well as for determining the formats and templates for the information to be reported by such special purpose vehicles in accordance with Directive 2009/138/EC of the European Parliament and of the Council (OJ, L 76/23 of 20 March 2015). In cases not settled, the rules for reinsurance companies under this Code shall apply. Persons distributing insurance or reinsurance products Art. 23. (Amended - State Gazette, No. 101 of 2018, in force from 07.12.2018) (1) Activity of distribution of insurance products on the territory of the Republic of Bulgaria may be carried out only by the following persons:
1. insurers;
2. insurance intermediaries entered in the register under Art. 30, para. 1, item 12 of the Financial Supervision Commission Act;
3. intermediaries offering insurance products as an ancillary activity, entered in the register under Art. 30, para. 1, item 12 of the Financial Supervision Commission Act;
4. intermediaries offering insurance products as an ancillary activity, which are not subject to entry in the register under Art. 30, para. 1, item 12 of the Financial Supervision Commission Act;
5. insurance intermediaries and intermediaries offering insurance products as an ancillary activity, which carry out activity under the conditions of the right of establishment or the freedom to provide services.
(2) Activity of distribution of reinsurance products on the territory of the Republic of Bulgaria may be carried out only by the following persons:
1. insurers and reinsurers;
2. insurance brokers entered in the register under Art. 30, para. 1, item 12 of the Financial Supervision Commission Act;
3. insurance and reinsurance intermediaries which carry out activity under the conditions of the right of establishment or the freedom to provide services.
Section V
Restrictions on activity
Restrictions on the activity of insurers and reinsurers Art. 24. (1) The carrying out by one and the same insurer of insurance activity in classes of insurance under Section I and under Section II of Annex No. 1 shall not be permitted, with the exception of accident insurance and sickness insurance. An insurer licensed for activity under items 1 and/or 2 of Section II, letter "A" of Annex No. 1 may also obtain a licence for activity under Section I, and an insurer licensed for activity under Section I may also obtain a licence for activity under items 1 and/or 2 of Section II, letter "A" of Annex No. 1 (insurers with mixed activity). (2) The activities under Section I and Section II of Annex No. 1 shall be managed separately in accordance with Chapter Nine "Separate management of activities in non-life insurance and life insurance". (3) A branch of an insurer from a third country licensed in the Republic of Bulgaria may not simultaneously carry out insurance under Section I and under Section II of Annex No. 1. Insurance and active reinsurance Art. 25. (1) An insurance joint-stock company may also carry out active reinsurance activity in the classes of insurance and the respective risks for which it has received a licence for insurance. (2) A reinsurer may not carry out insurance activity. Prohibition on carrying out other activities Art. 26. (Supplemented - State Gazette, No. 101 of 2018, in force from 07.12.2018; amended and supplemented, No. 85 of 2023, in force from 10.10.2023) (1) (Supplemented - State Gazette, No. 101 of 2018, in force from 07.12.2018; amended, No. 85 of 2023, in force from 10.10.2023) The carrying out by an insurer, respectively by a reinsurer, of another commercial activity shall not be permitted. (2) (New - State Gazette, No. 85 of 2023, in force from 10.10.2023) The following shall not constitute another commercial activity within the meaning of para. 1:
1. the settlement of claims on the territory of the Republic of Bulgaria by an insurer under insurances concluded by insurers with a seat outside the Republic of Bulgaria; this activity shall be carried out under a contract against payment and without assuming insurance risk;
2. the provision of services between insurers and/or reinsurers which are part of a group, where the services are directly related to the carrying out of insurance and/or reinsurance activity;
3. the activity of an insurer licensed in classes of insurance under Section I of Annex No. 1 as a provider of a pan-European personal pension product (PEPP) under Art. 6, para. 1, letter "b" of Regulation (EU) 2019/1238 of the European Parliament and of the Council of 20 June 2019 on a pan-European personal pension product (PEPP) (OJ, L 198/1 of 25 July 2019), hereinafter referred to as "Regulation (EU) 2019/1238", in compliance with the requirements of the same regulation, Chapter Twenty-eight "a" of the Social Insurance Code, this Code and the acts implementing them.
(3) (Previous para. 2 - State Gazette, No. 85 of 2023, in force from 10.10.2023) An insurer or reinsurer may not participate as an unlimited liability partner in a commercial company.
(4) (Previous para. 3 - State Gazette, No. 85 of 2023, in force from 10.10.2023) An insurer or reinsurer may not secure foreign obligations with its assets, except where otherwise provided for by this Code.
Restriction on the activity of insurance intermediaries Art. 27. The carrying out of insurance intermediation activity as an insurance broker and an insurance agent by one and the same person shall not be permitted.
PART TWO
INSURANCE AND REINSURANCE
TITLE ONE
STARTING AND TERMINATION OF ACTIVITY
Chapter Three
ISSUANCE AND WITHDRAWAL OF LICENCES OF LOCAL INSURERS AND REINSURERS
Section I
Issuance of licences
Licensing of insurance or reinsurance activity Art. 28. (1) A person with a seat in the Republic of Bulgaria has the right to carry out insurance or reinsurance activity on the territory of the Republic of Bulgaria after obtaining a licence from the commission under the conditions of this Code.
(2) A person who has not obtained a licence for insurance activity has no right to offer or conclude a contract by which an insurance risk is assumed.
Licences
Art. 29. (1) The licence of an insurer shall be issued for insurance activity in:
1. one or more classes of insurance under Section I of Annex No. 1 (life insurance);
2. one or more classes of insurance under Section II of Annex No. 1 (non-life insurance).
(2) The licence under para. 1, item 2 may also be issued for groups of classes of insurance listed in Section II, letter "B" of Annex No. 1.
(3) The licence of a reinsurer shall be issued for reinsurance activity in:
1. life insurance, or
2. non-life insurance, or
3. life insurance and non-life insurance (reinsurance in all classes of insurance).
(4) The scope of the licence of an insurer may be extended with an additional licence for a class of insurance or for groups of classes of insurance listed in Section II, letter "B" of Annex No. 1. The licence of a reinsurer which has been issued for part of the activities under para. 2 may be extended with an additional licence for a new activity. (5) An insurer may carry out the activity under Art. 3, para. 1, item 7 of providing travel assistance only if it has obtained a licence for insurance under item 18, Section II, letter "A" of Annex No. 1, except in the cases of additional risk. (6) The licence shall be in writing and shall exhaustively determine:
1. for an insurer - the type of activity and the classes of insurance under Annex No. 1 in which it has the right to carry out insurance;
2. for a reinsurer - the activities under para. 3 in which it has the right to carry out reinsurance.
(7) A licence under paras. 1 - 3 (licence), as well as an additional licence under para. 4 (additional licence) shall be issued by the commission on a proposal of the deputy chairperson.
(8) The commission shall refuse to issue a licence if the applicant does not meet the requirements of this Code.
(9) A licence or additional licence for a class of insurance shall be issued for the entire class, and may also be issued only for part of the risks of Annex No. 1 which relate to the respective class:
1. where the applicant has requested to cover only part of the risks of Annex No. 1 relating to the class of insurance, or
2. at the discretion of the commission, where it is established from the documents submitted for the issuance of a licence that not all risks are covered.
(10) The reinsurance licence may be issued for one or for both activities under para. 3, items 1 and 2 in accordance with the application submitted.
Additional risks
Art. 30. (1) An insurer that has obtained a licence for a main risk which is included in one class or group of classes of insurance according to Section II of Annex No. 1 may also insure risks included in another class without the need to obtain a licence for these risks, if these risks simultaneously meet the following conditions:
1. they are related to the main risk;
2. they concern the subject which is insured against the main risk;

3. are included in the contract by which the main risk is insured.
(2) Risks included in classes 14, 15 and 17, Section II, letter "A" of Annex No. 1 shall not be considered additional risks within the meaning of para. 1. However, legal expenses insurance under class 17 may be an additional risk to class 18 where the conditions under para. 1 are met and one of the following conditions is fulfilled:
1. the main risk relates solely to assistance provided to persons encountering difficulties while travelling, while away from their home or usual residence;
2. the insurance relates to disputes or risks arising out of or in connection with the use of sea-going vessels.
Documents required for issuing a licence
Art. 31. (Amended - State Gazette No. 85 of 2023, in force from 01.01.2023) (1) For the issuance of a licence to carry on insurance or reinsurance activity by a joint-stock company, an application for a licence shall be submitted, to which the following shall be attached:
1. the articles of association and other constitutive documents;
2. a list of shareholders and the amount of their participation;
3. a document issued by a bank carrying on banking activity on the territory of the Republic of Bulgaria certifying the monetary contributions made for the subscribed shares;
4. the documents and information under Art. 69 - for the persons acquiring a participation under Art. 68, para. 1, and the documents and information under Art. 73 - for the persons acquiring more than one per cent of the shares of the company;
5. (amended - State Gazette No. 85 of 2023, in force from 01.01.2023) evidence that the insurer, respectively the reinsurer, will be able to maintain in the future eligible own funds to cover the Solvency Capital Requirement within the meaning of Chapter Thirteen;
6. evidence that:
(a) the insurer, respectively the reinsurer, will be able to maintain in the future eligible basic own funds to cover the Minimum Capital Requirement within the meaning of Chapter Fourteen; (b) (amended - State Gazette No. 85 of 2023, in force from 01.01.2023) the insurer without access to the single market will be able to maintain in the future eligible basic own funds to cover the minimum guarantee capital under Art. 210;
7. evidence that the insurer, respectively the reinsurer, will be able to comply with the requirements relating to the system of governance under Chapter Seven, including the documents under Art. 77, para. 1, items 1, 3 and 4;
8. data on the persons under Art. 79, para. 1 together with evidence of compliance with the respective requirements for qualifications and good repute;
9. a programme of activity of the insurer, respectively of the reinsurer.
(2) For the issuance of a licence to carry on insurance activity under item 10.1, Section II, letter "A" of Annex No. 1, the following shall also be submitted with the application:
1. a document from a bank confirming that a bank guarantee will be issued in accordance with the requirements of the articles of association of the National Bureau of Bulgarian Motor Insurers;
2. a reinsurance contract in accordance with criteria determined by a decision of the Commission, and
3. a list with the names and addresses of the representatives under Art. 503 for claims settlement in each of the Member States and copies certified by the applicant of contracts with those persons.
(3) For the issuance of a licence to carry on insurance activity by a mutual insurance cooperative, an application for a licence shall be submitted, to which the following shall be attached:
1. the articles of association and other constitutive documents;
2. a list of member-cooperators and the amount of their share contribution;
3. a document issued by a bank entitled to carry on banking activity on the territory of the Republic of Bulgaria certifying the monetary contributions made to the capital of the cooperative;
4. the documents and information under Art. 69, para. 2, item 1, respectively para. 3, items 1 and 6 - for the persons making an additional or target contribution exceeding one per cent of the minimum guarantee capital of the cooperative;
5. the evidence and documents under para. 1, items 5 - 9.
(4) Where the applicant under para. 1 and 2 has applied for a licence for insurance under item 18, Section II, letter "A" of Annex No. 1, the Commission may request evidence of the direct and indirect resources, including staff and equipment, including the qualifications of the medical team and the quality of the equipment, available to the applicant to assume its obligations arising from travel assistance insurance. (5) The application under para. 1, 2 or 3 shall be considered after payment of a fee for examination of documents. Documents for extending the scope of the licence Art. 32. (Amended - State Gazette No. 85 of 2023, in force from 01.01.2023) (1) For the issuance of a licence to a reinsurer to extend its subject of activity with a new activity, an application shall be submitted, to which the following shall be attached:
1. a copy of the minutes of the competent body of the reinsurer with the decisions taken to supplement the subject of activity;
2. the amended and supplemented programme of activity.
(2) For the issuance to an insurer of a licence for a new type of insurance activity, as well as for a licence for a new class of insurance, for supplementing the licence by class of insurance with new risks from Annex No. 1 or for a licence for a group of classes of insurance, an application shall be submitted, to which the following shall be attached:
1. a copy of the minutes of the competent body of the insurer with the decisions taken regarding the application for a licence;
2. the amended and supplemented programme of activity;
3. evidence that:
(a) the insurer with access to the single market has eligible own funds sufficient to cover the Solvency Capital Requirement, respectively eligible basic own funds sufficient to cover the Minimum Capital Requirement, or (b) (amended - State Gazette No. 85 of 2023, in force from 01.01.2023) the insurer without access to the single market has eligible basic own funds sufficient to cover the minimum guarantee capital. (3) For the issuance of a licence for insurance under item 10.1, Section II, letter "A" of Annex No. 1, the evidence under Art. 31, para. 2 shall also be submitted. (4) In the cases under para. 2, where the issuance of a licence for non-life insurance activity of a life insurer under classes of insurance under item 1 or 2, Section II, letter "A" of Annex No. 1 is requested, or the issuance of a licence for life insurance activity of an insurer licensed only under item 1 or 2, Section II, letter "A" of Annex No. 1, evidence shall be submitted that the insurer has eligible basic own funds covering the absolute minimum amount of the Minimum Capital Requirement - for life insurers, and the absolute minimum amount of the Minimum Capital Requirement - for non-life insurers in accordance with Art. 192, as well as evidence that it will be able to cover the minimum financial obligations under Art. 142, para. 2. Where the insurer is without access to the single market, evidence shall be submitted that it has eligible basic own funds covering the minimum guarantee capital under Art. 210, item 3. (5) The application under para. 1, 2, 3 or 4 shall be considered after payment of a fee for examination of documents. Programme of activity Art. 33. (Amended - State Gazette No. 85 of 2023, in force from 01.01.2023) (1) The programme of activity of the insurer, respectively of the reinsurer, shall contain:
1. the classes of insurance which the insurer intends to conclude and the nature of the risks which it intends to cover, respectively the activities which the reinsurer intends to carry out and the nature of the risks which it intends to cover;
2. the reinsurance, respectively retrocession policy and programme, indicating also the guiding principles for reinsurance, respectively retrocession;
3. the methods, assumptions and source data to be used for establishing the technical provisions;
4. a forecast of the expenses for organising and commencing the activity, the financial resources for covering those expenses, and for the insurance under item 18, Section II, letter "A" of Annex No. 1 - the financial and technical resources available to the applicant for providing the assistance;
5. a reasoned financial forecast for the activity for the first three years, containing:
(a) a forecast balance sheet;
(b) a forecast estimate of the future Solvency Capital Requirement based on the forecast balance sheet together with the calculation method used to derive the estimate; (c) a forecast estimate of the future Minimum Capital Requirement based on the forecast balance sheet together with the calculation method used to derive the estimate; (d) a forecast estimate of the financial resources intended to cover the technical provisions, the Minimum Capital Requirement and the Solvency Capital Requirement; (e) a forecast of income and expenses, including the expected amount of premium income, the expected claims for insurance, respectively reinsurance payments, as well as the expected expenses for commissions of insurance or reinsurance intermediaries, acquisition, administrative and other expenses - in respect of non-life insurance and reinsurance; (f) a plan with a detailed forecast estimate of income and expenses in respect of direct insurance activity, active and passive reinsurance - in respect of life insurance;
6. the source, amount and distribution of own funds, including the methods of financing in the event of a shortfall for covering the Solvency Capital Requirement and the Minimum Capital Requirement;
7. a programme of measures for the prevention of money laundering and terrorist financing.
(2) The programme of activity of the reinsurer shall also contain a description and main parameters of the reinsurance contracts which it intends to conclude with cedants.
(3) The programme of activity shall realistically reflect the characteristics of the market and their impact on the activity of the person under para. 1, the volume of activity carried out, the financial, labour and other resources, as well as other factors relevant to its implementation within the set deadlines.
(4) In the cases under Art. 32, the programme of activity shall relate only to the new class of insurance or group of classes of insurance with which the insurer seeks to extend the scope of its licence, respectively to the new activity with which the reinsurer seeks to extend the scope of its licence.
(5) (Amended - State Gazette No. 85 of 2023, in force from 01.01.2023) In cases where the applicant wishes to avail itself of the limitation of the right of access to the single market under Art. 16, the parameters under para. 1, item 5, letters "b" - "d" and item 6 shall be submitted for the minimum guarantee capital. Where in the licensing procedure the Commission finds that within 5 years after the issuance of the licence the applicant may exceed at least one of the thresholds under Art. 16, the procedure shall be suspended until a revised programme of activity is submitted in accordance with the parameters for the Solvency Capital Requirement, respectively for the Minimum Capital Requirement. Issuance and refusal to issue a licence Art. 34. (1) On a proposal from the Deputy Chairperson, the Commission shall assess whether the requirements for issuing the requested licence are met and shall rule no later than 4 months from receipt of the application. (2) If the documents submitted are irregular or additional information is necessary, the Deputy Chairperson and/or the Commission shall send the applicant a notification of the irregularities found and/or of the additional information requested and shall set the applicant a sufficient period for their removal, which may not be shorter than one month and longer than two months. The period under para. 1 shall be suspended until the expiry of the period set for removal of irregularities and/or for provision of additional information. (3) When issuing a licence for extending the scope of the insurer's licence with a new class of insurance or group of classes of insurance, respectively of a reinsurer with a new activity, the period under para. 1 may not be longer than two months, and under para. 2 - shorter than 7 days. The period for the Commission's ruling shall be suspended until the expiry of the set period for removal of irregularities and/or for provision of additional information. (4) If the notification under para. 2 is not received at the correspondence address indicated by the applicant, the period set for the applicant shall run from the placing of the notification at a place specially designated for that purpose in the building of the Commission. The notice of the notification shall also be published on the Commission's website. These circumstances shall be certified by a protocol drawn up by officials designated by order of the Chairperson of the Commission. (5) The Commission shall notify the applicant in writing of the decision taken within 7 days of its adoption. (6) The Commission shall notify the European Authority of every decision to issue a licence to an insurer, respectively a reinsurer. Grounds for refusal Art. 35. (1) The Commission shall refuse the issuance of a licence for insurance or reinsurance where:
1. the applicant's capital does not meet the requirements of this Code;
2. any of the members of the management and supervisory body of the applicant or the persons authorised to manage and represent it does not meet the requirements of this Code or if by their activity or influence on decision-making they may harm the security of the applicant or its operations;
3. the persons who hold directly, together with or through related or acting in concert with other persons 10 per cent or more than 10 per cent of the votes in the general meeting or the capital of the applicant or may control it:
(a) do not meet the requirements of this Code; (b) by their activity or qualifications or by their influence on decision-making may harm the activity of the applicant; (c) cannot be identified to the ultimate owner (ultimate beneficiary); (d) the amount of the property held by them and/or the activity carried out by them in its scale and financial results do not correspond to the declared acquisition of shareholding in the applicant and create doubt as to the reliability and suitability of those persons where necessary to provide capital support to the applicant;
4. the funds with which the persons subscribed one and more than one per cent of the capital do not meet the requirements of Art. 19, para. 3;
5. the applicant has submitted false data or documents with false content;
6. the applicant is a related person to a natural or legal person and that relationship creates obstacles to the effective exercise of the supervisory functions of the Commission or of the Deputy Chairperson;
7. there are obstacles to the effective exercise of the supervisory functions of the Commission or of the Deputy Chairperson arising from or in connection with the application of a normative or administrative act of a third country regulating the activity of one or more persons to whom the applicant is a related person;
8. no programme of activity has been submitted or the submitted programme does not comply with the requirements of Art. 33, or does not sufficiently guarantee the interests of users of insurance services, or where the activity which the applicant intends to carry out does not provide the necessary reliability and financial stability;
9. other requirements of this Code and of the acts implementing it have not been met.
(2) In the cases under para. 1, items 1, 2, 4, 5, 8 and 9, the Commission shall refuse the issuance of a licence only if the applicant has not removed the irregularities or has not provided the additional information within the set period.
(3) The Commission's refusal to issue a licence shall be reasoned in writing. Where no decision has been adopted within the period under Art. 34, para. 1, there shall be a tacit refusal.
(4) A new application for the issuance of a licence may be submitted no earlier than 6 months from the entry into force of the refusal.
(5) The Commission shall refuse the issuance of a licence for a new class of insurance or for extending the subject of activity of a reinsurer with a new activity on the grounds under para. 1, items 1, 3 - 5, 8 and 9, applying respectively para. 2 and 3. A tacit refusal shall exist if the Commission does not rule within the period under Art. 34, para. 3. In the event of refusal, para. 4 shall apply. Registration and deregistration of PEPP Art. 35a. (New - State Gazette No. 85 of 2023, in force from 10.10.2023) The Commission shall adopt a decision for registration or deregistration of a PEPP established by an insurer carrying on activity under classes of insurance under Section I of Annex No. 1, in accordance with Regulation (EU) 2019/1238 on a proposal from the Deputy Chairperson. Entry in the Commercial Register and the Register of Legal Entities with Non-Profit Purpose Art. 36. A trader whose subject of activity is insurance or reinsurance shall be entered in the Commercial Register and the Register of Legal Entities with Non-Profit Purpose only after presentation of the licence issued by the Commission.
Section II
Change of the insurer's right of access to the single market Status of the insurer Art. 37. The existence or absence of the right of access to the single market (status of the insurer) shall be reflected in the insurer's licence in the register under Art. 30, para. 1, item 9 of the Financial Supervision Commission Act.
Voluntary change in the status of the insurer
Art. 38. (1) An insurer without access to the single market shall have the right to obtain authorisation to carry on its activity under the general rules for access to the single market, for which it shall submit an application to the Commission.
(2) Where the application is submitted after a licence has been issued, the insurer shall provide evidence of compliance with the requirements under Part Two, Title Three and the other requirements under this Code and the applicable acts of the European Union which the activity of insurers with access to the single market must meet.
(3) The necessary evidence under para. 2 shall be determined by a decision of the Commission and shall include at least:
1. statements and data on compliance with the requirements for valuation of assets and liabilities and for calculation of technical provisions in accordance with Part Two, Title Three and Regulation (EU) 2015/35;
2. statements and data on the Minimum Capital Requirement and the Solvency Capital Requirement in accordance with the requirements of Part Two, Title Three and Regulation (EU) 2015/35;
3. statements and evidence of the availability of eligible own funds at least equal to the Solvency Capital Requirement and the Minimum Capital Requirement in accordance with the requirements of Part Two, Title Three and Regulation (EU) 2015/35.
(4) The Commission, on a proposal from the Deputy Chairperson, shall assess whether the requirements of Part Two, Title Three and Regulation (EU) 2015/35 are met and shall rule by decision within three months from the date of receipt of all evidence, and the change in the insurer's status shall be reflected in the issued licence.
(5) If the documents submitted are irregular or additional information is necessary, the Commission shall send the applicant a notification of the irregularities found and/or of the additional information requested and shall set a sufficient period for their removal, which may not be shorter than one month and longer than two months. The period under para. 4 shall be suspended until the expiry of the set period for removal of irregularities and/or for provision of additional information. (6) An insurer carrying on activity under the general rules for access to the single market may carry on its activity under the rules for insurers without access to the single market after submitting an application to the Commission if the following circumstances exist simultaneously:
1. none of the thresholds under Art. 16 has been exceeded in the last three consecutive years before the date of submission of the application;
2. none of the thresholds under Art. 16 is expected to be exceeded in the next 5 years after the date of submission of the application;
3. as at the date of submission of the application the insurer does not carry on activity under the conditions of the right of establishment or the freedom to provide services in another Member State;
4. the insurer is not part of a group to which Part Two, Title Three applies on the basis of Art. 39, para. 4.
(7) To prove the circumstances under para. 6, item 2, the insurer shall submit the programme of activity under Art. 33.
(8) On a proposal from the Deputy Chairperson, the Commission shall rule by decision on the change of the insurer's status within one month of submission of the application, and may provide for a transitional period during which additional reporting requirements for the insurer shall apply. The change in the insurer's status shall be reflected in the issued licence. (9) The Commission shall refuse to change the insurer's status where the circumstances under para. 6, items 1, 3 and 4 are not present, if from the insurer's programme of activity under Art. 33 it may be concluded that any of the thresholds under Art. 16 is likely to be exceeded in the next 5 years, or if the assets covering the reserves are not in accordance with the requirements of Title Four. (10) The application under para. 1 or 6 shall be considered after payment of a fee for examination of documents. Mandatory change in the status of the insurer Art. 39. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) (1) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) Where any of the thresholds under Art. 16 is exceeded over a period of three consecutive years, the general rules for access to the single market shall begin to apply to the respective insurer without access to the single market as from the fourth year. The Commission shall notify the respective insurer in writing no later than the end of the second consecutive year in which any of the thresholds under Art. 16 has been exceeded. (2) The insurer under para. 1 shall be obliged within a three-month period from the notification to submit a plan for compliance with the requirements which the activity of insurers with access to the single market must meet. The Deputy Chairperson shall carry out ongoing supervision of compliance with the plan and shall apply the relevant enforcement measures in the event of non-compliance. (3) The status of the insurer under para. 1 shall be changed ex officio by a decision of the Commission after the end of the third consecutive year in which any of the thresholds under Art. 16 has been exceeded, and the change in the insurer's status shall be reflected in the licence and entered in the register under Art. 30, para. 1, item 9 of the Financial Supervision Commission Act. (4) All insurers which are part of one insurance group shall mandatorily apply Part Two, Title Three in cases where one of them begins to apply Part Two, Title Three, as well as where an insurer with its seat outside the Republic of Bulgaria joins the group. In these cases para. 1 and 2 shall apply respectively. (5) Where an insurer without access to the single market submits an application for obtaining an additional licence for one or more of the classes of insurance under Art. 16, item 4 or for groups of classes of insurance, compliance with the requirements which the activity of insurers with access to the single market must meet shall be verified in the procedure for issuing an additional
licence.
Section III
Withdrawal of licences
Withdrawal of a licence

Art. 40. (Amended - State Gazette No. 15 of 2018, in force from 16.02.2018; supplemented, No. 84 of 2023; amended, No. 85 of 2023, in force from 01.01.2023; amended and supplemented, No. 49 of 2025) (1) The Commission shall withdraw the licence of an insurer or a reinsurer if:
1. the person has submitted false data or documents with false content which served as a basis for the issuance of the licence;
2. the person has not submitted a short-term plan under Art. 215, para. 2 or if the submitted plan is manifestly inadequate, or if, despite the submission of the short-term plan, the person has not restored compliance with:
(a) the minimum capital requirement within three months of the establishment of the non-compliance, where the person is an insurer entitled to access to the single market, respectively a reinsurer, or (b) (amended - State Gazette No. 85 of 2023, in force from 01.01.2023) the minimum guarantee capital within three months of the establishment of the non-compliance, where the person is an insurer without the right of access to the single market;
3. the insurer violates the voluntary nature of insurance;
4. there is a request by the person and the requirements of this Code have been complied with.
(2) The Commission may withdraw the licence of an insurer or reinsurer if:
1. the person does not commence activity within 12 months of the issuance of the licence;
2. the person ceases to carry on activity for more than 6 months;
3. the number of members of the mutual insurance cooperative falls below the established minimum and within 6 months the membership is not replenished, or if Art. 20, para. 2 or Art. 21, para. 1 have been violated;
4. the person ceases to meet the conditions for the issuance of a licence;
5. the person carries on another activity besides the activity for which it has received a licence;
6. the person or its shareholder, or a member of a management or supervisory body, or another person authorised to manage or represent it, fails to comply with an enforceable coercive administrative measure imposed under this Code;
7. a ground exists for the termination of the joint-stock company under Art. 252, para. 1, item 4 of the Commerce Act;
8. (supplemented - State Gazette No. 49 of 2025) the insurer, the reinsurer and/or persons under Art. 80 and Art. 81 have committed and/or have allowed the commission of gross or systematic violations of this Code or of the acts implementing it;
9. (amended - State Gazette No. 85 of 2023, in force from 01.01.2023) the plan under Art. 215, para. 1 has not been submitted within the prescribed time limit, has not been approved, or, despite its submission, compliance with the capital requirement for solvency has not been restored within the prescribed time limits, where the person is an insurer entitled to access to the single market, respectively a reinsurer;
10. the person unlawfully refuses payment or partially pays due and liquid monetary obligations;
11. (new - State Gazette No. 15 of 2018, in force from 16.02.2018; supplemented, No. 84 of 2023; amended, No. 49 of 2025) the insurer or the reinsurer has committed or has allowed the commission of gross or systematic violations of Regulation (EU) 2015/2365 of the European Parliament and of the Council of 25 November 2015 on transparency of securities financing transactions and of reuse and amending Regulation (EU) No 648/2012 (OJ, L 337/1 of 23 December 2015), hereinafter referred to as "Regulation (EU) 2015/2365", the Measures against Money Laundering Act, the Measures against the Financing of Terrorism and the Proliferation of Weapons of Mass Destruction Act and the acts implementing them.
(3) Where the grounds for withdrawal of a licence relate to part of the person's activity, the Commission may withdraw the licence for one or more individual classes of insurance, respectively for a separate part of the reinsurance activity.
(4) The Commission shall decide by a reasoned decision and shall notify the person in writing of the decision taken within 7 days.
(5) By the decision withdrawing the licence, except in the cases under para. 3, the Commission shall appoint one or more receivers under Art. 597 until the appointment of a liquidator or trustee.
(6) In the cases under para. 1, item 5, the decision of the Commission shall be for approval of a voluntary surrender of the licence.
Obligations of the insurer or reinsurer after withdrawal of the licence Art. 41. (1) After the entry into force of the decision withdrawing the licence, the person under Art. 40, para. 1 or 2 may not conclude new insurance and/or reinsurance contracts or offer new terms under contracts, nor amend the terms thereof, including the term, the sum insured and the cover under concluded contracts. (2) The withdrawal of the licence does not release the person from its obligations under contracts already concluded. Powers of the Commission upon withdrawal of the licence Art. 42. (1) After the entry into force of the decision withdrawing the licence of an insurer, respectively of a reinsurer, the Commission shall notify the European Authority thereof and shall request the competent court to open liquidation proceedings, and in the cases under Art. 40, para. 1, item 2 and para. 2, items 9 and 10 - to open insolvency proceedings, and shall take the necessary measures to inform the public. (2) The Commission, respectively the Deputy Chairperson, may carry out inspections and apply the coercive administrative measures under Art. 587 until the deletion of the company, respectively of the cooperative, from the commercial register and the register of non-profit legal entities. Notification of the competent authorities of the other Member States upon withdrawal of a licence of an insurer or reinsurer Art. 43. (1) The Commission shall immediately notify the competent authorities of the other Member States concerned of the withdrawal of a licence of an insurer or reinsurer and shall request the competent authorities concerned to take action in accordance with their legislation to:
1. prevent the conclusion of new contracts, the offering of new terms and the amendment of terms under concluded contracts by the insurer, respectively by the reinsurer;
2. protect the interests of the persons concerned, including by prohibiting the free disposal of assets of the insurer, respectively of the reinsurer.
(2) Where the Commission has been notified of the withdrawal of a licence of an insurer or reinsurer by another Member State, it shall take appropriate measures under para. 1 in relation to the activity and assets of the insurer, respectively of the reinsurer on the territory of the Republic of Bulgaria.
Chapter Four
CARRYING ON ACTIVITY IN ANOTHER MEMBER STATE BY A LOCAL INSURER OR REINSURER. CARRYING ON ACTIVITY IN THE REPUBLIC OF BULGARIA BY AN INSURER OR REINSURER FROM ANOTHER MEMBER STATE
Section I
Carrying on activity in another Member State by a local insurer Right of establishment and freedom to provide services Art. 44. (1) A local insurer which has received a licence under the conditions and procedure of this Code may carry on the activity for which its licence was issued on the territory of another Member State under the conditions of the right of establishment or the freedom to provide services. (2) Paragraph 1 shall not apply to insurers licensed and carrying on their activity under the procedure of Part Four of Part Two. Carrying on activity under the conditions of the right of establishment Art. 45. (1) A local insurer which intends to establish a branch on the territory of another Member State must notify the Commission thereof in advance. (2) The notification under para. 1 shall contain:
1. indication of the Member State in which the insurer intends to establish a branch, as well as its address;
2. a programme of activity of the insurer, including information on the classes of insurance in which the insurer will carry on activity in the Member State of the branch, as well as the organisational structure of the branch;
3. the name of the authorised representative of the branch, who must possess representative authority of a scope enabling him to assume obligations for the insurer towards third parties and to represent it before the state authorities and courts of the Member State of the branch;
4. evidence of membership in the respective national bureau of the "Green Card" system and in the institution entrusted with carrying out guarantee payments, analogous to the Guarantee Fund under Art. 518 of the Member State of the branch, if the insurer intends to carry on activity under item 10.1, Section II, letter "A" of Annex No. 1;
5. information on the measure chosen by the insurer under Art. 147 to avoid a conflict of interest, if the insurer intends to carry on activity under item 17, Section II, letter "A" of Annex No. 1.
(3) The Commission shall provide to the competent authority concerned of the Member State of the branch the information under para. 2 within three months of receipt of the information and documents under para. 2, as well as a certificate that the insurer has sufficient own funds to cover the capital requirement for solvency and the minimum capital requirement. The Commission shall immediately notify the insurer of the provision of the information under the first sentence. (4) The Commission may refuse, within the time limit under para. 3, to provide the information under para. 2 to the competent authority concerned of the Member State of the branch by a reasoned decision, if the system of governance of the insurer, its financial condition or the professional qualifications and experience of the persons who manage and represent it, or of the authorised representative of the branch, are unsuitable or insufficient with regard to the insurance in which the insurer intends to carry on activity in the Member State, as well as in cases where the insurer is applying a recovery plan and in this connection the interests of the insured are endangered. The Commission shall immediately notify the insurer of the decision under the first sentence. (5) The insurer may establish a branch and commence carrying on activity on the territory of the Member State after the Commission has received notification from the competent authority concerned of that State, respectively after the expiry of two months from the notification under para. 3 to the competent authority concerned, if no notification has been received within that period. (6) The insurer shall notify the Commission in writing, as well as the competent authority concerned of the Member State of the branch, of any change in the data and documents under para. 2 within a period not shorter than one month before the implementation of the change. Para. 4 shall apply accordingly to this case. Carrying on activity under the conditions of the freedom to provide services Art. 46. (1) An insurer with registered office in the Republic of Bulgaria which intends to carry on insurance activity in another Member State under the conditions of the freedom to provide services, without opening a branch on its territory, must notify the Commission thereof in advance, stating:
1. the classes of insurance which it intends to conclude and the nature of the risks which it envisages covering in that Member State;
2. evidence of membership in the respective national bureau of the "Green Card" system and in the institution entrusted with carrying out guarantee payments, analogous to the Guarantee Fund under Art. 518 of the Member State of the branch, as well as the name and address of the claims settlement representative, if the insurer intends to carry on activity under item 10.1, Section II, letter "A" of Annex No. 1;
3. the measure chosen by the insurer under Art. 147 to avoid a conflict of interest, if the insurer intends to carry on activity under item 17, Section II, letter "A" of Annex No. 1.
(2) The Commission shall provide to the competent authority concerned of the Member State, within one month of the notification and information under para. 1, also information on the classes of insurance in which the insurer has the right to carry on activity on the territory of the Republic of Bulgaria, together with a certificate that the insurer has sufficient own funds to cover the capital requirement for solvency and the minimum capital requirement. The Commission shall immediately notify the insurer of the provision of the information under the first sentence. (3) The Commission may refuse, within the time limit under para. 2, to provide the information under para. 1 to the competent authority concerned of the Member State by a reasoned decision, if the insurer's own funds do not ensure coverage of the capital requirement for solvency or of the minimum capital requirement, or the insurer is applying a recovery plan, or for another reason the interests of the insured are endangered. (4) The insurer may commence carrying on activity on the territory of the Member State concerned from the date on which it is notified of the provision of the information under para. 1 by the Commission to the competent authority concerned of the Member State. (5) The insurer shall notify the Commission in writing of any change in the data and documents under para. 1 at least one month before the implementation of the change. The Commission shall notify the competent authority concerned of the Member State of the changes under the first sentence. Provision of information Art. 47. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) (1) An insurer with registered office in the Republic of Bulgaria which carries on activity in another Member State shall submit, under the procedure of Art. 126, quarterly and annual reports to the Commission separately for the insurance concluded under the conditions of the right of establishment or of the freedom to provide services, on the amount of insurance premiums, including the reinsurer's share, as well as on the amount of claims and commissions, specified by Member State and by types of activity (lines of business), in accordance with Regulation (EU) 2015/35. For the insurance under item 10.1, Section II, letter "A" of Annex No. 1, the insurer shall also submit information on the frequency and average amount of claims. (2) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) The Commission shall provide the information received under para. 1 in summarised form to the competent authorities of the Member States concerned at their request.
Section II
Carrying on activity on the territory of the Republic of Bulgaria by an insurer from another Member State Right of establishment and freedom to provide services Art. 48. An insurer from another Member State which has received a licence to carry on insurance activity from the competent authority concerned of the Member State of origin of the insurer may carry on the activity for which its authorisation was issued on the territory of the Republic of Bulgaria under the conditions of the right of establishment or the freedom to provide services. Carrying on activity under the conditions of the right of establishment Art. 49. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) (1) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) Within two months of receipt of the information within the meaning of Art. 45, para. 2 from the competent authority concerned regarding an insurer from another Member State which intends to establish a branch on the territory of the Republic of Bulgaria, the Commission shall notify the competent authority concerned of the Member State of origin of the insurer and, if necessary, provide it with information on the conditions under which insurance activity is carried on on the territory of the Republic of Bulgaria, with a view to the protection of the public interest. (2) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) The insurer may establish a branch and commence carrying on activity on the territory of the Republic of Bulgaria after the competent authority of the Member State of origin has received notification from the Commission in accordance with para. 1, respectively after the expiry of the time limit under para. 1, if no notification has been received within that period. (3) The insurer shall notify the Commission in writing of any change in the circumstances under Art. 45, para. 2 under which it carries on its activity within a period not shorter than one month before the implementation of the change. Para. 2 shall apply accordingly to this case. Carrying on activity under the conditions of the freedom to provide services Art. 50. (1) An insurer from another Member State which intends to carry on insurance activity on the territory of the Republic of Bulgaria under the conditions of the freedom to provide services, without opening a branch, may commence carrying on activity from the date on which it is notified by the competent authority concerned of the Member State of origin that information within the meaning of Art. 46, paras. 1 and 2 has been provided to the Commission. (2) The insurer under para. 1 which has expressed an intention to carry on insurance activity under item 10.1, Section II, letter "A" of Annex No. 1 shall notify the Commission in writing of the name and address of the representative appointed under the procedure of Art. 51, para. 2 and shall declare the circumstances under Art. 51, para. 1, where this information has not been provided to the
Commission by the competent authority in the Member State of origin of the insurer under the procedure of para. 1. (3) Paragraph 1 shall apply accordingly to any change in the classes of insurance which the insurer from a Member State intends to offer in the Republic of Bulgaria under the conditions of the freedom to provide services. Requirements for insurers with registered office in another Member State Art. 51. (1) An insurer which carries on activity on the territory of the Republic of Bulgaria under the conditions of the right of establishment or the freedom to provide services and which covers risks under insurance under item 10.1, Section II, letter "A" of Annex No. 1 shall be obliged to be a member of the National Bureau of Bulgarian Motor Insurers and to participate in the financing of the Guarantee Fund under the procedure of this Code. (2) An insurer which carries on activity on the territory of the Republic of Bulgaria under the conditions of the freedom to provide services shall appoint a person with permanent address or registered office in the Republic of Bulgaria to represent it in its relations with insured persons or injured persons under the compulsory motor third party liability insurance of persons residing or having their registered office in the Republic of Bulgaria. The representative must have sufficient powers to collect all necessary information for the settlement of claims of such persons, as well as to make payments and to represent the insurer in administrative and judicial proceedings in connection with the settlement of claims. The representative shall be obliged to certify before the Commission and before other competent authorities the existence and validity of insurance policies under the compulsory motor third party liability insurance. (3) The appointment of the representative under para. 2 shall not be considered as establishment of the insurer from the Member State. Where this insurer has also established a branch on the territory of the Republic of Bulgaria, this branch may carry out the functions of representation in connection with the compulsory motor third party liability insurance concluded under the conditions of the freedom to provide services. (4) With the approval of the Commission, the insurer which offers compulsory motor third party liability insurance in the country under the conditions of the freedom to provide services may assign the activities under para. 2 to the claims settlement representative in the Republic of Bulgaria under Art. 503.
Section III
Carrying on activity in another Member State by a local reinsurer. Carrying on activity on the territory of the Republic of Bulgaria by a reinsurer from another Member State Right of establishment and freedom to provide services of a local reinsurer Art. 52. A local reinsurer which has received a licence under the conditions and procedure of this Code may carry on the activity for which its licence was issued on the territory of another Member State under the conditions of the right of establishment or the freedom to provide services, after notifying the Commission thereof and in compliance with the law in the Member State. Right of establishment and freedom to provide services of a reinsurer from another Member State Art. 53. A reinsurer from another Member State which has received a licence to carry on reinsurance at its registered office may carry on the activity for which its licence was issued on the territory of the Republic of Bulgaria under the conditions of the right of establishment or the freedom to provide services and in compliance with the law in the Republic of Bulgaria.
Section IV
(New - State Gazette No. 25 of 2022, in force from 29.03.2022) Notification and cooperation platforms Notification Art. 53a. (New - State Gazette No. 25 of 2022, in force from 29.03.2022) (1) Before issuing a licence to a local insurer, respectively to a local reinsurer, whose programme of activity indicates that part of its activities will be carried on under the conditions of the right of establishment or the freedom to provide services in another Member State and that these activities are likely to be of relevance to the market of the host Member State, the Commission shall notify the European Authority and the supervisory authority of the host Member State thereof. (2) The Commission shall notify the European Authority and the supervisory authority of the host Member State in the event that it establishes a deterioration of the financial condition or other emerging risks caused by a local insurer, respectively reinsurer, which carries on activity under

the conditions of the right of establishment or the freedom to provide services in another Member State, and which may have a significant cross-border impact.
(3) Where the Republic of Bulgaria is the host Member State, the commission may notify the supervisory authority of the home Member State if there are serious and substantiated concerns regarding consumer protection.
(4) In the cases under paragraphs 2 and 3, where no solution can be reached between the commission and the supervisory authority of the host Member State, respectively between the commission and the supervisory authority of the home Member State, the commission may refer the matter to the European Authority and request its assistance.
(5) The notifications under paragraphs 1 - 4 must be sufficiently detailed to allow an appropriate assessment to be carried out.
(6) The notifications under paragraphs 1 - 4 do not affect the supervisory powers of the commission under this code.
Cooperation platforms
Art. 53b. (New - State Gazette, No. 25 of 2022, in force from 29.03.2022) (1) In the event of substantiated concerns about adverse consequences for users of insurance services, the commission may request the European Authority to establish and coordinate a cooperation platform to strengthen the exchange of information and enhanced cooperation between the relevant supervisory authorities, where an insurer or reinsurer carries out or intends to carry out activities based on the right of establishment or the freedom to provide services, and where:

those activities are of relevance to the market of the host Member State;
the commission has made a notification under Art. 53a, paragraphs 2 or 3, respectively has received such a notification from a Member State in connection with a deterioration of the financial condition or other emerging risks, or
the matter has been referred to the European Authority by the commission under Art. 53a, paragraph 4 or by the supervisory authority of another Member State under Art. 152a, paragraph 2 of Directive 2009/138/EC.
(2) The commission participates in the work of a cooperation platform established by the European Authority, and may participate in establishing a cooperation platform together with other supervisory authorities of Member States where all of them agree thereto.
(3) The establishment of a cooperation platform by the European Authority and/or by the supervisory authorities does not affect the powers of the commission under this code.
(4) The commission shall provide in a timely manner, at the request of the European Authority, all information necessary for the proper functioning of the cooperation platform, if such has been established by it.
Chapter Five
CARRYING OUT ACTIVITY IN A THIRD COUNTRY BY A LOCAL INSURER OR REINSURER. CARRYING OUT ACTIVITY ON THE TERRITORY OF THE REPUBLIC OF BULGARIA BY AN INSURER OR REINSURER FROM A THIRD COUNTRY
Section I
Carrying out activity in a third country by a local insurer

Issuance of authorisation
Art. 54. (1) For carrying out insurance activity by a local insurer on the territory of a third country, the local insurer shall submit an application for authorisation to the commission, stating:
1. the state in which the insurer intends to carry out activity and the manner of carrying out the activity (through a branch or by direct provision of services);
2. the classes of insurance in which the insurer will carry out activity in the third country.
(2) Attached to the application under paragraph 1 shall be:
1. a programme of activity with the amendments and supplements in connection with the activity in the third country;
2. documents establishing compliance with the requirements of Art. 80 and 83 - for the manager of the branch, as well as the address of the branch, where the activity will be carried out through a branch.
(3) Where there is no concluded agreement on cooperation and exchange of information between the competent authority in the state of the seat of the branch and the commission, the commission may require the applicant to certify the requirements which the legislation of the third country imposes in connection with the carrying out of insurance activity through a branch. (4) On a proposal of the deputy chairperson, the commission shall rule within a period of two months from receipt of the application. Where irregularities are established or additional information is necessary, Art. 34, paragraphs 2, 4 and 5 shall apply accordingly, and the period for remedying the irregularities or for providing additional information shall be not less than 15 days. (5) The commission shall refuse to issue authorisation where:
1. the carrying out of the activity in the third country would jeopardise the financial condition of the insurer;
2. the submitted programme of activity envisages the carrying out of insurance activity in the third country which is outside the scope of the insurer's licence;
3. the proposed organisational structure of the branch does not ensure its reliable and stable management;
4. there are legal or administrative obstacles to the exercise of supervision over the activity of the branch by the commission or by the deputy chairperson;
5. the insurer is in a procedure for implementation of a plan under Art. 215, paragraphs 1 or 2;
6. other requirements of this code or of the acts implementing it have not been complied with.
Notification to the commission
Art. 55. Within 7 days of receipt of an authorisation for carrying out insurance activity from the competent authority of the respective third country, the insurer shall provide a copy thereof to the commission.
Section II
Carrying out activity in the Republic of Bulgaria by an insurer from a third country Conditions for carrying out activity

Art. 56. (1) An insurer from a third country has the right to carry out insurance activity on the territory of the Republic of Bulgaria through a branch registered under the Commerce Act, after obtaining a licence from the commission under the conditions and according to the procedure of this code and of the acts implementing it. The licence may cover activity in insurance only in the classes of insurance for which the insurer has received authorisation to carry out insurance activity in the state of its seat. Simultaneous carrying out of activity under Section I and Section II of Annex No. 1 through a branch shall not be permitted. (2) The commission may issue a licence under paragraph 1 provided that:
1. the person has the right under its national legislation to carry out insurance activity;
2. the branch of the insurer has assets in the Republic of Bulgaria in an amount not less than half of the respective absolute minimum amount of the minimum capital requirement under Art. 192, paragraph 2;
3. a deposit has been paid in the amount of one quarter of the respective absolute minimum amount of the minimum capital requirement under Art. 192, paragraph 2 in a bank carrying out banking activity in the Republic of Bulgaria;
4. a manager of the branch has been elected who meets the requirements of Art. 80, paragraphs 1, 3 and 4 and Art. 83, having representative power to an extent which allows him to assume obligations for the insurer towards third parties and to represent it before the state authorities and courts of the Republic of Bulgaria;
5. a programme of activity has been submitted which, in addition to the relevant information under Art. 33, also contains information on the condition of the eligible own funds and of the eligible basic own funds in connection with the solvency capital requirement and the minimum capital requirement, as well as information on the structure of the system of governance;
6. the branch complies with the requirements in connection with the system of governance under Chapter Seven.
(3) Insofar as otherwise is not provided in this code, the insurer from a third country has the rights and obligations of an insurer with a seat in the Republic of Bulgaria and for its activity in the country shall be subject to state insurance supervision exercised by the commission and by the deputy chairperson in relation to insurers with a seat in the country. Where an insurer from a third country has chosen the competent authorities of the Republic of Bulgaria under Art. 62, paragraph 3, the commission and the deputy chairperson shall exercise supervision of solvency in relation to the activity of all its branches established within the European Union and the European Economic Area and shall apply the compulsory administrative measures under this code. Issuance of a licence Art. 57. (1) For the issuance of a licence for carrying out insurance activity on the territory of the Republic of Bulgaria through a branch, the insurer from a third country shall submit an application, to which it shall attach:
1. a certified copy of the act of registration of the insurer and a document from the registration authority with current data on the seat and address of management, the subject of activity, the amount of the subscribed capital, the system of governance and the persons who manage and/or represent it;

2. a certified copy of the authorisation for carrying out insurance activity issued by the competent authority at the seat of the insurer, including a description of the classes of insurance for which it has received authorisation;
3. a certified copy of the act of the competent management body of the insurer for opening a branch on the territory of the Republic of Bulgaria and for electing a manager of the branch;
4. a certificate issued by the competent authority exercising insurance supervision in the state of the seat of the insurer that a local insurer may open and carry out insurance activity in that state under the general procedure established for foreign insurers;
5. a document issued by a bank carrying out banking activity in the Republic of Bulgaria certifying the payment of a deposit under Art. 56, paragraph 2, item 3, and documents certifying the amount of the assets under Art. 56, paragraph 2, item 2;
6. data on the manager of the branch;
7. the programme of activity;
8. evidence that the branch will comply with the requirements in connection with the system of governance under Chapter Seven, including the documents under Art. 77, paragraph 1, items 1, 3 and 4;
9. a written declaration of the management body of the insurer that it will prepare and submit an annual financial report on the activity which it will carry out in the country through the branch and that it will keep them at the seat of the branch;
10. a written declaration of the management body of the insurer that the branch will cover the solvency capital requirement and the minimum capital requirement according to the procedure established for local insurers;
11. the annual financial reports of the insurer for the last three years, respectively for the period of existence of the insurer, if it has existed for a shorter period;
12. data on the persons who hold directly or through related persons 10 or more than 10 per cent of the votes in the general meeting or of the capital of the insurer, or another participation which gives them the possibility to control it;
13. where a licence is sought for insurance covering activity under item 10.1, Section II, letter "A" of Annex No. 1:
a) the name and address of the claims settlement representative for that insurance in each of the Member States; b) a document for a bank guarantee in accordance with the statute of the National Bureau of Bulgarian Motor Insurers; c) a reinsurance contract in accordance with criteria determined by a decision of the commission;
14. the technical bases for calculation of the premium rates and the insurance reserves.
(2) The commission shall rule within a 4-month period from receipt of the application. Where irregularities are established or additional information is necessary, Art. 34, paragraphs 2, 4 and 5 shall apply accordingly, and the period for remedying the irregularities or providing additional information shall be not less than 15 days.

(3) The application under paragraph 1 shall be considered after payment of a fee for consideration of documents.
Refusal to issue a licence
Art. 58. (Amended - State Gazette, No. 63 of 2025, in force from 01.08.2025) (1) The commission shall refuse the issuance of a licence if a ground under Art. 35, paragraph 1 exists, as well as where the legal regulation at the seat of the insurer from a third country or the supervision exercised over it by the respective competent authority prevents the exercise of state insurance supervision under this code and under the Financial Supervision Commission Act or otherwise jeopardises the interests of users of insurance services. (2) (Amended - State Gazette, No. 63 of 2025, in force from 01.08.2025) The commission shall refuse the issuance of a licence where it has received information from the State Agency "National Security" that an insurer from a third country poses a danger to the national security of the Republic of Bulgaria. (3) The refusal of the commission to issue a licence shall be reasoned in writing. (4) A new application for issuance of a licence may be submitted not earlier than 6 months from the entry into force of the decision of refusal. Entry in the commercial register and the register of legal persons with non-profit purpose Art. 59. (1) A branch of an insurer from a third country with subject of activity insurance and/or reinsurance shall be entered in the commercial register and the register of legal persons with non-profit purpose after presentation of the licence issued by the commission. (2) The insurer from a third country shall notify the commission of any change in the documents or in the circumstances under Art. 57, paragraph 1 within 7 days of the taking of the decision, of becoming aware of the change or of the entry of the circumstance, where it is subject to entry in the commercial register and the register of legal persons with non-profit purpose, but not later than 14 days of the entry. Requirements for the activity Art. 60. (Amended - State Gazette, No. 85 of 2023, in force from 01.01.2023; supplemented - State Gazette, No. 63 of 2025, in force from 01.08.2025) (1) The insurer from a third country carrying out activity on the territory of the Republic of Bulgaria through a branch shall keep its commercial books in the Bulgarian language in accordance with the applicable Bulgarian legislation and shall keep at the address of the branch all available documentation related to the activity carried out by it on the territory of the Republic of Bulgaria. (2) Within 7 days of the termination of the insurer from a third country, the manager of the branch shall provide to the commission the decision of the competent authority. (3) The branch of the insurer from a third country shall be obliged:

(amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) to value its assets and liabilities according to the procedure of Art. 117a;
to maintain sufficient technical reserves to cover the obligations under insurance and reinsurance contracts assumed on the territory of the Republic of Bulgaria according to the procedure of Chapter Eight, Section II;
to determine its own funds according to the procedure of Chapter Twelve.

(4) (New - State Gazette, No. 63 of 2025, in force from 01.08.2025) The commission shall determine by ordinance additional requirements for the activity of branches of insurers from third countries and the supervision thereof, where this is necessary for compliance with guidelines of the European Authority.
Solvency capital requirement and minimum capital requirement Art. 61. (1) The branch of an insurer from a third country shall be obliged to have eligible own funds to cover the solvency capital requirement in accordance with the requirements of Chapter Twelve.
(2) The solvency capital requirement and the minimum capital requirement of the branch of an insurer from a third country shall be calculated according to the procedure of Chapter Thirteen and Chapter Fourteen respectively, taking into account only the activity carried out by the branch.
(3) The eligible basic own funds of the branch of the insurer from a third country may not be less than one half of the absolute minimum of the minimum capital requirement under Art. 192, paragraph 2, including therein also the deposit under Art. 56, paragraph 2, item 3.
(4) The assets for coverage of the solvency capital requirement of the branch of an insurer from a third country up to the amount of the minimum capital requirement shall be located in the country, and the remaining part - within the European Union.
Advantages for insurers from third countries
Art. 62. (1) An insurer from a third country which applies for or has received a licence for carrying out insurance activity on the territory of the Republic of Bulgaria through a branch and in one or more Member States may request from the commission to enjoy the following advantages, which may be granted only together:

its solvency capital requirement to be calculated in relation to the entire volume of activity carried out by the insurer from a third country in the European Union, in which case only the activity carried out by all branches of the insurer from a third country in the Member States shall be taken into account;
the deposit under Art. 56, paragraph 2, item 3 to be paid in only one of the Member States in which it carries out activity;
the assets representing the funds in the amount of the minimum capital requirement to be located in one of the Member States in which the insurer carries out activity.
(2) In order to enjoy the advantages under paragraph 1, the insurer from a third country shall submit an application to the commission and to the competent authorities of the other Member States in which it wishes to carry out or has received a licence to carry out activity.
(3) In the application the insurer from a third country shall designate a competent authority of one of the Member States in which it wishes to carry out or has received a licence to carry out activity, which shall exercise supervision of its solvency in connection with the activity of all its branches established within the European Union and the European Economic

Area, as well as the reasons for the choice of that authority. The deposit under paragraph 1, item 2 shall be paid in the state under the first sentence.
(4) The advantages under paragraph 1 shall be granted only with the consent of the competent authorities of all Member States to which an application under paragraph 2 has been submitted. The commission shall give its consent by a decision after an assessment of the financial condition of the insurer from a third country, including its solvency. (5) The insurer from a third country may enjoy the advantages under paragraph 1 after the competent authority under paragraph 3 has notified the other competent authorities that it will exercise supervision of the solvency of the insurer in relation to the activity of all its branches established within the European Union and the European Economic Area. (6) The commission shall provide to the respective competent authority under paragraph 3 all information necessary for the exercise of supervision which it has at its disposal. (7) The granted advantages shall be withdrawn simultaneously in all Member States in which the insurer from a third country carries out activity, on a proposal of the competent authority of any of those Member States. Withdrawal of a licence Art. 63. (1) The commission shall withdraw the licence of the branch of the insurer from a third country for its activity through a branch on the territory of the Republic of Bulgaria under the conditions and according to the procedure of Art. 40. In this case Art. 41 and 42 shall apply accordingly. (2) The commission shall withdraw the licence of the branch of the insurer from a third country also in cases where its authorisation for carrying out insurance activity has been withdrawn by the competent authority in the state of its seat or by the competent authority under Art. 62, paragraph 3 on the ground of non-compliance with the solvency requirements. Where the authority under Art. 62, paragraph 3 has notified the commission of the withdrawal of the licence of the insurer from a third country on another ground, the commission shall take the necessary measures. (3) Upon withdrawal of the licence by the commission in its capacity as authority under Art. 62, paragraph 3, it shall immediately notify the competent authorities of the Member States in which the insurer carries out activity and which have given consent according to the procedure of Art. 62, paragraph 4, stating the reasons for the decision taken.
Section III
Carrying out activity in a third country by a local reinsurer. Carrying out activity in the Republic of Bulgaria by a reinsurer from a third country Activity of a local reinsurer in a third country Art. 64. For the activity of a reinsurer with a seat in the Republic of Bulgaria carried out in a third country, the legislation of the third country shall apply, unless otherwise provided in this code. Activity of a reinsurer from a third country in the Republic of Bulgaria through a branch under the Commerce Act Art. 65. (1) A reinsurer from a third country has the right to carry out activity on the territory of the Republic of Bulgaria through a branch registered under the Commerce Act, after obtaining a licence from the commission under the conditions and according to the procedure of this code and of the acts implementing it. The licence shall be issued for

reinsurance only in the types of activity for which the reinsurer has received authorisation in the state of its seat.
(2) The commission shall issue the licence under paragraph 1 provided that:

the person has the right under its national legislation to carry out reinsurance activity;
the branch of the reinsurer has assets in the Republic of Bulgaria in an amount not less than half of the absolute minimum amount of the minimum capital requirement under Art. 192, paragraph 2;
a deposit has been paid in the amount of one quarter of the absolute minimum amount of the minimum capital requirement under Art. 192, paragraph 2 in a bank carrying out banking activity in the Republic of Bulgaria;
a manager of the branch has been elected who meets the requirements of Art. 80, paragraphs 1, 3 and 4 and of Art. 83, having representative power to an extent which allows him to assume obligations for the reinsurer towards third parties and to represent it before the state authorities and courts in the Republic of Bulgaria;
a programme of activity has been submitted which contains the relevant information under Art. 33, information on the condition of the eligible own funds and of the eligible basic own funds in connection with the solvency capital requirement and the minimum capital requirement, as well as information on the structure of the system of governance.
(3) Insofar as otherwise is not provided in this code, the reinsurer from a third country has the rights and obligations of a reinsurer with a seat in the Republic of Bulgaria and for its activity in the country shall be subject to state insurance supervision exercised by the commission and by the deputy chairperson in relation to reinsurers with a seat in the country. (4) For the issuance and refusal to issue a licence under paragraph 1, Art. 57, paragraph 1, items 1 - 11 and 14, paragraphs 2 and 3 and Art. 58 shall apply accordingly. Art. 59 - 61 shall apply accordingly to the reinsurer. (5) The commission shall withdraw the licence of a branch of a reinsurer from a third country under the conditions and according to the procedure of Art. 40, as well as where the authorisation for carrying out reinsurance activity has been withdrawn by the competent authority in the state of the seat of the reinsurer. Art. 41 and 42 shall apply to the reinsurer. Provision of services in the Republic of Bulgaria by a reinsurer with a seat in a third country Art. 66. (Amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) (1) A reinsurer from a third country may provide services in the Republic of Bulgaria from its seat or branch, provided that it has received authorisation for carrying out reinsurance in the state of its seat and is subject to supervision of its entire activity by the competent authority in that state. (2) In relation to a reinsurer from a third country which carries out reinsurance activity on the territory of the Republic of Bulgaria, provisions which result in more favourable treatment than that granted to reinsurers with a seat in a Member State shall not apply. (3) (Amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) The commission may provide by ordinance for insurers or reinsurers from third countries which carry out reinsurance in the Republic of Bulgaria an obligation

for providing collateral or other guarantees for the coverage of technical reserves.
(4) Paragraph 3 shall not apply to insurers and reinsurers from third countries with a supervisory regime recognised as equivalent by the European Commission under the conditions and in accordance with the procedure laid down in Directive 2009/138/EC and the implementing acts thereof.
Section IV
Provision of information
Information provided to the European Commission Art. 67. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018; amended, No. 101 of 2018, in force from 07.12.2018) The Commission shall notify the European Commission, the European Authority and the competent authorities carrying out insurance supervision in the Member States of:
1. whether a licence has been issued to an insurer or reinsurer controlled directly or through related undertakings by one or more parent undertakings, where the legislation of a third country applies to at least one of them; the notification shall also indicate the structure of the group to which the persons referred to in the first sentence belong;
2. an acquisition of a holding by a parent undertaking referred to in item 1 in an insurer or reinsurer with its registered office in the Republic of Bulgaria which enables it to exercise control over the latter;
3. (amended - State Gazette No. 101 of 2018, in force from 07.12.2018) the existence of obstacles to commencing or carrying on business in a third country by an insurer, reinsurer, insurance intermediary or intermediary offering insurance products as an ancillary activity, with its registered office in the Republic of Bulgaria.
PART TWO
REQUIREMENTS FOR THE MANAGEMENT AND ACTIVITIES OF INSURERS AND REINSURERS
Chapter Six
QUALIFYING HOLDINGS
Acquisitions
Art. 68. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018; amended, No. 15 of 2018, in force from 16.02.2018; amended, No. 27 of 2018; amended and supplemented, No. 49 of 2025) (1) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) Any natural or legal person or such persons acting in concert which have decided to acquire, directly or indirectly, a qualifying holding in an insurance or reinsurance joint-stock company, or to increase, directly or indirectly, such a qualifying holding, as a result of which the proportion of voting rights or capital held by them would reach or exceed 20, 30 or 50 per cent, or the insurance or reinsurance joint-stock company would become their subsidiary, shall be obliged to notify the Commission in writing of the decision before the acquisition, stating the size of the intended holding. Where, as a result of objectively occurring circumstances beyond the will of the persons, their holding becomes a qualifying holding or the thresholds referred to in the first sentence are reached or exceeded, the notification shall be made after the acquisition or increase of the holding, within 15 working days of becoming aware thereof. (2) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) Any natural or legal person which has decided to dispose, directly or indirectly, of its qualifying holding in an insurance or reinsurance joint-stock company shall be obliged to notify the Commission in writing of the decision before the disposal, stating the size of its holding after the planned disposal. The person shall also notify the Commission where it has decided to reduce its qualifying holding, as a result of which the proportion of voting rights or the capital held would fall below 20, 30 or 50 per cent or the insurance or reinsurance joint-stock company would cease to be its subsidiary. (3) A qualifying holding is a direct or indirect holding in an insurer or reinsurer which represents 10 or more than 10 per cent of the capital or of the voting rights or which makes it possible to exercise a significant influence over the management of that insurer or reinsurer. (4) Every person referred to in paragraph 1 must be unambiguously identified up to the beneficial owner (beneficial beneficiary). (5) (Amended - State Gazette No. 27 of 2018) A beneficial owner (beneficial beneficiary) within the meaning of paragraph 4 is a person within the meaning of § 2 of the Supplementary Provisions of the Measures against Money Laundering Act. (6) (Amended - State Gazette No. 15 of 2018, in force from 16.02.2018) When determining the size of the qualifying holding, the voting rights under Art. 146, para. 1 of the Public Offering of Securities Act shall also be taken into account. When determining the size of the qualifying holding, the voting rights or shares held by investment intermediaries or credit institutions as a result of providing the services under Art. 6, para. 2, item 6 of the Markets in
Financial Instruments Act shall not be taken into account, provided that those rights are not exercised or used to influence the management of the insurer or reinsurer, and provided that those rights are transferred within one year of the acquisition. (7) The Commission, on a proposal from the Deputy Chairperson, shall assess the intended acquisition or increase of a qualifying holding with a view to ensuring the sound and prudent management of the insurer or reinsurer in which the acquisition is to be made. In carrying out the assessment, the Commission shall take into account the possible influence of the applicant on the insurer or reinsurer, according to which it shall assess whether the applicant is suitable and financially sound, applying the following criteria:
1. the reputation of the applicant;
2. the reputation and professional experience of any person who will manage the activities of the insurer or reinsurer as a result of the proposed acquisition;
3. the financial soundness of the applicant in relation to the activity carried out or intended to be carried out by the insurer or reinsurer for which the acquisition is proposed; the applicant shall be deemed financially sound if, on the basis of the documents submitted and their analysis, it may reasonably be assumed that for a period of not less than three years from the date of the acquisition there is no risk of financial difficulties and it will have such a financial position as would ensure the planned development of the insurer or reinsurer, including, where necessary, providing it with financial support;
4. whether the insurer or reinsurer will be able to meet or continue to meet the prudential requirements of the law and, more specifically, whether the group of which it will become part after the acquisition has a structure that allows effective supervision and exchange of information between the competent supervisory authorities and the determination and allocation of responsibilities between them;
5. (amended - State Gazette No. 49 of 2025) whether there are reasonable grounds to suspect that, in connection with the proposed acquisition, money laundering within the meaning of the Measures against Money Laundering Act or terrorist financing within the meaning of the Measures against the Financing of Terrorism and the Proliferation of Weapons of Mass Destruction Act has been, is being or has been attempted to be committed, or that the implementation of the proposed acquisition would increase that risk;
6. (new - State Gazette No. 49 of 2025) whether, on the basis of the data collected on the applicant and its related parties, as well as on the links between them, there is no ground for doubt as to its reliability and suitability and the possibility of a conflict of interests arising.
(8) The Commission, on a proposal from the Deputy Chairperson, may prohibit the proposed acquisition only if there are grounds for doing so in accordance with the criteria referred to in paragraph 7, or if the information provided by the applicant is incomplete.
(9) The Commission and the Deputy Chairperson may not impose prior conditions in relation to the size of the holding to be acquired, nor may they examine the acquisition in the light of the economic needs of the market.
(10) The Commission and the Deputy Chairperson may not require information that is not relevant to carrying out the assessment of compliance with the prudential requirements. In connection with a specific acquisition or increase of a qualifying holding, the Deputy Chairperson may require additional information and evidence where these are necessary for carrying out the assessment of compliance with the prudential requirements. (11) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) Where two or more notifications for the acquisition or increase of a qualifying holding in the same insurer or reinsurer have been submitted, the Commission shall assess each of the acquisitions on a non-discriminatory basis. (12) Prudential requirements are the requirements under Part Two, Chapters Seven to Ten, Parts Three, Four and Seven, as well as under the Additional Supervision of Financial Conglomerates Act, where that Act applies or will apply to the insurer or reinsurer in which the acquisition of the capital holding is proposed. (13) (Amended - State Gazette No. 49 of 2025) For the assessment of an acquisition or increase of a qualifying holding, the requirements of guidelines in respect of which the Commission has adopted a decision to apply them under Art. 13, para. 1, item 26 of the Financial Supervision Commission Act shall also apply.

Information in the case of acquisition or increase of a qualifying holding Art. 69. (Amended - State Gazette No. 103 of 2017, in force from 01.01.2018; amended, No. 85 of 2023, in force from 01.01.2023) (1) The notification under Art. 68, para. 1 shall be in writing and shall contain the information and documents under paragraphs 2 to 6. The notification shall state:
1. the insurer or reinsurer in which the applicant intends to acquire a holding;
2. the size of the intended holding, including the number and type of shares held by the applicant before and after the acquisition, the proportion of shares in the total capital before and after the acquisition in percentage and in monetary terms, as well as the proportion of voting rights where these differ from the proportion of capital before and after the acquisition;
3. the purpose of the acquisition of the holding;
4. exhaustive information on acting in concert with other persons in connection with the acquisition, where there is such acting in concert, or a declaration of the absence thereof.
(2) Where the applicant is a natural person, the following shall be submitted with the notification:
1. the applicant's data - personal identification number, citizenship, country of habitual residence, number, date and place of issue of the identity document (identity card), correspondence address;
2. (amended - State Gazette No. 103 of 2017, in force from 01.01.2018) for Bulgarian citizens - a criminal record certificate and a declaration of absence of convictions outside the Republic of Bulgaria, the absence of convictions in the Republic of Bulgaria being established ex officio, and for persons who are not Bulgarian citizens - an official document certifying the absence of previous convictions or a declaration of absence of convictions where such a document is not issued in their country of habitual residence; the documents referred to in the preceding sentence shall be recognised if they have been submitted within 6 months of the date of their issue;
3. a curriculum vitae exhaustively stating the education, qualifications and professional experience of the applicant, as well as all professional activities, positions and functions of the person held as at the date of submission of the notification;
4. a declaration:
(a) of the existence or absence of pending criminal proceedings in which the person is charged as an accused, as well as of the outcome of completed such proceedings; (b) of the existence or absence of pending civil cases concerning unpaid loans, tortious damage to an undertaking managed by him, in which the applicant for acquisition of a qualifying holding was a defendant, or a legal person over which the applicant exercised control, or a legal person in which he was a member of a management or supervisory body or a procurator, as well as of the outcome of completed such proceedings; (c) of the existence or absence of pending or completed proceedings for the imposition of administrative penalties and/or for the application of coercive administrative measures against the applicant for violations of regulatory acts in the financial sector; (d) whether the applicant has been a member of a management or supervisory body of a company which has been terminated by a court decision due to carrying out an activity contrary to the law or pursuing unlawful purposes; (e) whether the applicant has been a member of a management or supervisory body or an unlimited liability partner in a company where it has been terminated due to insolvency and creditors have remained unsatisfied; (f) whether a person over whom the applicant has exercised control has been declared insolvent or bankrupt, or in compulsory liquidation; (g) whether a legal person over which the applicant has exercised control, or a legal person in which he has been a member of a management or supervisory body or a procurator:
(aa) has been sanctioned with an administrative penalty and/or coercive administrative measures for violations of regulatory acts in the financial sector; (bb) has been refused the issuance of a licence or entry in a register kept by the Commission, the Bulgarian National Bank or analogous authorities of other states, refused membership in a trade or professional organisation, or its issued licence has been withdrawn, or its entry has been deleted, including for companies in whose management or supervisory bodies those legal persons have participated; (h) whether the applicant has been dismissed from a position as a member of a management or supervisory body of an insurer, reinsurer, credit institution or other financial institution whose activity is subject to a licensing regime, as a result of an applied coercive administrative measure; (i) whether the applicant has been deprived of the right to hold a position of material responsibility; (j) whether a previous identical assessment of the reputation of the applicant has been carried out by a competent supervisory authority in the financial sector or of a person controlled by the applicant, as well as which the supervisory authority is and what the result of the assessment is; (k) whether an assessment of the applicant has been carried out by a competent supervisory authority outside the financial sector or of a person controlled by the applicant, as well as which the supervisory authority is and what the result of the assessment is;
5. a declaration by the applicant of:
(a) his financial position, including information on the property held, the obligations assumed by him, the collateral provided and guarantees issued, as well as information on the sources and amount of his income for the last three years; (b) the existence of financial or other interests or links of the applicant with:
(aa) the insurer or reinsurer, or the group of which they are part; (bb) shareholders of the insurer or reinsurer, or with other persons entitled to exercise voting rights at the general meeting of the insurer or reinsurer; (cc) members of the management or supervisory body or with other persons in a managerial position in the insurer or reinsurer; (dd) the existence of any other interest which may lead to a conflict of interests with the insurer or reinsurer, as well as a plan for overcoming it;
6. a document concerning an assigned rating and public reports of commercial companies controlled by the applicant, if any.
(3) Where the applicant is a legal person, the following shall be submitted:
1. data on: company name, registered office and address of management, correspondence address, as well as identification number of the applicant, where such exists;
2. a certified copy of the articles of association and/or of the founding contract, where the founding contract is part of the registration documents of the person;
3. a current certificate of entry in the relevant commercial register for persons registered outside the Republic of Bulgaria;
4. a current and detailed description of the applicant's activity;
5. a list with the names of the persons who manage or represent the applicant, and a curriculum vitae exhaustively stating the education, qualifications and professional experience of each of the persons, as well as all professional activities, positions and functions of each of the persons held as at the date of submission of the notification;
6. a declaration by the legal representative of the applicant on the structure and distribution of the capital of the applicant - legal person, with information up to the beneficial owner (beneficial beneficiary) under item 1;
7. declarations by the applicant on the circumstances under paragraph 2, item 4, letters "b", "d" - "f", letter "g", sub-letter "bb", letters "h", "j" and "k", as well as a declaration under paragraph 2, item 5, letter "b" concerning the existence of financial or other interests or links of the applicant and of the persons who manage and represent it;
8. a description of the structure of the group, where the applicant participates in a group as a subsidiary or parent undertaking, as well as a description of the activities carried out by the group;
9. information on the persons in the group over whom financial or other supervision is exercised, and indication of the supervisory authority at the seat of the respective persons;
10. annual financial statements of the applicant for the last three years after audit, where such is mandatory, including a balance sheet, an income statement, an annual activity report and the other disclosures made to the annual financial statement for the respective period;
11. a document concerning a credit rating assigned to the applicant and to the group in which it participates, if any have been assigned.
(4) Together with the notification under paragraph 1, the following annexes with additional information concerning the financing of the acquisition of the qualifying holding shall be submitted:
1. a declaration on the origin of the funds with which the qualifying holding is acquired;
2. information on the method of acquiring the shares and the manner of payment;
3. information on the manner of financing the acquisition of the shares, including access to capital sources and financial markets;
4. information on the use of borrowed funds from the banking system or on the issuance of financial instruments for the purpose of financing the acquisition, as well as on any financial relationships with other shareholders of the insurer or reinsurer, including data on maturities, terms, collateral and guarantees provided;
5. information on assets of the applicant or of the insurer or reinsurer in which the holding is acquired which are planned to be sold in the short term for the purpose of financing the acquisition, as well as on the terms and price of the transaction.
(5) Together with the notification under paragraph 1, the following annexes with additional information shall be submitted depending on the level of the qualifying holding being acquired:
1. where the acquisition of the qualifying holding will be followed by a change in control of the insurer or reinsurer - a business plan including:
(a) a strategic development plan containing the main objectives of the acquisition and the main ways of achieving them, and more specifically:
(aa) justification of the acquisition;
(bb) medium-term financial objectives, including return on capital; (cc) the main synergies expected to be realised; (dd) expected redirection of activities, clients and products, as well as expected reallocation of resources within the insurer or reinsurer; (ee) the significant circumstances concerning the inclusion and integration of the insurer or reinsurer in the group structure of the applicant, including the interaction that will be carried out with other companies in the group, together with a description of the policy governing intra-group relations; (b) forecast financial statements of the insurer or reinsurer, separately and on a consolidated basis for a period of three years ahead, including:
(aa) a forecast balance sheet and income statement; (bb) (amended - State Gazette No. 85 of 2023, in force from 01.01.2023) a forecast of the prudential ratios, at least for the coverage with own funds of the minimum capital requirement and the solvency capital requirement, respectively of the minimum guarantee capital, loss ratios and expense ratios; (cc) information on risk exposures by types of risk, at least for operational, credit, market and underwriting risk; (dd) a forecast of expected intra-group transactions; (c) a summary description of the impact of the acquisition on the management of the insurer or reinsurer, as well as on its organisational structure;
2. where, after the acquisition of the qualifying holding, the same will not exceed 20 per cent of the capital - a document on the applicant's strategy including:
(a) the period for which the applicant intends to hold its holding; (b) the applicant's intentions to increase, reduce or retain its holding at the same level in the foreseeable future; (c) information on the applicant's ability and willingness to support the insurer or reinsurer with additional own funds in the event of financial difficulties;
3. where, after the acquisition of the qualifying holding, the same will exceed 20 per cent but will not exceed 50 per cent of the capital - a document on the applicant's strategy under item 2, also including:
(a) information on the influence which the applicant intends to exert on the financial position of the insurer or reinsurer (including on the dividend distribution policy), on its strategic development and with regard to the allocation of its resources; (b) a description of the applicant's intentions and expectations with regard to the activity of the insurer or reinsurer in the medium term. (6) Where the qualifying holding is acquired or the crossing of a threshold under Art. 68, para. 1 is carried out indirectly, the notification under paragraph 1 shall be submitted to the Commission upon acquisition of a holding in a direct or indirect shareholder in the following cases:
1. acquisition of a qualifying holding or increase of a holding, thereby exceeding 20, 30 or 50 per cent of the capital of a shareholder which exercises control over the insurer or reinsurer, or
2. acquisition of control over a shareholder which holds a qualifying holding but does not exercise control over the insurer or reinsurer.
(7) In the case of intra-group acquisitions within the group of an existing shareholder of an insurer or reinsurer, as a result of which the beneficial owner (beneficial beneficiary) of the holding in the capital of the insurer does not change, only the documents under paragraph 3, item 6 shall be attached to the notification under paragraph 1. Acquisition of a qualifying holding by financial undertakings Art. 70. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) (1) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) The Commission shall exchange information with the relevant supervisory authorities when carrying out the assessment of the acquisition, where the applicant is one of the following persons:
1. a credit institution, insurer or reinsurer, investment intermediary or management company within the meaning of Article 1, paragraph 2 of Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) (OJ, L 302/32 of 17 November

2009), authorised in another Member State or in a sector other than that in which the acquisition is proposed;
2. a parent undertaking of a credit institution, insurer or reinsurer, investment firm or a management company of a UCITS, authorised in another Member State or in a sector other than that in which the acquisition is proposed;
3. a natural or legal person controlling a credit institution, insurer or reinsurer, investment firm or a management company of a UCITS, authorised in another Member State or in a sector other than that in which the acquisition is proposed.
(2) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) The opinions and objections of the supervisory authorities with which consultation was carried out under paragraph 1 shall be stated in the decision of the Commission under Article 71(4) or (5).
(3) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) The Commission shall provide without delay any information that is material or relevant to the assessment where an acquisition of a qualifying holding is notified by a person under paragraph 1 who is an insurer or reinsurer with registered office in the Republic of Bulgaria, or a parent undertaking, or a natural or legal person controlling an insurer or reinsurer with registered office in the Republic of Bulgaria. In the process of cooperation under the first sentence, the Commission shall provide to the competent supervisory authorities, at their request or on its own initiative, all information that is necessary or material for the examination carried out by them. (4) The information under Article 69(2) and (3) shall not be required from the applicant where the supervisory authority under paragraph 1 is from a Member State and provides a certificate that the applicant meets the requirements of Directive 2009/138/EC or of Directive 2007/44/EC of the European Parliament and of the Council of 5 September 2007 amending Council Directive 92/49/EEC and Directives 2002/83/EC, 2004/39/EC, 2005/68/EC and 2006/48/EC as regards procedural rules and evaluation criteria for the prudential assessment of acquisitions and increase of holdings in the financial sector (OJ, L 247/1 of 21 September 2007). (5) The information under Article 69(2) and (3) shall not be required from an applicant who is a supervised person of the Commission and for whom the documents under Article 69(1) - (4) have been submitted in another proceeding before the Commission. (6) The information under Article 69(2) and (3) shall not be required from an applicant who has been assessed in another proceeding during the previous two years by the Deputy Chairperson or by the Commission and for whom the documents under Article 69(2) and (3) have been submitted. Notification procedure
Article 71. (Amended - State Gazette No. 83 of 2019, in force from 22.10.2019) (1) Within a period not longer than two working days from the date of receipt of the application with all required documents under Article 69, the Commission, on a proposal from the Deputy Chairperson, shall confirm in writing to the applicant the receipt of the application and inform it of the date on which the period for decision under paragraph 4 expires. Where not all documents under Article 69 are attached to the application, the period for confirmation under the first sentence shall start running from the date of submission of all required documents. The first sentence shall apply mutatis mutandis to any subsequent submission of documents by the applicant.
(2) The Commission, on a proposal from the Deputy Chairperson, may, before the expiry of 50 working days from the date of the confirmation under paragraph 1, request additional information necessary for deciding on the application. The request for additional information shall be in writing and shall specify the required information. The period for decision under paragraph 4 shall be suspended from the date of the request for additional information until the date of its receipt, but for not more than 20 working days. Where the applicant has its registered office or is subject to supervision outside the European Union or is a natural person, or is a legal person that is not an insurer, credit institution or investment firm, the maximum period for which the period for decision is suspended shall be 30 days from the date of the written request for additional information. Subsequent requests for additional information shall not suspend the period for decision. Upon each receipt of additional information, the two-day period under paragraph 1 shall apply. (3) Within a period of up to 60 working days from the date of the confirmation under paragraph 1, the Commission, on a proposal from the Deputy Chairperson, shall issue a prohibition on the acquisition of the notified holding if there are serious grounds for this in accordance with the criteria under Article 68(7) or if the information provided by the applicant is incomplete. The decision of the Commission to issue a prohibition, together with its reasons, shall be sent to the applicant before the expiry of the period for decision and no later than two days from the date of issuance of the decision. The decision shall be published on the Commission's website or in another appropriate manner. (4) Within the period under paragraph 3, the Commission, on a proposal from the Deputy Chairperson, may approve the implementation of the change of shareholding, as well as determine a maximum period within which the acquisition under Article 68(1) is to be carried out, after the expiry of which the approval becomes invalid. The determined maximum period may be extended at the request of the applicant if there are justified reasons for this. (5) If the applicant has not been notified within the period under paragraph 3 of a prohibition on the acquisition of the notified holding, it has the right to acquire the holding notified by it. (6) A person who acquires a qualifying holding or crosses another threshold under Article 68(1), first sentence, without submitting a notification under Article 68(1), before the expiry of the period under paragraph 3 or in breach of a prohibition of the Commission, may not exercise voting rights on the shares thus acquired. Where the person also holds other shares acquired before the acquisition of the qualifying holding or the crossing of another threshold under the first sentence, its voting rights on those shares shall be preserved. The voting right of the person on the new shares
acquired under the first sentence shall not be taken into account in determining the presence of a quorum for holding a general meeting of the insurer or reinsurer respectively. (7) (Amended - State Gazette No. 83 of 2019, in force from 22.10.2019) The relevant central securities depository which maintains the shareholders' register of the insurer or reinsurer respectively shall notify the Commission of any acquisition of a holding under Article 68(1), respectively any reduction under Article 68(2), within three days of becoming aware thereof. Powers of the supervisory authority in relation to qualifying holdings
Article 72. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018; supplemented - State Gazette No. 49 of 2025) (1) In the event of an acquisition of a qualifying holding before the expiry of the period under Article 71(4) or without a notification under Article 68 having been submitted, or in breach of a prohibition of the Commission, and where the influence exercised by the persons referred to in Article 68(1) is likely to be detrimental to the sound and prudent management of the insurer or reinsurer, the Deputy Chairperson or the Commission respectively shall take appropriate measures, including, at the discretion of the authority, instructions, administrative penalties for members of the management and supervisory bodies of the persons who have not complied with the notification obligation under Article 68, and a prohibition on exercising voting rights on the basis of the shares held by the shareholders or members concerned.
(2) If the qualifying holding has been acquired in breach of a prohibition of the Commission, the Commission:
1. shall impose a prohibition on the exercise of the relevant voting rights at the general meeting of the insurer or reinsurer respectively, and
2. may request a declaration of nullity of the decision of the general meeting of shareholders.
(3) (New - State Gazette No. 49 of 2025) The Commission shall carry out an ongoing assessment of compliance with the criteria under Article 68(7) by the persons holding qualifying holdings in an insurance or reinsurance joint-stock company.
Acquisition of a non-qualifying holding
Article 73. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) A person who acquires one or more per cent, but not more than 10 per cent, of the shares of an insurer or reinsurer respectively, shall be obliged, within a period no later than 14 days from the acquisition or increase of the holding, to identify itself as to the beneficial owner (beneficial beneficiary) before the Commission by submitting the documents under Article 69(2), item 1, respectively under paragraph 3, items 1 and 6.
Reporting of qualifying holdings
Article 74. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) (1) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) The insurer or reinsurer respectively shall inform the Commission of all acquisitions of or disposals of holdings in its capital as a result of which the holdings exceed or fall below any of the thresholds referred to in Article 68(1), when this becomes known to it.
(2) An insurer or reinsurer respectively shall submit to the Commission annually by 31 March a statement in a form approved by the Deputy Chairperson regarding the persons who hold qualifying holdings, as well as the size of those holdings.
Chapter Seven
GOVERNANCE SYSTEM
Section I
Management, structure and organisation of the activity of the insurer and reinsurer Responsibility of the management and supervisory bodies of the insurer or reinsurer
Article 75. The management and supervisory bodies of the insurer or reinsurer shall be responsible for the adoption and application in its activity of the necessary organisation and rules guaranteeing compliance with:
1. this Code;
2. the secondary legislation on its implementation;
3. directly applicable European Union law in the field of insurance, reinsurance and the supervision thereof;
4. the internal acts of the insurer or reinsurer.
Governance system. General requirements
Article 76. (1) The insurer or reinsurer shall be obliged to have an effective governance system in order to ensure reliable and prudent management of the activity.
(2) The governance system shall include an adequate and transparent organisational structure with a clear allocation and appropriate segregation of responsibilities and an effective system ensuring the transmission of information. The governance system may also include additional elements at the discretion of the insurer or reinsurer.
(3) The governance system must be based on the requirements under Articles 77 - 100 and Articles 110 and 111.
(4) The governance system must be proportionate to the nature, scale and complexity of the activity of the insurer or reinsurer.
(5) The insurer or reinsurer shall be obliged periodically to review its governance system and to make changes where necessary to achieve the objectives under paragraph 1.
Structure of the governance system
Article 77. (Amended and supplemented - State Gazette No. 101 of 2018, in force from 07.12.2018; supplemented - State Gazette No. 54 of 2025) (1) The management or supervisory body respectively, in accordance with its powers under the articles of association of the insurer or reinsurer, shall be responsible for the adoption and strict application of:
1. a management and organisational structure of the insurer or reinsurer, in which at least the following must be determined:
(a) the activity of the individual organisational units; (b) the management positions outside the positions under Article 80(1), as well as their functions and powers; (c) the allocation of functions and powers among the executive directors, as well as the appropriate allocation of functions among the members of the management body;
2. (amended - State Gazette No. 101 of 2018, in force from 07.12.2018) a programme for the activity of the insurer or reinsurer in accordance with Article 33 for a period of three years, which shall be updated annually by 30 June of each year;
3. policies for:
(a) risk management, including at least:
(aa) a policy for the management of the risk related to underwriting activity and the setting of technical provisions; (bb) a policy for the management of operational risk; (cc) a policy for the management of risk through reinsurance and other risk mitigation techniques; (dd) a policy for the management of assets and liabilities; (ee) a policy for the management of investment risk; (ff) a policy for the management of liquidity risk; (b) internal control; (c) operational control, including rules and procedures for the performance and reporting of the activity of the individual organisational units; (d) internal audit; (e) the outsourcing of activities within the meaning of Article 110, where such is carried out; (f) the performance of the obligations under Article 127(7); (g) the information system and document flow; (h) underwriting activity and work with insurance intermediaries; (i) the prevention of conflicts of interest; (j) the valuation of assets; (k) capital management; (l) (new - State Gazette No. 101 of 2018, in force from 07.12.2018) the qualifications, knowledge and skills of the employees directly engaged in the activities of distribution of insurance or reinsurance products, as well as of the relevant persons in the management structure of the insurer or reinsurer respectively who are responsible for the activity of distribution of insurance or reinsurance products, including policies for continuing professional training and development; (m) (new - State Gazette No. 101 of 2018, in force from 07.12.2018) the existence of good repute of the employees carrying out activities of distribution of insurance or reinsurance products, as well as of the relevant persons in the management structure of the insurer or reinsurer respectively who are responsible for the activity of distribution of insurance or reinsurance products; (n) (new - State Gazette No. 101 of 2018, in force from 07.12.2018) the creation of insurance products, which include a procedure for the development and approval of each insurance product or of substantial changes to an existing insurance product, before the product is offered or distributed to users of insurance services; (o) (new - State Gazette No. 101 of 2018, in force from 07.12.2018) the distribution of insurance products; (p) (new - State Gazette No. 101 of 2018, in force from 07.12.2018) business continuity and working in emergency situations; (q) (former letter "m" - State Gazette No. 101 of 2018, in force from 07.12.2018) other activities at the discretion of the management body or where provided for by law or another regulatory act;
4. a policy for the remuneration of the persons who work for the insurer or reinsurer.
(2) The body under paragraph 1 shall review at least once a year the documents under paragraph 1 and make the necessary amendments or supplements in response to substantial changes in the matter governed by those documents, and shall present to the general meeting of shareholders or member-cooperators an annual report on their implementation, including on the implementation of the programme under paragraph 1, item 2. (3) (Supplemented - State Gazette No. 54 of 2025) The insurer or reinsurer shall take reasonable measures to ensure continuity and regularity in the performance of its activity, including by developing contingency plans. For this purpose, the insurer or reinsurer shall use systems, resources and procedures appropriate and proportionate to the scale, nature and complexity of its activity and in particular shall introduce and manage network and information systems in accordance with Regulation (EU) 2022/2554 of the European Parliament and of the Council of 14 December 2022 on digital operational resilience for the financial sector and amending Regulations (EC) No 1060/2009, (EU) No 648/2012, (EU) No 600/2014, (EU) No 909/2014 and (EU) 2016/1011 (OJ, L 333/1 of 27 December 2022), hereinafter referred to as "Regulation (EU) 2022/2554". (4) The Deputy Chairperson:
1. may receive all information about the governance system of the insurer or reinsurer and order inspections to establish its condition;
2. shall assess the potential risks identified by the insurers or reinsurers which may affect their financial stability;
3. may order the improvement or strengthening of the governance system in order to ensure compliance with the requirements under Article 76(3).
(5) The Commission shall lay down by ordinance more detailed requirements for the governance system of insurers and reinsurers in accordance with the principles regulated in this Chapter, where this is necessary for compliance with the guidelines of the European Authority.
Functions in the governance system
Article 78. (1) Within the governance system, the insurer or reinsurer shall establish:
1. a risk management function;
2. a function monitoring compliance with regulatory requirements (compliance function);
3. an internal audit function;
4. an actuarial function, and
5. other functions provided for in this Code and such as are at the discretion of its management and supervisory bodies.
(2) A function within the meaning of paragraph 1 is the internal capacity to perform practical tasks. The insurer or reinsurer shall independently choose the organisational form of the functions under paragraph 1, unless otherwise provided for in this Code. The functions under paragraph 1 may be carried out by employees of the insurer or reinsurer or by means of outsourcing under Article 110. (3) The organisational structure under Article 77(1), item 1 must clearly regulate all functions under paragraph 1. (4) Articles 269 - 271 of Regulation (EU) 2015/35 shall also apply to insurers without access to the single market.
Section II
Qualification and fitness requirements
Persons participating in the management of the insurer or reinsurer and persons performing other key functions
Article 79. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) (1) The insurer or reinsurer respectively shall ensure that the persons who effectively manage it - the members of its management board and supervisory board or of the board of directors in joint-stock companies, respectively the members of the management board and control board of the mutual insurance cooperative, hereinafter referred to as the "management and supervisory bodies", the other persons authorised to manage or represent it, as well as the persons performing key functions under Article 78(1), at any time meet the following requirements for:
1. qualifications - their professional qualifications, knowledge and experience are adequate to enable sound and prudent management, and
2. fitness - they are of good repute.
(2) Article 258(1)(c) of Regulation (EU) 2015/35 shall also apply to insurers without access to the single market.
(3) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) The insurer or reinsurer respectively shall be represented jointly by at least two natural persons. The insurer or reinsurer respectively shall notify the Commission of any change in the persons who effectively manage it or perform the key functions, providing the complete information necessary for assessing the fulfilment of the qualification and fitness requirements of the new persons. (4) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) The insurer or reinsurer respectively shall notify the Commission upon the release of a person under paragraph 1, as well as of the reasons for this, if the person has ceased to meet the requirements of this Code, within a period no later than 7 days from the date of release. (5) The board of directors or the supervisory board respectively of the insurer or reinsurer shall adopt and apply rules and procedures guaranteeing that the persons under paragraph 1 meet the qualification and fitness requirements at all times (qualification and fitness policy). Requirements for professional qualification and fitness
Article 80. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018; amended, No. 103 of 2017, in force from 01.01.2018; amended, No. 101 of 2018, in force from 07.12.2018; supplemented, No. 84 of 2023) (1) Each member of a management or supervisory body of an insurer or reinsurer respectively, as well as each person authorised to manage and/or represent it, must:
1. have higher education at the educational-qualification degree "master" and possess the appropriate professional qualification necessary for managing the activity of the insurer or reinsurer respectively;
2. possess professional experience in the field of economics or finance;
3. not have been convicted of an intentional crime of a general nature;
4. not have been, during the last three years before the initial date of insolvency determined by the court, a member of a management or supervisory

body or unlimited liability partner in a company for which insolvency proceedings have been opened, or in a company terminated due to insolvency, if unsatisfied creditors remain;
5. has not been declared insolvent and is not in insolvency proceedings;
6. is not a spouse or relative by blood or by collateral line up to and including the fourth degree, or by affinity up to the third degree, of another member of the management or supervisory body of the person;
7. has not been deprived of the right to hold a materially responsible position;
8. has not, during the last year before the act of the respective competent authority, been a member of a management or supervisory body or an unlimited liability partner in a company whose license to carry out an activity subject to a licensing regime has been withdrawn, except in cases where the license has been withdrawn at the request of the company, and also if the act withdrawing the issued license has been revoked in accordance with the established procedure;
9. has not been dismissed from a position in a management or supervisory body of a commercial company on the basis of an applied coercive administrative measure, except in cases where the act of the competent authority has been revoked in accordance with the established procedure.
10. (new - State Gazette, No. 84 of 2023) does not give rise to doubt, based on the collected data about him, his related persons and the connections between them, regarding his reliability and suitability and the possibility of a conflict of interest arising.
(2) The requirements of para. 1 shall also apply to the natural persons who represent legal entities - members of the management and supervisory bodies of an insurance or reinsurance joint-stock company.
(3) A member of a management or supervisory body of an insurer, respectively a reinsurer, as well as a person authorized to manage or represent it, must be a person who enjoys a good reputation and does not endanger the management of the person, the interests of users of insurance services and does not impede insurance supervision. In the approval proceedings under para. 10, the applicant shall also submit declarations under Art. 69, para. 2, item 4, letters "a" - "c", "e" - "l". (4) (Amended - State Gazette, No. 101 of 2018, in force from 07.12.2018) After registration in the commercial register and in the register of legal entities with non-profit purpose, the executive director, respectively the chairman of the cooperative, or another person authorized to manage and represent the insurer or reinsurer, must not hold another paid position under an employment relationship, unless he is a lecturer at a higher education institution. Natural persons - citizens of a third country, must also have a long-term residence permit in the Republic of Bulgaria. (5) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) The circumstances under para. 1, item 1 shall be certified before the commission with a notarized copy of a higher education diploma obtained in the Republic of Bulgaria, respectively with a legalized translation of a higher education diploma obtained at a higher education institution outside the Republic of Bulgaria. (6) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) The circumstances under para. 1, item 2 shall be certified before the commission with a curriculum vitae, which shall state: the place, respectively the places, where the applicant has accumulated his professional experience, giving exact data about them (name, legal form, seat, subject of activity, registration number, where applicable, territorial scope of activity), the positions held and their place in the organizational structure of the enterprise or institution, the period during which he held each position, a detailed description of the position, its functions, powers and duties. (7) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018; amended, No. 103 of 2017, in force from 01.01.2018) The circumstances under para. 1, item 3 for Bulgarian citizens shall be established ex officio - for absence of conviction in the Republic of Bulgaria, and by declaration - for absence of conviction outside the Republic of Bulgaria, and for persons who are not Bulgarian citizens, these circumstances shall be certified by a criminal record certificate issued by the state of habitual residence of the person. The circumstances under para. 1, items 4 - 9 shall be certified by declaration. The documents under the first and second sentences shall be recognized if they are submitted within three months from the date of their issuance, respectively their preparation. A long-term residence permit in the Republic of Bulgaria of a person from a third
country shall be submitted no later than three months from the date of issuance of the approval. (8) Where the Member State of habitual residence of the person or the Member State from which the respective person originates does not issue a criminal record certificate, it may be replaced by an affidavit - or, in Member States where such is not provided for, by an official declaration made by the person before a competent judicial or administrative authority, a notary in the Member State of origin or the Member State from which the person comes. Such authority or notary shall issue a certificate confirming the truthfulness of the affidavit or the official declaration. The declaration under para. 1 for absence of prior insolvency may also be made before a competent professional or trade organization in the respective Member State. (9) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) The curriculum vitae and each declaration for establishing circumstances under para. 1 - 6 shall be signed by the applicant. A declaration signed by two of the members of the management or supervisory body of the insurer, respectively of the reinsurer, as well as by the official in the insurer or reinsurer who has verified the reliability of the circumstances contained in the respective documents, that the assessment has been carried out in accordance with the law and the policy for qualification and reliability and the person meets the requirements for the position, shall also be submitted. The person for whom approval is sought shall give written consent for the commission to request confirmation of all circumstances disclosed in the approval proceedings, as well as to receive the necessary information from other authorities and persons where the respective information is located. (10) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) The persons under para. 1 and 2 shall be subject to approval by the commission before their election or appointment to the respective position. The commission shall rule within one month from receipt of the request. (11) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) Upon establishing incompleteness or contradictions with legal requirements in the documents to the request under para. 10, the commission shall require the applicant to remedy the irregularities within one month. The period for ruling under para. 10 shall be suspended from the sending of the notification for remedying the irregularities until the receipt of the additional documents. (12) Persons who have received approval under para. 10 in previous proceedings shall not be subject to new approval for qualification. Independent members Art. 81. (Supplemented - State Gazette, No. 101 of 2018, in force from 07.12.2018) (1) At least one third of the board of directors or of the supervisory board of the insurer shall consist of independent members - natural persons. Art. 80 shall apply to independent members. (2) An
independent member of the board may not be:
1. an employee of the insurer;
2. a person related to the insurer within the meaning of § 1, item 22, letters "a" and "c" of the supplementary provisions;
3. a person who is in permanent business relations with the insurer;
4. a member of a management or supervisory body, a procurator or an employee of a person under item 2 or 3;
5. a related person to another member of the management or supervisory body of the insurer.
(3) (Supplemented - State Gazette, No. 101 of 2018, in force from 07.12.2018) The persons elected as independent members of the board of directors or of the supervisory board, for whom circumstances under para. 2 arise after the date of their election, shall be obliged to immediately notify the respective body of the insurer. In this case the persons shall cease to perform their functions and shall not receive remuneration, unless other members of the respective board are independent members and the requirements for the number of independent members are met, of which the insurer shall notify the commission and provide the respective evidence. (4) Candidates for independent members shall prove the absence of the circumstances under para. 2 by declaration. Requirements for the management and supervisory bodies of an insurance holding company and a mixed financial holding company Art. 82. (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) Each member of a management or supervisory body, as well as any other person authorized to manage and/or represent an insurance holding company or a mixed financial holding company with seat in the Republic of Bulgaria, must meet the requirements under Art. 80, para. 1. Where the commission carries out group supervision, Art. 80, paras. 2 - 12, Art. 83, para. 2 and Art. 84 shall apply. Professional experience Art. 83. (1) A person who is authorized to manage and/or represent an insurer, respectively a reinsurer, as well as a member of a management body of an insurer, respectively a reinsurer, has professional experience if:
1. for a period of not less than three years he has held a position in a management body of an insurer, insurance or financial holding company, insurance holding company with mixed activity, financial holding company with mixed activity, reinsurer or pension insurance company, bank or other financial sector undertaking, where the activity of the financial sector undertaking is comparable to that of the insurer, respectively of the reinsurer;
2. for a period of not less than 5 years he has held a position in a supervisory body or a position with managerial functions in an insurer, insurance or financial holding company, insurance holding company with mixed activity, financial holding company with mixed activity, reinsurer, pension insurance company, bank or other financial sector undertaking, where the activity of the financial sector undertaking is comparable to that of the insurer, respectively of the reinsurer, and if he has a higher economic or legal education - not less than three years;
3. for a period of not less than 5 years he has held a position as a representing insurance broker, directly managing the insurance intermediation activity, where the activity of the insurance broker is comparable to the activity of the insurer, and if he has a higher economic or legal education - not less than three years;
4. for a period of not less than 10 years he has held a position with managerial functions in the financial management of a non-financial sector undertaking whose assets are comparable to the value of the assets of the insurer, respectively the reinsurer, and if he has a higher economic or legal education - not less than 5 years;
5. for a period of not less than 10 years he has held a position with managerial functions in a state institution in the field of economics and finance or a position with managerial functions in the financial management of other state institutions, and if the person has an economic or legal education - not less than 5 years.
(2) A member of a supervisory body of an insurance joint-stock company, outside the cases under para. 1, may be a person who has worked for at least three years in another managerial position in an insurer, insurance or financial holding company, insurance holding company with mixed activity, financial holding company with mixed activity, reinsurer, pension insurance company, bank, state institution in the field of economics and finance or as a representing insurance broker, directly engaged in insurance intermediation activity, where the activity of the insurance broker is comparable to the activity of the insurer, and if the person has an economic or legal education - not less than two years. Assessment of professional qualification and experience Art. 84. (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) The commission shall also refuse to issue approval in cases where, despite the formal existence of the requirements under Art. 80, para. 1, item 1 and Art. 83, it assesses that the person does not possess sufficient professional qualification and experience necessary to participate effectively in the management of the insurer, respectively the reinsurer, to which the request relates. The reasoned refusal shall be sent to the insurer, respectively the reinsurer, to which the request relates. Requirements for persons in managerial positions Art. 85. (1) The persons holding managerial positions according to the organizational structure of the insurer must meet the requirements of Art. 80, para. 1, items 3 and 4 and possess appropriate qualification and experience. (2) The rules under Art. 79, para. 5 shall regulate the detailed requirements for qualification and experience of the persons under para. 1 and may provide for additional requirements for persons performing key functions.
Section III
Risk management
Basic principles
Art. 86. (Amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) (1) The insurer or reinsurer must have a risk management system that includes strategies, processes and reporting procedures for the continuous identification, measurement, monitoring, management and reporting of the risks to which it is exposed or could be exposed, both individually and in their entirety, as well as their interdependencies. (2) The risk management system must be effective and well integrated into the organizational structure and decision-making processes of the insurer or reinsurer, taking appropriate account by the persons under Art. 80 and the persons performing the functions under Art. 78, para. 1. (3) (Amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) The risk management system shall cover the risks that are included in the calculation of the solvency capital requirement, respectively those that would affect the own funds of the insurer or reinsurer and the coverage of its minimum guarantee capital with own funds, as well as the risks that are not fully or partially included in this calculation. (4) The risk management system shall cover the following areas:
1. underwriting activity and formation of technical reserves;
2. asset and liability management;
3. investments and more specifically derivatives and other similar obligations;
4. risk management in the area of liquidity and concentration;
5. operational risk management;
6. reinsurance and other risk mitigation techniques;
7. other areas at the discretion of the insurer or reinsurer.
(5) The risk management policy under Art. 77, para. 1, item 3, letter "a" shall include risk management policies in each of the areas under para. 4.
(6) In connection with investment risk, insurers and reinsurers shall demonstrate that they comply with the rules under Art. 124, 196 and 197.
Rules for risk management in connection with the application of a matching adjustment and a volatility adjustment Art. 87. (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) (1) Where the insurer or reinsurer applies a matching adjustment or a volatility adjustment, it shall prepare a liquidity plan reflecting the incoming and outgoing cash flows in respect of the assets and liabilities that are subject to these adjustments. (2) In respect of asset and liability management, the insurer, respectively the reinsurer, shall carry out a regular assessment of the sensitivity of its technical reserves and eligible own funds to the assumptions underlying the extrapolation of the relevant term structure of the risk-free interest rate. (3) In respect of asset and liability management and where a matching adjustment is applied, the insurer, respectively the reinsurer, shall carry out a regular assessment of:
1. the sensitivity of its technical reserves and eligible own funds to the assumptions underlying the calculation of the matching adjustment, including the calculation of the fundamental spread under Art. 157, para. 1, item 2, and the possible impact of forced sale of assets on its eligible own funds;
2. the sensitivity of its technical reserves and eligible own funds to changes in the structure of the target portfolio of assets;
3. the impact of reducing the matching adjustment to zero.
(4) In respect of asset and liability management and where a volatility adjustment under Art. 158 is applied, the insurer, respectively the reinsurer, shall carry out a regular assessment of:
1. the sensitivity of its technical reserves and eligible own funds to the assumptions underlying the calculation of the volatility adjustment, and the possible impact of forced sale of assets on their eligible own funds;
2. the impact of reducing the volatility adjustment to zero.
(5) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) The insurer, respectively the reinsurer, shall submit annually the assessments under paras. 2 - 4 to the commission as part of the information reported under Art. 127. Where the reduction of the matching adjustment or of the volatility adjustment to zero would lead to non-compliance with the solvency capital requirement, the undertaking shall also submit an analysis of the measures it may apply in such a situation to restore the level of eligible own funds to cover the solvency capital requirement or to reduce the risk profile in order to restore compliance with the solvency capital requirement. (6) Where the volatility adjustment under Art. 158 is applied, the risk management policy under Art. 77, para. 1, item 3, letter "a" shall include a policy on the criteria for applying the volatility adjustment. Assessment of the appropriateness of external credit assessments Art. 88. (1) In order to avoid excessive reliance on external credit assessment institutions, when using an external credit assessment in the calculation of technical reserves and the solvency capital requirement, the insurer, respectively the reinsurer, shall carry out an assessment of the appropriateness of these external credit assessments as part of risk management by using additional assessments where practicable, in order to avoid any automatic dependence on external assessments. (2) An external credit assessment institution is a credit rating agency registered or certified in accordance with Regulation (EC) No. 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies (OJ, L 302/1 of 17 November 2009), or a central bank issuing credit ratings. (3) The assessment of external credit assessments shall be carried out in accordance with a procedure laid down by an act of the European Union. Risk management function Art. 89. (1) The risk management function of the insurer or reinsurer shall be structured in such a way as to assist in the implementation of the risk management system. (2) The person performing the risk management function, or the head of the unit/structure that carries it out (risk manager), must have appropriate qualification and experience in the field of risk management and must meet the requirements under Art. 80, para. 1, items 3 - 9. Art. 80, paras. 3, 7 and 8 shall apply accordingly. (3) Where the insurer or reinsurer applies a partial or full internal model, the risk management function shall also perform the following tasks:
1. design and implement the internal model;
2. test and validate the internal model;
3. document the internal model and subsequent changes made to it;
4. analyze the results of the application of the internal model and summarize them in reports;
5. inform the management body of the insurer or reinsurer of the results of the application of the internal model, indicate areas where improvement is needed, and periodically inform the management body of the status of efforts to overcome previously identified weaknesses.
Own risk and solvency assessment
Art. 90. (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) (1) As part of the risk management system, each insurer or reinsurer shall carry out its own risk and solvency assessment.
(2) The assessment under para. 1 shall include:
1. the overall solvency needs, taking into account the risk profile, the approved risk tolerance limits and the business strategy of the insurer, respectively the reinsurer;
2. whether the solvency capital requirement, the minimum capital requirement, as well as the requirements in connection with technical reserves are continuously complied with;
3. the extent to which the risk profile of the undertaking deviates from the assumptions under Art. 170, para. 3, underlying the said solvency capital requirement, calculated using the standard formula or using a full or partial internal model.
(3) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) For the purposes of the assessment under para. 2, item 1, the insurer, respectively the reinsurer, shall have processes that are proportionate to the nature, scale and complexity of the risks inherent in its activity and that enable it

correctly identify and assess the risks to which it is exposed or may be exposed in the short or long term. The insurer, respectively the reinsurer, presents to the commission the methods used for this assessment.
(4) Where the insurer, respectively the reinsurer, applies the matching adjustment under Article 156 and the volatility adjustment referred to in Article 158, it shall assess compliance with the capital requirements under paragraph 2, item 2 with and without taking into account those adjustments and transitional measures.
(5) In the cases under paragraph 2, item 3, where an internal model is used, the assessment shall be carried out together with a recalibration that transforms the internal risk results into the risk measurement method and the calibration of the solvency capital requirement.
(6) The own risk and solvency assessment is an integral part of the business strategy and shall always be taken into account in strategic decisions of the insurer or reinsurer.
(7) The insurer, respectively the reinsurer, shall carry out the assessment under paragraph 1 regularly, as well as immediately after any change in its risk profile.
(8) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) The insurer, respectively the reinsurer, shall inform the commission of the results of each own risk and solvency assessment. The deadlines and conditions for providing the information shall be determined in the ordinance under Article 77, paragraph 5.
(9) The own risk and solvency assessment shall not be used to calculate the capital requirements of the insurer or reinsurer. The solvency capital requirement shall be adjusted only under the conditions and in accordance with the procedure of Articles 252 - 255, Article 259 and Article 584.
Supervision of reinsurance with limited risk transfer
Article 91. (1) Insurers and reinsurers that conclude reinsurance contracts with limited risk assumption or carry out reinsurance activity with limited risk assumption shall be obliged to properly identify, measure, monitor, manage, control and report the risks arising from those contracts or activities.
(2) Reinsurance with limited risk assumption is reinsurance where the determined maximum possible loss, expressed as the assumed maximum economic risk arising both from the assumption of significant insurance risk and from the assumption of timing risk, exceeds the amount of the premium for the entire term of the contract by a limited but significant amount, where at least one of the following features must additionally be present:
1. explicit and actual consideration of the time value of money;
2. contractual clauses that equalize the economic results between the parties for the entire term of the contract in order to achieve the intended risk transfer.
Section IV
Internal control. Internal audit
Internal control system
Article 92. The insurer, respectively the reinsurer, shall establish an effective internal control system which includes:
1. administrative and accounting procedures;
2. arrangements for carrying out internal control;
3. appropriate reporting rules at all levels;
4. a compliance function;
5. other elements at the discretion of the insurer or reinsurer.
Compliance function
Article 93. (1) The compliance function of the insurer, respectively the reinsurer, shall consist in:
1. advising the management and supervisory bodies of the insurer or reinsurer on compliance with laws, subordinate legislation, directly applicable acts of the competent authorities of the European Union and the internal acts of the insurer, respectively the reinsurer;
2. assessing the possible effect of changes in the legal environment on the activity of the insurer or reinsurer;
3. identifying and assessing the risk arising from non-compliance with laws, subordinate legislation, directly applicable acts of the competent authorities of the European Union and the internal acts of the insurer, respectively the reinsurer.
(2) Insurers and reinsurers must have appropriate systems and structures that allow the provision of the information that is to be provided to the commission in accordance with this Code.
(3) Insurers and reinsurers shall determine how to ensure the ongoing adequacy of published and provided information through written internal rules approved by the management and supervisory bodies.
(4) The person who heads the compliance function (head of the compliance function) shall be appointed by the management body of the insurer, respectively the reinsurer, and in the case of a branch under the Commercial Act of an insurer or reinsurer from a third country - shall be appointed by the manager of the branch.
(5) The person who heads the compliance function must have appropriate qualifications and experience in the field of compliance control and must meet the requirements under Article 80, paragraph 1, items 3 - 9, applying accordingly Article 80, paragraphs 3 and 5 - 12 and Article 84.
Duties of the compliance function
Article 94. (1) The person who heads the compliance function shall immediately inform the management bodies of the violations established by him in the activity of the insurer, respectively the reinsurer.
(2) The person who heads the compliance function shall prepare an annual report on the activity of the function and present it to the management body and to the general meeting of shareholders, respectively of members-cooperators.
(3) The person who heads the compliance function shall immediately inform the deputy chairperson in cases where, as a result of an inspection, violations and weaknesses in the organization of the activity and management of the insurer, respectively the reinsurer, have been established and for which he considers that the management body has not taken sufficient measures for their elimination.

Internal audit function
Article 95. (1) The internal audit function of the insurer or reinsurer must be effective. It includes an assessment of the adequacy and effectiveness of the internal control system and of the other elements of the management system.
(2) The internal audit function shall be objective and independent of the other operational functions. The persons who carry out the internal audit function may not simultaneously carry out other activities within the insurer or reinsurer.
(3) The person who carries out the internal audit function or who heads the unit that carries it out shall be appointed by the management body of the insurer, respectively the reinsurer, and in the case of a branch under the Commercial Act of an insurer or reinsurer from a third country - shall be appointed by the manager of the branch and must have appropriate qualifications and experience in the field of internal audit and must meet the requirements under Article 80, paragraph 1, items 3 - 9, applying accordingly Article 80, paragraphs 3 and 5 - 12 and Article 84. The employees who are part of the unit carrying out the internal audit function must have appropriate qualifications and experience in the field of internal audit. Duties of the internal audit function
Article 96. (1) The internal audit function shall adopt and implement a plan for carrying out audit inspections covering a period of at least one year. At the discretion of the persons carrying out the internal audit function, inspections may also be carried out outside the adopted plan.
(2) The person who carries out the internal audit function or who heads the unit that carries it out shall immediately inform the management bodies or the supervisory bodies of the insurer, respectively the reinsurer, of the violations established by him in the activity. The management or supervisory bodies of the insurer or reinsurer shall be obliged to take measures for the actual elimination of the violations and for the implementation of the recommendations of the internal audit function. (3) The person who carries out the internal audit function or who heads the unit that carries it out shall prepare an annual report on the activity of the function and present it to the management body.
Section V
Actuarial function
Responsible actuary
Article 97. (1) The actuarial function of an insurer or reinsurer must be effective and shall be carried out by a responsible actuary who organizes, manages and is responsible for the actuarial servicing of the insurer or reinsurer. A responsible actuary is a natural person with recognized professional capacity or a legal entity on whose behalf documents are signed by one or more natural persons with recognized professional capacity of a responsible actuary (actuarial undertaking).
(2) The responsible actuary, respectively the natural person who signs documents on behalf of an actuarial undertaking, must:
1. not have been convicted of an intentional crime of a general nature;
2. not have been, in the three years preceding the initial date of insolvency determined by the court, a member of a management or control body or an unlimited liability partner in a company for which insolvency proceedings have been opened, or in a company terminated due to insolvency, if unsatisfied creditors remain;
3. not have been declared insolvent and not be in insolvency proceedings;
4. not have been deprived of the right to hold a position of material responsibility;
5. have higher education with an educational-qualification degree "master" or an educational and scientific degree "doctor" with covered hours in higher mathematics in accordance with requirements determined in an ordinance of the commission;
6. have at least three years of experience as an actuary of an insurer, reinsurer, pension insurance company, in bodies exercising supervision over the activity of such persons, or as a habilitated lecturer in insurance or actuarial science;
7. have recognized professional capacity of a responsible actuary by the commission after successfully passing an examination or have recognized professional capacity of a responsible actuary in another Member State;
8. not have had professional capacity withdrawn on the grounds of Article 98, paragraph 1, items 1 - 3 and 5 and not have had professional capacity as an actuary withdrawn by a state or public organization in the Republic of Bulgaria or in another Member State on grounds related to dishonesty in the performance of his duties as an actuary.
(3) The requirements under paragraph 2, items 2 and 3 shall also apply to the actuarial undertaking.
(4) The conditions and procedure for conducting the examination and for recognizing the professional capacity under paragraph 2, item 7, as well as for recognizing professional capacity acquired outside the Republic of Bulgaria, shall be determined by an ordinance of the commission. For the purposes of this Code, the professional capacity of a responsible actuary recognized under the procedure of the Social Insurance Code shall be recognized where the professional capacity examination passed includes an assessment of knowledge in the field of insurance. Withdrawal of professional capacity of a responsible actuary
Article 98. (1) On a proposal of the deputy chairperson, the commission shall withdraw the professional capacity of a responsible actuary if it is established that he:
1. has ceased to meet the requirements of Article 97, paragraph 2, items 1 - 4;
2. in carrying out activity in actuarial servicing of an insurer or reinsurer has committed gross or systematic violations of this Code or of the acts implementing it;
3. has submitted false data or documents with false content on the basis of which his professional capacity was recognized;
4. has not exercised the activity for more than 7 consecutive years from the recognition of professional capacity or from the release from the position of responsible actuary, unless he has carried out activity as an actuary;
5. has had professional capacity as an actuary withdrawn by a state or public organization in the Republic of Bulgaria or in another Member State on grounds related to dishonesty in the performance of his duties as an actuary.
(2) With the withdrawal of professional capacity on any of the grounds under paragraph 1, the person's professional capacity as a responsible actuary recognized under the procedure of the Social Insurance Code shall also be considered withdrawn.
Additional requirements for the responsible actuary
Article 99. (1) The responsible actuary may not be a spouse or a relative by blood or by collateral line up to the fourth degree inclusive, or by affinity up to the third degree with a member of a management or control body of the insurer, respectively the reinsurer, as well as a member of a management or control body of another insurer, respectively reinsurer.
(2) The responsible actuary shall be appointed by the management body of the insurer or reinsurer, before which he shall first certify by declaration the absence of circumstances under paragraph 1. The insurer or reinsurer shall notify the deputy chairperson of the decision taken to appoint a responsible actuary within 7 days from the date of taking the decision, presenting also a certified copy of the declaration under the first sentence. (3) In the event of a change in the circumstances under paragraph 1 or upon withdrawal of professional capacity of a responsible actuary under Article 98, paragraph 1, the management body of the insurer or reinsurer shall be obliged to release the responsible actuary and to elect a new one within a three-month period from learning of the circumstances. Main duties of the actuarial function
Article 100. (1) The responsible actuary:
1. coordinates the calculation of technical provisions;
2. ensures the appropriateness of the methodologies and underlying models used, as well as the assumptions made in calculating technical provisions;
3. assesses the sufficiency and quality of the data used in calculating technical provisions;
4. compares best estimates against practical results;
5. informs the management or control body about the reliability and adequacy of the calculation of technical provisions;
6. controls the calculation of technical provisions through approximations and individual approaches for individual cases where sufficiently appropriate data are not available for applying reliable actuarial methods;
7. expresses an opinion on the overall underwriting policy;
8. expresses an opinion on the adequacy of reinsurance contracts;
9. supports the effective implementation of the risk management system, including by participating in the creation of the risk models underlying the calculation of the solvency capital requirement and the minimum capital requirement and in the own risk and solvency assessment.
(2) In connection with the activity under paragraph 1, the responsible actuary:
1. prepares and certifies the statements of the insurer or reinsurer in connection with the actuarial activity;
2. prepares and submits to the commission an annual actuarial report - within the deadline under Article 126, paragraph 1, item 1.
(3) In performing his duties, the responsible actuary shall have access to all necessary information, and the management bodies and employees of the insurer or reinsurer shall be obliged to assist him.
(4) The form of the actuarial certification and the form and content of the actuarial report and of the statements certified by the responsible actuary shall be determined by an ordinance of the commission.
(5) Article 272 of Regulation (EU) 2015/35 shall also apply to insurers without access to the single market.
Section VI
External auditors
Audit of the annual financial statements
Article 101. (Amended - State Gazette, No. 95 of 2016; amended, No. 79 of 2024; amended, No. 63 of 2025, in force from 01.08.2025) (1) (Amended - State Gazette, No. 95 of 2016; amended, No. 79 of 2024; amended, No. 63 of 2025, in force from 01.08.2025) The annual financial statements of an insurer, respectively a reinsurer, an insurance holding company and a mixed financial holding company with registered office in the Republic of Bulgaria and their consolidated financial statements, where applicable, shall be subject to financial audit under the conditions and procedure of the Independent Financial Audit and Sustainability Assurance Act.
(2) (Amended - State Gazette, No. 63 of 2025, in force from 01.08.2025) The commission may determine by ordinance other elements of the information provided by the persons under paragraph 1 for supervisory purposes or of the information publicly disclosed by them, which are to be subject to financial audit, as well as determine the standards by which these elements are to be audited. (3) (Amended - State Gazette, No. 95 of 2016; amended, No. 79 of 2024; repealed, No. 63 of 2025, in force from 01.08.2025) (4) (Repealed - State Gazette, No. 95 of 2016). Approval of auditors
Article 101a. (New - State Gazette, No. 95 of 2016; repealed, No. 79 of 2024).
Duties of auditors
Article 102. (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018; amended, No. 85 of 2023, in force from 01.01.2023) (1) The auditor of an insurer, respectively a reinsurer, shall be obliged to express an opinion on the fair presentation in all material respects in the financial statements of the insurer or reinsurer of its financial condition, including the sufficiency of its technical provisions. To fulfill the obligation under the first sentence, the auditor must have adequate capacity.
(2) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) The auditor of an insurer or reinsurer, or of participating undertakings in the group of insurers and/or reinsurers, shall be obliged to notify the commission immediately of any circumstance or decision that has become known to him in the course of the audit and that relates to the insurer or to a person under Article 233, paragraphs 4 or 5, where the insurer, respectively the reinsurer, is part of a group, and:
1. constitutes or may lead to a material violation of this Code or of the acts implementing it, as well as of directly applicable European Union law;
2. affects or may adversely affect the carrying out of the activity of the insurer, respectively the reinsurer;
3. may constitute grounds for refusal to certify the accounting statements or for expressing reservations;
4. (amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) leads or may lead to non-compliance with the own funds coverage of the minimum guarantee capital, the solvency capital requirement or the minimum capital requirement;
5. is related to actions of the persons under Article 80 or of the persons holding management positions in the insurer, respectively the reinsurer, causing or capable of causing significant harm to the insurer, respectively the reinsurer, or to the users of the insurance services offered by it;
6. is related to false or incomplete data in the statements, reports and reports that the insurer, respectively the reinsurer, submits to the commission.
(3) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) The auditor under paragraph 1 shall also notify the commission of any circumstance under paragraph 2 that has become known to him in the course of an audit of a person related to the insurer, respectively the reinsurer.
(4) In the cases under paragraphs 2 and 3, the restrictions on disclosure of information provided for in a law, subordinate normative act or contract shall not apply. The auditor shall not be liable for the good-faith disclosure of information under paragraphs 2 and 3 to the commission and the deputy chairperson.
Liability of auditors
Article 103. (Amended - State Gazette, No. 95 of 2016) The liability of the auditors under Article 101, paragraph 1 for damages in connection with an audit of an insurer or reinsurer, regardless of whether the damages are a direct and immediate consequence of culpable actions or culpable omissions, or of intentional unlawful conduct on the part of persons participating in the audit on behalf of the auditors under Article 101, paragraph 1, shall be unlimited.
Section VII
Organization of the activity of settling insurance claims Internal rules
Article 104. (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) (1) Within one month from the issuance of the insurance license, the management body of the insurer shall adopt internal rules for the activity of settling claims under insurance contracts. The rules shall not apply to the settlement of claims for large risks insurance, unless otherwise provided in them.
(2) The rules shall govern the procedures by which the insurer accepts claims under insurance contracts, collects the evidence for establishing their grounds and amount, carries out an assessment of the damages caused, determines the amount of the compensations, carries out the payments to the users of insurance services and considers complaints submitted by them. (3) The rules may not contradict the law and must guarantee the rights of the users of insurance services to fast, transparent and fair settlement of their claims. (4) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) The rules, together with their subsequent amendments and supplements, shall be provided to the commission within 7 days from their adoption. The commission may give binding instructions for the elimination of contradictions with the law, as well as in cases of unjustified restriction of the rights of the users of insurance services. (5) The rules shall be public. The insurer shall publish them on its website and ensure free access to them at the places where it carries out activity. (6) The commission may determine by ordinance additional requirements for the procedure for settling insurance claims where this is necessary for compliance with guidelines adopted by the European Authority. Prohibition on taking sex into account as a factor in determining the insurance compensation or sum
Article 105. (1) The insurer may not take sex into account as a factor in determining the amount of the insurance compensation or sum.
(2) The costs related to pregnancy and maternity may not lead to differences in determining the amount of the insurance compensation or sum.
Filing of insurance claims. Evidence
Article 106. (Supplemented - State Gazette, No. 63 of 2025, in force from 01.08.2025) (1) Insurance claims shall be filed in the procedure and within the deadlines provided for in the insurance contract before the insurer and in compliance with Article 380, paragraph 1.
(2) The insurer shall be obliged to register the date of each filed claim, as well as to register the date of subsequent receipt of each document relating to it, and to certify each of these circumstances separately or under an inventory before the person who filed the claim.
(3) Where the user of the insurance service is an injured person under "Civil Liability" insurance or a third-party beneficiary under other insurances, the insurer shall notify him of the evidence that he must present to establish the grounds and amount of his claim. Additional evidence may be required only if the need for it could not have been foreseen as of the date of filing the claim and no later than within 45 days from the date of presentation of the evidence required upon filing under the first sentence. (4) Where the user of the insurance service is a party to the insurance contract, the insurer shall notify him of the additional evidence no later than within 45 days from the presentation of the evidence determined by the contract and the rules under Article 104, which were not provided for in the insurance contract at its conclusion and which are necessary to establish the grounds and amount of his claim. (5) It shall not be permissible to require evidence that the user of the insurance service cannot obtain due to existing regulatory obstacles or due to the lack of legal possibility to provide it, as well as evidence that can reasonably be judged not to be of material importance for establishing the grounds and amount of the claim and intended to unjustifiably delay and prolong the claim settlement procedure.

(6) (New - State Gazette, No. 63 of 2025, in force from 01.08.2025) For the purposes of settling a motor insurance claim, the insurer, respectively the insurance intermediary, may create and store a copy of the driving licence of a motor vehicle of a driver involved in a road traffic accident.

Assistance from State Authorities and Third Parties

Art. 107. (1) In order to establish the insured event and the damage caused by it, the insurer, the person claiming compensation, the Guarantee Fund under Art. 518 or the National Bureau of Bulgarian Motor Insurers under Art. 506 shall have the right to receive the necessary information kept by the bodies of the Ministry of Internal Affairs, the investigating authorities, other State authorities, the personal physician, the medical and health establishments and by the persons who have the right to certify the occurrence of circumstances, as well as certified copies of documents. Where the requested information is part of the materials of the pre-trial proceedings, the prosecutor shall authorise access to it.

(2) Where the information under para. 1 constitutes a secret protected by law, when it is provided to the persons, their obligations not to disclose it, as well as the consequences of its unauthorised disclosure, shall be explained to them in writing and against signature.

Insurer's Decision. Time Limits for Decision and Performance

Art. 108. (Amended - State Gazette, No. 101 of 2018, in force from 07.12.2018) (1) The insurer shall be obliged to decide on the claim under insurances under Section I of Annex No. 1 or under items 1 - 3, 8 - 10 and 13 - 18, Section II, letter "A" of Annex No. 1, which are not large risks insurances, within 15 working days of the submission of all evidence under Art. 106, by:

determining and paying the amount of the compensation or the insured sum, or
refusing payment with reasons.

(2) Where not all evidence under Art. 106 has been submitted under the insurances under para. 1, with the exception of "Motor Third Party Liability" insurance, the insurer shall be obliged to decide in one of the ways under para. 1 no later than 6 months from the date of submission of the claim.

(3) In the cases under "Motor Third Party Liability" insurance, where not all evidence under Art. 106 has been submitted, the time limit under Art. 496, para. 1 shall apply.

(4) The insurer's response under Art. 496, para. 2, item 2 shall be considered a refusal of payment within the meaning of para. 1, item 2.

(5) In the activity of settling claims under large risks insurances, the time limit under para. 1 may not exceed 6 months, and under para. 2 - one year. In the cases under insurances under items 5, 6, 11 and 12, Section II, letter "A" of Annex No. 1, the time limits for decision under the first sentence and under paras. 1 and 2 shall not apply.

(6) (Amended - State Gazette, No. 101 of 2018, in force from 07.12.2018) Upon a complaint from a user of insurance services regarding the amount of the determined compensation, the insurer shall be obliged within 7 days to provide him in writing with a factual and legal justification of the determined amount of the compensation.

(7) Where the user of the insurance service has given his consent for the damage to be remedied by an external contractor, the insurer shall be obliged within the time limit under para. 1 or 5 to assign in writing to an external contractor the restoration of the damage. In the cases under the first sentence, the restoration of the damage shall be carried out within a reasonable time for performance, unless a specific time limit has been agreed between the insurer and the user.

Specific Features for Large Risks

Art. 109. For the purposes of this Section, the following shall not constitute a large risk:

the risk under insurances under items 3 and 10, Section II, letter "A" of Annex No. 1 - in all cases;
the risk under insurances under items 8, 9, 13, Section II, letter "A" of Annex No. 1 - where the insured property, the insured liability or the damage caused are not of an unusual nature; the property, liability or damage are of a usual nature where they are commensurate with the property, liability or damage under an insurance of the same class which does not constitute a large risk.

Section VIII
Transfer of Activity by an Insurer or Reinsurer to Third Parties

Definition

Art. 110. (1) The transfer of activity by an insurer or reinsurer constitutes a permanent assignment by virtue of an agreement in any form of a separate activity, service or process which should be performed by the insurer, respectively the reinsurer, for performance, directly or through a subcontractor, by a third party (service provider).

(2) The insurer, respectively the reinsurer, shall continue to be liable for the performance of all its obligations in connection with the functions or activities transferred to third parties. The insurer, respectively the reinsurer, shall be liable for the activity of the service provider as for its own actions.

(3) The insurer, respectively the reinsurer, may not transfer a function within the meaning of Art. 78, para. 1, items 1 - 4 or another important function or activity where:

the quality of its management system is significantly deteriorated;
the operational risk is unjustifiably increased;
insurance supervision is impeded;
the interests of users of insurance services are endangered.

Performance of Transferred Activities. Control. State Supervision

Art. 111. (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) (1) The transferred activities shall be performed according to the requirements established for the insurer, respectively the reinsurer.

(2) The transferred activities and the persons to whom they have been assigned shall be covered by the management and internal control system of the insurer, respectively the reinsurer.

(3) The insurer, respectively the reinsurer, shall provide in the contract for the transfer of activity and take all other necessary measures to guarantee that:

the service provider cooperates with the Commission and the Deputy Chairperson in relation to the transferred function or activity;
it, its auditors, the Commission and the Deputy Chairperson have effective access to the information related to the transferred functions or activities;
the Chairperson of the Commission, the Deputy Chairperson or persons designated by them have effective access to the premises of the service provider and are able to exercise this right of access.

(4) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) The contracts for the transfer of a function within the meaning of Art. 78, para. 1, items 1 - 4 or of another important function or activity shall be submitted to the Commission before their conclusion. The insurer, respectively the reinsurer, shall submit information on the performance of the transferred functions or activities in a manner determined in the ordinance under Art. 77, para. 5. The Commission may order the carrying out of an inspection, including on-site, of a third party to which an activity has been transferred by an insurer or reinsurer. At the request of the Commission, the third party to which an activity has been transferred by an insurer or reinsurer shall be obliged to provide any information in connection with the transferred activity.

(5) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) Where in the activity of a person to which an insurer or reinsurer has transferred an activity, violations of the law have been established, or a practice which endangers the stability of the insurer or reinsurer, the rights and interests of users of insurance services, as well as the accurate and timely performance of obligations under reinsurance contracts, or which impedes the exercise of State insurance supervision, the Commission shall order their elimination within a time limit determined by it. Where the order has not been complied with or, although complied with, the person continues to violate the law, to endanger the stability of the insurer or reinsurer, the rights of users, the accurate and timely performance of obligations under reinsurance contracts or to impede supervision, the Commission shall order the insurer to terminate its contract with that person.

(6) The insurer, respectively the reinsurer, shall not owe penalties and other compensation for damages upon early termination of a contract for transfer of activity in implementation of an order under para. 5.

(7) The Commission, respectively the Deputy Chairperson, may apply to the person to which the insurer or reinsurer has transferred an activity, and to the transferred activity, all other powers which they have in relation to the insurer or reinsurer according to the nature of the transferred activity.

Inspections of a Service Provider in Another Member State

Art. 112. (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) (1) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) The Commission may order the carrying out of an on-site inspection in the premises of a service provider in another Member State after notifying the authority in the respective Member State which supervises the service provider. Where the service provider is not subject to supervision in the respective State, the competent authority exercising insurance supervision in the Member State shall be notified. The Commission may delegate the inspection to the authority under the first or second sentence.

(2) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) Where the Commission is prevented from carrying out the inspection under para. 1, it may request assistance from the European Authority.

(3) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) Where a competent authority exercising insurance supervision in the Member State has notified its intention to carry out an inspection of a service provider in the Republic of Bulgaria, the Commission shall provide the necessary assistance and shall order an inspection of the service provider if the authority of the other Member State has assigned this.

Chapter Eight
REPORTING

Section I
Document Flow and Information System

Document Flow and Organisation of Accounting Reporting

Art. 113. (1) The management and control bodies of the insurer, respectively the reinsurer, shall be responsible for the organisation and functioning of the accounting reporting which is to guarantee the accurate reflection of its results and financial condition.

(2) The bodies under para. 1 shall align the procedures in connection with the document flow and reporting with the specifics and volume of the activity.

Information System

Art. 114. (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) (1) The insurer, respectively the reinsurer, must create and maintain in an up-to-date condition an information system in which information can be processed, stored and archived on a durable medium in accordance with the internal acts of the insurer and which must contain up-to-date, complete, accurate and reliable data on:

the concluded insurance contracts and reinsurance contracts under active reinsurance, reflecting:
a) the written and received premiums; b) the data under the contracts related to the measurement of the underwriting risk under them; c) other data at the discretion of the insurer, respectively the reinsurer;
the submitted claims, reflecting:
a) the amount claimed by the user under the submitted claim and the date of its submission; b) the fair valuation of the value of each submitted claim on the basis of documents and other evidence or an average statistical value for it on the basis of statistical methods, whereby the data on the value of the submitted claims shall be changed by the insurer only upon newly received documents and evidence which lead to a change in the amount of the submitted claim; c) the value and date of the payments made under each of them; d) other data at the discretion of the insurer, respectively the reinsurer;
accounting information reflecting accurately and clearly the type, amount and basis of the concluded transactions, their reflection on the results and financial condition of the insurer, respectively the reinsurer;
the internal documents related to the management system;
the minutes of the meetings of the general meeting of shareholders, respectively of the general meeting of members-cooperators, and of the management and control bodies;
other data at the discretion of the insurer, respectively the reinsurer, or by order of the Deputy Chairperson.

(2) In relation to the information system, the insurer, respectively the reinsurer, must apply internal processes and procedures which guarantee that:

the data for the purposes of calculating the technical reserves are appropriate, complete and reliable and in accordance with Art. 19 of Regulation (EU) 2015/35;
the methods for calculating the technical reserves and the assumptions determining their calculation are regularly compared with the actual results.

(3) The information system of the insurer, respectively of the reinsurer, must be able to provide all the information necessary for the purposes of supervision in accordance with the requirements under Art. 127.

(4) The management body of the insurer, respectively the reinsurer, shall guarantee that the information contained in the information system is up-to-date, complete, accurate and reliable, as well as create conditions for guaranteeing its security.

(5) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) The insurer shall be obliged to provide the Commission with remote access to periodic reports with content and format determined by an ordinance of the Commission.

Testing of the Operational Resilience of Digital Technologies of Insurance Intermediaries, Insurers and Reinsurers

Art. 114a. (New - State Gazette, No. 54 of 2025) (1) The Commission, on a proposal of the Deputy Chairperson, in accordance with the requirements of Regulation (EU) 2022/2554 of the European Parliament and of the Council of 14 December 2022 on digital operational resilience for the financial sector and amending Regulations (EC) No. 1060/2009, (EU) No. 648/2012, (EU) No. 600/2014, (EU) No. 909/2014 and (EU) 2016/1011 (OJ, L 333/1 of 27 December 2022), hereinafter referred to as "Regulation (EU) 2022/2554", and the acts on its implementation, shall adopt decisions determining the insurers and reinsurers which are to carry out penetration testing, confirming the scope of the testing and approving the use of internal persons conducting testing, as well as requiring a change, where necessary, in the frequency of carrying out the testing.

(2) The Commission, on a proposal of the Deputy Chairperson, shall adopt a decision that the testing under para. 1 has been carried out in accordance with the requirements of Regulation (EU) 2022/2554, the acts on its implementation and the documentation for the testing, and shall issue a certificate confirming it or order the carrying out of re-testing.

(3) The Commission shall adopt an ordinance on the implementation of this Article.

Section II
General Financial Requirements

General Provisions

Art. 115. (Amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) In order to guarantee the possibility of accurate performance of the obligations under the concluded insurance and reinsurance contracts, the insurer, respectively the reinsurer, shall be obliged at all times to:

determine and apply in its activity premiums corresponding to the amount of the risk assumed and to its expenses;
form technical reserves sufficient in type and amount in accordance with the regulatory requirements;
reflect its financial condition truthfully and accurately in accordance with the regulatory requirements;
(amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) have sufficient own funds to cover the solvency capital requirement and the minimum capital requirement, or the minimum guarantee capital;
invest its assets in accordance with the prudent investor principle.

Insurance and Reinsurance Premiums

Art. 116. (1) The insurance and reinsurance premiums must be sufficient, calculated on the basis of a reasonable actuarial assumption, so as to ensure the performance of all obligations of the insurer, respectively the reinsurer, including the formation of sufficient technical reserves.

(2) For the fulfilment of the requirement under para. 1, the financial condition of the insurer and its solvency in the long term shall be forecast solely on the basis of the premiums as the only source of income.

(3) It shall not be permissible to take gender into account as an actuarial factor in determining the insurance premium.

(4) The expenses related to pregnancy and maternity may not lead to differences in the determination of the premiums.

Recalculation of Financial Indicators for Supervisory Purposes

Art. 117. Where the insurer or reinsurer has calculated the amount of the technical reserves, the capital requirements, the value of the assets, liabilities, income and expenses or other indicators reflected in a financial report, other report or statement submitted to the Commission, in violation of the law or of another regulatory act, the Commission, on a proposal of the Deputy Chairperson, may for the purposes of the insurance supervision exercised, by a statement of findings, revalue or recalculate any of these indicators and apply a coercive administrative measure under Art. 587.

Valuation of Assets and Liabilities

Art. 117a. (New - State Gazette, No. 85 of 2023, in force from 01.01.2023) (1) Unless otherwise provided in this Code, in the acts on its implementation or in the acts of the European Commission on the implementation of Directive 2009/138/EC, the insurer, respectively the reinsurer, shall value the assets and liabilities as follows:

the assets shall be valued at the amount for which they could be exchanged in a transaction under fair market conditions between independent, equal, informed and willing parties;
the liabilities (obligations) shall be valued at the amount for which they could be transferred or settled in a transaction under fair market conditions between independent, equal, informed and willing parties.

(2) In the valuation of the liabilities under para. 1, item 2, no adjustment shall be made for the purpose of accounting for the own credit standing of the insurer or reinsurer.

(3) In the valuation of the assets and liabilities, Regulation (EU) 2015/35 shall apply.

Types of Reserves

Art. 118. (Amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) (1) The insurer, respectively the reinsurer, shall be obliged to create general and technical reserves.

(2) The general reserves shall consist of:

the "Reserve" fund under Art. 246 of the Commerce Act, respectively under Art. 34 of the Cooperatives Act;
other funds, if provided for in the articles of association.

(3) (Amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) The technical reserves shall constitute an obligation of the insurer, respectively the reinsurer.

(4) (Repealed - State Gazette, No. 85 of 2023, in force from 01.01.2023).

(5) (Repealed - State Gazette, No. 85 of 2023, in force from 01.01.2023)

Types of Technical Reserves

Art. 119. (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018; repealed, No. 85 of 2023, in force from 01.01.2023).

General Rules for Technical Reserves

Art. 120. (Amended - State Gazette, No. 85 of 2023, in force from 01.01.2023). (1) The insurer, respectively the reinsurer, shall maintain technical reserves for all its insurance and reinsurance obligations under insurance and reinsurance contracts.

(2) The amount of the technical reserves shall be calculated on the basis of the value of the obligations assumed by the insurer or reinsurer which are expected to be performed in the future under insurance or reinsurance contracts which have entered into force, the expenses related to the performance of these obligations, as well as the value of the possible adverse deviation from this expectation.

(3) The value of the technical reserves must correspond to the present value which the insurer, respectively the reinsurer, would have to pay if it were to transfer immediately its insurance and/or reinsurance obligations to another insurer or reinsurer.

(4) The calculation of the technical reserves shall be based on and consistent with the information obtained from the financial markets and from the publicly available data on the underwriting risks (market consistency).

(5) The technical reserves shall be calculated in a reasonable, reliable and objective manner.

(6) (Repealed - State Gazette, No. 85 of 2023, in force from 01.01.2023).

(7) (Amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) Insurers, reinsurers and branches of insurers from third countries shall form their technical reserves in accordance with the requirements of Part Two, Title Three of Regulation (EU) 2015/35 and of an ordinance of the Commission. The ordinance shall also determine the maximum amount of the technical interest for the insurances under Section I of Annex No. 1.

(8) The basis and methods for calculating the technical reserves under the insurances under Section I of Annex No. 1 shall be public. The insurer shall be obliged to provide them to any interested person upon request.

(9) The data for calculating the technical reserves must be appropriate, complete and accurate and must meet the requirements of Art. 19 of Regulation (EU) 2015/35.

Sufficiency of Technical Reserves

Art. 121. (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) (1) The insurer, respectively the reinsurer, shall be obliged at all times to maintain technical reserves sufficient in amount for each class of insurance, corresponding to its overall activity, with which to guarantee coverage of the insurance risks assumed.

(2) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) At the request of the Commission, the insurer, respectively the reinsurer, shall prove that the amount of their technical reserves is sufficient, that the methods used are applicable and relevant, as well as that the statistical data used as a basis are adequate.

Technical Reserves in Co-insurance

Art. 122. (Amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) In carrying out co-insurance, the insurer shall form its technical reserves by accounting for its share in accordance with the terms of the co-insurance contract.

Violation of the Requirements for the Amount of Technical Reserves

Art. 123. (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) Where an insurer or reinsurer does not comply with the requirements regarding the technical reserves of this Code and the acts on its implementation, the Commission may prohibit the free disposal of assets of the insurer, respectively the reinsurer.

Prudent Investor Principle

Art. 124. (Amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) (1) Every insurer, respectively reinsurer, shall invest its assets in accordance with the prudent investor principle under paras. 2 - 7.

(2) In relation to its entire portfolio of assets, the insurer, respectively the reinsurer, may invest only in assets and instruments whose risks it is able to properly identify, measure, monitor, control and report, as well as to take into account in an appropriate manner

in the assessment of its overall needs with regard to solvency under Article 90, paragraph 2, item 1.
(3) (Amended - State Gazette No. 85 of 2023, in force from 01.01.2023) The assets covering the minimum capital requirement, respectively the minimum guarantee capital, the solvency capital requirement, and all other assets shall be invested in a manner that ensures the security, quality, liquidity and profitability of the overall portfolio. In addition, the localisation of those assets shall be carried out so as to ensure their availability. (4) The assets covering technical provisions shall also be invested in an appropriate manner having regard to the nature and duration of the insurance and reinsurance obligations. Those assets shall be invested entirely in the interest of all policyholders and beneficiaries, taking into account any disclosed objective of the asset investment policy. (5) In the event of a conflict of interest, the insurer, respectively the reinsurer, or the person managing its asset portfolio, shall ensure that the investment is made entirely in the interest of the policyholders and beneficiaries. (6) In addition to the requirements of paragraphs 2 to 5, with regard to assets relating to life insurance contracts where the investment risk is borne by the policyholders, the following rules shall also apply:
1. where the payments provided for in the contract are directly linked to the value of units in undertakings for collective investment in transferable securities or to the value of assets included in an internal fund held by the insurer and normally divided into units, the technical provisions relating to those payments shall be covered as fully as possible by those units or, where units have not been determined, by those assets;
2. where the payments under the contract are directly linked to the value of a share index or another reference value other than that under item 1, the technical provisions relating to those payments must be covered as fully as possible either by units deemed to reflect the reference value or, where units have not been determined, by assets of appropriate security and liquidity that reflect as fully as possible those assets on which the reference value is based;
3. where the payments under item 1 or 2 include a guarantee of the investment result or another guaranteed payment, paragraph 7 shall apply to the covering assets.
(7) In addition to the requirements of paragraphs 2 to 5, with regard to assets other than those under paragraph 6, the following rules shall also apply:
1. the use of derivatives shall be permitted to the extent that they contribute to reducing risks or facilitate the effective management of the portfolio;
2. investments in assets that are not admitted to trading on a regulated financial market must be limited to prudent levels;
3. assets shall be diversified appropriately so as to avoid excessive reliance on any particular asset, issuer or group of undertakings, or market, and also excessive accumulation of risk in the portfolio as a whole;
4. investments in assets issued by the same issuer or by issuers belonging to the same group must not expose the insurer to excessive concentration of risk.
Section III
Annual financial statement and periodic reports Annual and periodic reports of insurers and reinsurers
Article 125. (Supplemented - State Gazette No. 95 of 2016; amended, No. 85 of 2023, in force from 01.01.2023) (1) Insurers and reinsurers, insurance holding companies and mixed financial holding companies with their registered office in the Republic of Bulgaria shall prepare an annual financial statement and periodic financial statements and reports.
(2) (Amended - State Gazette No. 85 of 2023, in force from 01.01.2023) Insurers and reinsurers shall prepare the annual and periodic reports and statements with a structure (form) and content in accordance with an ordinance of the Commission, which may also introduce other reporting requirements.
(3) (New - State Gazette No. 95 of 2016) The management body of an insurance holding company or mixed financial holding company with its registered office in the Republic of Bulgaria, which heads a group, shall prepare and submit to the Commission the financial statements of the undertaking, as well as the consolidated financial statements, audited in accordance with Article 101, paragraph 1, no later than 20 weeks after the end of the financial year. Deadlines, certification and submission of reports
Article 126. (Amended - State Gazette No. 95 of 2016; amended, No. 24 of 2018; amended, No. 85 of 2023, in force from 01.01.2023) (1) The insurer, respectively the reinsurer, shall submit for the purposes of financial supervision to the Commission:
1. an annual financial statement - within the deadlines under Regulation (EU) 2015/35;
2. annual reports, statements and annexes - within the deadlines under Regulation (EU) 2015/35;
3. quarterly reports, statements, reports and annexes - within the deadlines under Regulation (EU) 2015/35;
4. (repealed - State Gazette No. 85 of 2023, in force from 01.01.2023).
(2) The reports and statements under paragraph 1 shall be submitted in the form of an electronic document signed with a qualified electronic signature in accordance with the requirements of the ordinance under Article 125.
(3) (Amended - State Gazette No. 95 of 2016) The annual financial statement and the annual reports, statements and annexes under paragraph 1, items 1 and 2 shall be certified by the auditors under Article 101, paragraph 1.
(4) (Amended - State Gazette No. 24 of 2018) The Commission shall determine by ordinance the information and data from the reports and statements under paragraph 1 that are subject to public disclosure in the register under Article 30, paragraph 1, item 9 of the Financial Supervision Commission Act.
Section IV
Provision of information to the supervisor. Public disclosure Information provided for supervisory purposes
Article 127. (1) The insurer, respectively the reinsurer, shall provide to the Commission all information necessary for the purposes of insurance supervision in connection with the objectives under Article 2.
(2) The information under paragraph 1 shall include at least the information necessary to achieve the following objectives in carrying out the supervisory review process:
1. assessment of:
(a) the system of governance applied by the insurer or reinsurer; (b) the business carried on by the insurer, respectively the reinsurer; (c) the valuation principles applied for solvency purposes; (d) the risks to which the insurer or reinsurer is exposed and the risk management systems; (e) the capital structure, capital needs and capital management of the insurer, respectively the reinsurer;
2. taking appropriate decisions as a result of the exercise of the supervisory powers of the Commission and the Deputy Chairperson.
(3) The Deputy Chairperson may:
1. determine the nature, scope and format of the information under paragraph 1 provided by insurers and reinsurers:
(a) periodically;
(b) upon the occurrence of predetermined events; (c) during on-site or documentary inspections;
2. receive all information in connection with contracts to which intermediaries are parties, or in connection with contracts concluded with third parties, and
3. require information from external experts, including auditors or actuaries.
(4) The information under paragraphs 1 to 3 shall cover:
1. qualitative and quantitative elements or any appropriate combination thereof;
2. historical, current and prospective elements or any appropriate combination thereof, and
3. information from internal or external sources or any appropriate combination thereof.
(5) The information under paragraphs 1 to 3 must:
1. reflect the nature, scale and complexity of the business of the respective insurer or reinsurer and, in particular, the risks related to that business;
2. be available, complete in all material aspects, comparable and consistent over time;
3. be relevant, reliable and understandable.
(6) The information under paragraphs 1 to 3 shall be submitted in the form of electronic documents signed with a qualified electronic signature, or on paper - at the discretion of the Deputy Chairperson.
(7) The insurer, respectively the reinsurer, shall be obliged to have appropriate systems and structures to ensure compliance with the obligations under paragraphs 1 to 6, as well as a policy approved by its management body, ensuring continuous accuracy, completeness and timeliness of the information submitted.
Notifications
Article 128. (1) The insurer, respectively the reinsurer, shall be obliged to notify the Commission of:
1. newly arising facts and circumstances that are subject to entry in the register of the Commission;
2. the entry of circumstances in the Commercial Register and the Register of Legal Entities with Non-Profit Purpose;
3. any change in its related parties, by providing information for the exercise of ongoing control over the occurrence of the circumstances under Article 35, paragraph 1, items 6 and 7.
(2) The obligation under paragraph 1 shall be performed within 7 days of the occurrence or becoming aware of the respective fact or circumstance, and where it is subject to entry in the Commercial Register and the Register of Legal Entities with Non-Profit Purpose - within 7 days of the entry.
Solvency and Financial Condition Report
Article 129. (Amended - State Gazette No. 85 of 2023, in force from 01.01.2023) (1) The insurer, respectively the reinsurer, shall annually, within the deadlines under Regulation (EU) 2015/35, publicly disclose a report on its solvency and financial condition, complying with Article 127, paragraphs 4 and 5. The solvency and financial condition report shall be part of the annual financial statement of the insurer and reinsurer.
(2) The solvency and financial condition report shall contain information presented in full or in the form of references to equivalent information, both in nature and scope, publicly disclosed by virtue of other regulatory requirements, as follows:
1. a description of the business and the results of the business of the undertaking;
2. a description of the system of governance and an assessment of its adequacy in relation to the risk profile of the insurer, respectively the reinsurer;
3. a description, separately for each risk category, of the risk exposure, concentration, mitigation and sensitivity;
4. a description, separately for assets, technical provisions and other liabilities, of the bases and methods used for their valuation, together with an explanation of any significant discrepancy with the bases and methods used for valuation in the financial statements;
5. a description of capital management, including at least:
(a) the structure and amount of own funds, as well as their quality; (b) the amount of the solvency capital requirement and of the minimum capital requirement; (c) information that allows a proper understanding of the main differences between the assumptions underlying the standard formula and those underlying any internal model used by the undertaking to calculate its solvency capital requirement; (d) (amended - State Gazette No. 85 of 2023, in force from 01.01.2023) the amount of any non-compliance, even if subsequently remedied, with the minimum capital requirement or the minimum guarantee capital and of any significant non-compliance with the solvency capital requirement within the reporting period, together with an explanation of its origin and consequences, as well as the measures taken to remedy it. (3) Where a matching adjustment under Article 156 is applied, the description under paragraph 2, item 4 shall include a description of the matching adjustment and of the portfolio of obligations and assigned assets to which the matching adjustment applies, as well as a quantitative measurement of the impact of reducing the matching adjustment to zero on the financial position of the insurer or reinsurer. The description under paragraph 2, item 4 shall also include information on whether the undertaking applies a volatility adjustment under Article 158, and shall contain a quantitative measurement of the impact of reducing the volatility adjustment to zero on the financial position of the insurer or reinsurer. (4) The description under paragraph 2, item 5, letter "a" shall include an analysis of any significant change compared to the previous reporting period and an explanation of any significant discrepancy in connection with the value of those elements in the financial statements, as well as a brief description of the possibility of transferring capital. (5) The disclosure of the solvency capital requirement under paragraph 2, item 5, letter "b" shall present separately the amount calculated in accordance with Chapter Thirteen, Section Two and Three, and the added capital imposed in accordance with Article 584, or the impact of the specific parameters that the insurer or reinsurer is required to use under Article 174, together with brief information on the reasons of the Commission. (6) Where applicable, the disclosure of the solvency capital requirement shall be accompanied by a statement that its final amount is subject to assessment by the competent supervisory authority. Principles of public disclosure
Article 130. (1) The Deputy Chairperson shall permit the insurer or reinsurer not to disclose information in the following cases:
1. if, as a result of the disclosure of information, competitors of the insurer, respectively the reinsurer, would unjustifiably obtain significant undue advantages;
2. if there are obligations to policyholders or legal relationships with other persons binding the undertaking to observe secrecy or confidentiality.
(2) The undertaking under paragraph 1 which the Deputy Chairperson has permitted not to disclose information shall make a declaration to that effect in its solvency and financial condition report and state the reasons.
(3) The Deputy Chairperson shall permit an undertaking under paragraph 1 to take advantage of or refer to public disclosures made by virtue of other regulatory requirements, to the extent that those disclosures are equivalent in nature and scope to the information required under Article 129.
(4) Paragraphs 1 and 2 shall not apply to the information under Article 129, paragraph 2, item 5.
Updating of the solvency and financial condition report
Article 131. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018; amended, No. 85 of 2023, in force from 01.01.2023) (1) In the event of a significant event having a material impact on the significance of the information disclosed under Articles 129 and 130, the insurer, respectively the reinsurer, shall be obliged to disclose appropriate information on the nature and consequences of that significant event.
(2) A significant event under paragraph 1 exists at least where:
1. (amended - State Gazette No. 95 of 2017, in force from 01.01.2018) the minimum capital requirement, respectively the minimum guarantee capital, has not been complied with, and the Commission considers that the undertaking will not be able to submit a realistic short-term plan or has not received such a plan within one month of the date of the observed breach;
2. (amended - State Gazette No. 95 of 2017, in force from 01.01.2018; amended, No. 85 of 2023, in force from 01.01.2023) there is significant non-compliance with the solvency capital requirement, and the Commission has not received a realistic plan for restoring solvency within two months of the date of the established non-compliance.
(3) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) In the cases under paragraph 2, item 1, the Commission shall order the respective undertaking to immediately disclose the amount of the non-compliance together with an explanation of its origin and consequences, including the measures taken to remedy it. If a short-term plan was applied which was initially assessed as realistic, but the non-compliance with the minimum capital requirement has not been remedied within three months of its establishment, at the end of that period it shall be disclosed together with an explanation of its origin and consequences, including all measures taken to remedy it and all further measures planned to remedy it. (4) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) In the cases under paragraph 2, item 2, the Commission shall order the respective undertaking to immediately disclose the amount of the non-compliance together with an explanation of its origin and consequences, including the measures taken to remedy it. If a plan for restoring solvency was applied which was initially assessed as realistic, but the significant non-compliance with the solvency capital requirement has not been remedied within 6 months of its establishment, at the end of that period it shall be disclosed together with an explanation of its origin and consequences, including all measures taken to remedy it and all further measures planned to remedy it. Additional voluntary information in the solvency and financial condition report
Article 132. The insurer, respectively the reinsurer, may voluntarily disclose any information or explanations related to its solvency and financial condition that are not subject to mandatory disclosure under this Section.
Organisation of public disclosure
Article 133. (1) The insurer, respectively the reinsurer:
1. shall establish appropriate systems and structures for the performance of the obligations under this Section;
2. shall adopt internal rules to ensure the continuous up-to-dateness of any information disclosed under this Section.
(2) The annual financial statement, including the solvency and financial condition report, shall be adopted by the management and supervisory body of the insurer, respectively the reinsurer, and shall then be publicly disclosed on the website of the insurer, respectively the reinsurer.
(3) Where additional requirements for the information subject to disclosure and for the deadlines for annual disclosure have been laid down by an act of the European Commission, those requirements shall also be applied by insurers without access to the single market.
Section V
Co-insurance in the European Union
Co-insurance activity in the European Union
Article 134. (1) Co-insurance activity in the European Union is co-insurance related to one or more risks under classes under item 3 - 16, Section II, letter "A" of Annex No. 1, and which meets the following conditions:
1. the risk is a large risk;
2. the risk is covered under a single contract against a single premium by two or more insurers for the same period, each of them being liable for its own share as co-insurer and one of them being the leading insurer;
3. the risk is situated in a Member State;
4. for the purposes of covering the risk, the leading insurer is deemed to cover the entire risk;
5. at least one of the co-insurers participates in the contract through its head office or branch established in a Member State other than the Member State of the leading insurer;
6. the leading insurer fully assumes the leading role in the co-insurance activity and in particular determines the insurance conditions and tariffs.
(2) Articles 46, 50 and 51 shall apply to the leading insurer.
(3) The provisions of this Section shall not apply to co-insurance activities for which the conditions under paragraph 1 are not met.
Participation in co-insurance in the European Union
Article 135. An insurer may participate in co-insurance activity in the European Union subject to compliance with the requirements of this Section.
Technical provisions
Article 136. (1) The amount of the technical provisions of an insurer participating in co-insurance in the European Union shall be determined according to the rules laid down by the respective Member State of origin or, in the absence of such rules, in accordance with the usual practice in that State.
(2) Notwithstanding paragraph 1, the technical provisions must be at least equal to the provisions determined by the leading insurer according to the rules of its Member State of origin.
Statistical data
Article 137. An insurer participating in co-insurance in the European Union shall be obliged to keep statistical records showing the volume of the co-insurance activity in the European Union in which it participates and in the respective Member States.
Treatment of co-insurance contracts in liquidation and insolvency
Article 138. In cases of liquidation or insolvency of an insurer, its obligations arising from participation in co-insurance contracts in the European Union shall be settled in the same way as those arising from the other insurance contracts of that insurer, irrespective of the State of the users of insurance services.
Exchange of information between supervisory authorities
Article 139. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) For the purposes of the application of this Section, the Commission shall exchange the necessary information with the supervisory authorities of the other Member States.
Cooperation in implementation
Article 140. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) (1) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) The Commission shall cooperate with the European Commission and with the supervisory authorities of the other Member States in resolving any difficulties in the application of this Section.
(2) In the process of cooperation under paragraph 1, practices which could indicate that the leading insurer does not assume a leading role in the co-insurance practice or that the covering of the risks obviously does not require the participation of two or more insurers shall be examined.
Chapter Nine
SEPARATE MANAGEMENT OF LIFE AND NON-LIFE INSURANCE ACTIVITIES General requirements
Article 141. (1) An insurer carrying on simultaneously insurance under Section I and under "Accident" and/or "Sickness" insurance under Section II, letter "A" of Annex No. 1 shall be organised in such a way that the life insurance activities are separated from the non-life insurance activities.
(2) The interests of the policyholders under contracts under Section I of Annex No. 1 may not be prejudiced at the expense of the interests of the policyholders under "Accident" and/or "Sickness" insurance, and the interests of the policyholders under "Accident" and/or "Sickness" insurance may not be prejudiced at the expense of the interests of the policyholders under contracts under Section I of Annex No. 1. The profits from the activity under Section I of Annex No. 1 shall benefit only the policyholders under the insurance classes of that activity, as if the insurer carried on life insurance only. Measures for separating the management of life insurance and non-life insurance
Article 142. (Amended - State Gazette No. 85 of 2023, in force from 01.01.2023) (1) (Amended - State Gazette No. 85 of 2023, in force from 01.01.2023) Notwithstanding the obligation to maintain eligible own funds to cover the solvency capital requirement and the minimum capital requirement, respectively a minimum guarantee capital, the insurer shall calculate:
1. a notional minimum capital requirement, respectively guarantee capital, in respect of its life insurance or reinsurance activity, calculated as if the respective insurer carried on only that activity on the basis of the separate financial statements under Article 143;
2. a notional minimum capital requirement, respectively guarantee capital, in respect of its non-life insurance or

reinsurance activity, calculated as if the respective insurer carries on only that activity on the basis of the separate financial statements under Art. 143.
(2) An insurer under Art. 141, para. 1 shall ensure coverage by means of equivalent amounts of eligible basic own funds of at least:
1. the notional minimum capital requirement, respectively the guarantee capital, in respect of life insurance activity;
2. the notional minimum capital requirement, respectively the guarantee capital, in respect of non-life insurance activity.
(3) The minimum financial obligations under para. 2 in respect of life insurance and non-life insurance activity may not be covered by the other activity.
(4) (Amended - State Gazette No. 85 of 2023, in force from 01.01.2023) An insurer under Art. 141, para. 1 may use, to cover the solvency capital requirement, explicit items of eligible own funds at its disposal for either of the activities, provided that:
1. the minimum financial obligations under para. 2 and 3 are met;
2. it has notified the Commission thereof.
(5) In carrying out insurance supervision of an insurer under Art. 141, para. 1, the results of both the life insurance activity and the Accident and/or Sickness insurance shall be analysed in order to ensure compliance with paras. 1 - 4, as well as with Art. 141.
Additional requirements in connection with reporting Art. 143. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) (1) An insurer under Art. 141, para. 1 shall prepare its financial statements so that the sources of the result from life insurance activity and from non-life insurance are shown separately.
(2) All income, in particular premiums, payments from reinsurers and investment income, and expenses, in particular insurance payments, additions to technical reserves, reinsurance premiums and operating expenses, shall be broken down by origin.
(3) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) Items which are common to both activities shall be recorded in the statements in accordance with allocation methods approved by the Commission.
(4) On the basis of the financial statements under para. 1 the insurer shall prepare a report in which the items of eligible basic own funds covering each notional minimum capital requirement under Art. 142, para. 1 are clearly identified in accordance with the eligibility requirements under the regulation under Art. 168.
Prohibition in the presentation of financial results Art. 144. An insurer licensed under Section I of Annex No. 1 and an insurer licensed under Section II of Annex No. 1 which are financially, commercially or administratively connected with one another may not conclude agreements and apply other arrangements which lead to an incorrect presentation of their financial results and in particular affect the structure of their income and expenses. Special requirements in the event of a shortfall of eligible basic own funds Art. 145. (1) If the amount of the items of eligible basic own funds in respect of one of the insurance activities is insufficient to cover the minimum financial obligations under Art. 142, para. 2, the Commission, on a proposal of the Deputy Chairperson, shall apply to that activity the measures under Art. 215, irrespective of the results of the other activity. (2) Notwithstanding Art. 142, para. 3, the Commission, on a proposal of the Deputy Chairperson, may permit the transfer of explicit items of eligible basic own funds from one insurance activity to the other.
Chapter Ten
DISCLOSURE OF CONFLICTS OF INTEREST. INSURANCE SECRECY Disclosure and avoidance of conflicts of interest Art. 146. (Amended and supplemented - State Gazette No. 101 of 2018, in force from 07.12.2018) (1) Every member of a management or supervisory body, every other person in a managerial position, as well as every other person authorised to manage and/or represent an insurer, respectively a reinsurer, shall notify in writing the management body of the insurer when concluding with the insurer, respectively the reinsurer, a contract which falls outside the ordinary activity of the insurer, respectively the reinsurer, or deviates substantially from ordinary market conditions. (2) The provision of para. 1 shall also apply where a party to a transaction with the insurer, respectively the reinsurer, is:
1. a family member of a person under para. 1;
2. an undertaking in which a person under para. 1 or a member of his family holds, directly or through related persons, a qualifying holding under Art. 68, para. 1;
3. an undertaking in which a person under para. 1 or a member of his family is a partner, a member of a management or supervisory body, an officer with managerial functions or a person authorised to manage or represent the undertaking.
(3) Every person under para. 1 shall notify in writing at least once every 6 months the management body of the insurer, respectively the reinsurer, of the undertakings in which the person or the members of his family hold, directly or through related persons, a qualifying holding under Art. 68, para. 1, in which they are partners or shareholders, members of a management or supervisory body, officers with managerial functions or persons authorised to manage or represent the undertaking. (4) A person under para. 1 shall not be entitled to participate in the negotiations, discussions and taking of a decision on concluding a transaction with the insurer, respectively the reinsurer, to which he is a party or to which a person under para. 2 is a party. (5) The insurer, respectively the reinsurer, the persons under para. 1, as well as the other employees of the insurer, respectively the reinsurer, shall, in the performance of their functions, prefer the interests of the insurer, respectively the reinsurer and of its users of insurance services, respectively cedants, to their own interests. (6) (Supplemented - State Gazette No. 101 of 2018, in force from 07.12.2018) The insurer shall be obliged to establish an effective internal organisation of its activity in a manner which does not allow a conflict of interest under para. 7 to adversely affect the interests of its users of insurance services. That organisation must be proportionate to the activity carried on, to the insurance products distributed and to the type of insurance distributor. (7) The insurer shall take all necessary measures to identify the conflict of interest which arises in the course of the activity of distribution of insurance products between:
1. the insurer, the members of its bodies, its other employees, other persons who conclude insurance contracts on its behalf, as well as the persons connected with it directly or indirectly through a control relationship, on the one hand, and the users of insurance services, on the other hand;
2. one user of insurance services and another.
(8) (Amended - State Gazette No. 101 of 2018, in force from 07.12.2018) Where the organisation under para. 6 is not able to guarantee with a sufficient degree of certainty that the risk of detriment to the interest of the user of insurance services will be avoided, the insurer shall be obliged clearly to disclose to the user the nature and sources of the conflict of interest sufficiently in advance before the conclusion of the insurance contract. In connection with the distribution of investment insurance products, the disclosure of information under the first sentence shall be made on a durable medium and shall contain sufficient detail, taking into account the characteristics of the user of insurance services, so as to enable him to take an informed decision on the activities of distribution of insurance products in respect of which the conflict of interest arises. In these cases Art. 330, para. 1 shall not apply. Special requirements for avoiding conflicts of interest Art. 147. An insurer which covers risks under legal expenses insurance must take the necessary measures to avoid a conflict of interest by fulfilling at least one of the following conditions:
1. it does not allow its employees entrusted with the settlement of claims or the giving of legal advice in respect of legal expenses insurance to carry out at the same time a similar activity in connection with other classes of insurance under Section II of Annex No. 1 for its own account or for the account of another insurer with which the insurer is in commercial, financial or administrative relations;
2. if it carries out coverage of risks under legal expenses insurance and under other insurance under Section II of Annex No. 1, to transfer, under the terms and procedure of Art. 110, the settlement of claims under legal expenses insurance to another legal person which must meet the condition under item 1;
3. to notify the insured of his right to authorise a lawyer of his own choice to protect his interests from the moment when the insured's right to bring a claim under the insurance has arisen.
Delegation
Art. 148. The Commission may, by regulation, determine more detailed requirements for the performance of the obligations under Art. 146, paras. 6 - 8.
Insurance secrecy. Protection of insurance secrecy Art. 149. (Amended and supplemented - State Gazette No. 101 of 2018, in force from 07.12.2018) (1) The insurer, respectively the reinsurer, the members of the management and supervisory bodies, the auditors, the actuaries, as well as all other persons who work for the insurer, respectively the reinsurer, including the persons with whom the insurer, respectively the reinsurer, has an agreement under Art. 110, shall be obliged to keep secret the information which has become known to them in connection with the performance of their functions. The persons under the first sentence may not use the information obtained for personal benefit or for the benefit of another person, as well as for purposes other than the performance of their functions. (2) (Supplemented - State Gazette No. 101 of 2018, in force from 07.12.2018) The obligation under para. 1 shall also apply to insurance and reinsurance intermediaries and their employees, as well as to intermediaries offering insurance products as an ancillary activity and their employees. (3) (Supplemented - State Gazette No. 101 of 2018, in force from 07.12.2018) All employees and members of management and supervisory bodies of the insurer, respectively the reinsurer, shall, upon appointment to a position, sign a declaration for the protection of insurance secrecy. The obligation under the first sentence shall also apply to the natural persons who represent legal persons - members of the management and supervisory bodies of the insurer, respectively the reinsurer, and of the insurance and reinsurance intermediary, as well as of the intermediaries offering insurance products as an ancillary activity. (4) (Amended - State Gazette No. 101 of 2018, in force from 07.12.2018) Insurance intermediaries, intermediaries offering insurance products as an ancillary activity, as well as the persons with whom the insurer, respectively the reinsurer, has an agreement under Art. 110, shall sign the declaration under para. 3 upon the conclusion of the contract governing their relations with the insurer, respectively the reinsurer. The persons under the first sentence shall be obliged to acquaint their employees with the obligations under para. 1. (5) The provision of para. 1 shall also apply in cases where the persons under paras. 1 - 4 have terminated their legal relationship with the insurer, respectively the reinsurer, in connection with which the obligation to protect insurance secrecy has arisen. Disclosure of insurance secrecy Art. 150. (Supplemented - State Gazette No. 62 of 2016, in force from 09.08.2016; supplemented, No. 103 of 2016; amended and supplemented, No. 63 of 2017, in force from 04.08.2017; supplemented, No. 92 of 2017, in force from 21.11.2017; amended, No. 7 of 2018; amended, No. 84 of 2023, in force from 06.10.2023; amended, No. 16 of 2026; amended, No. 51 of 2026, in force from 05.06.2026) (1) Apart from to the Commission, to the Deputy Chairperson and
to the authorised employees of the Commission's administration, the information under Art. 149, para. 1 may be disclosed only:
1. with the express written consent of the person to whom it relates;
2. to the bodies of the court, the prosecution service, the investigating authorities and the police authorities under the procedure established by law;
2a. (new - State Gazette No. 103 of 2016; amended, No. 7 of 2018; amended, No. 84 of 2023, in force from 06.10.2023; amended, No. 16 of 2026; amended, No. 51 of 2026, in force from 05.06.2026) to the Commission for Counteracting Corruption under the procedure established by law;
3. to the State Agency "National Security" under the terms and procedure laid down in the Money Laundering Measures Act;
4. to the Guarantee Fund and the National Bureau of Bulgarian Motor Insurers in connection with their activity under this Code;
5. to and from the Guarantee Fund for the purposes of creating information systems for the prevention of insurance fraud and for the purposes of creating a bonus-malus system;
6. to the director of a territorial directorate of the National Revenue Agency where:
(a) by an act of a revenue authority it has been established that the person under examination has obstructed the carrying out of an examination or audit or does not keep the necessary records, as well as where these are incomplete or unreliable; (b) by an act of a competent state authority the occurrence has been established of a fortuitous event which led to the destruction of the accounting documentation of the person under examination;
7. (amended - State Gazette No. 63 of 2017, in force from 04.08.2017) to the Minister of Finance or a person authorised by him - in the cases under Art. 143, para. 4 of the Tax and Social Insurance Procedure Code;
8. (supplemented - State Gazette No. 63 of 2017, in force from 04.08.2017; supplemented, No. 92 of 2017, in force from 21.11.2017) to the Executive Director of the National Revenue Agency in connection with the application of Art. 142b, para. 1, Art. 143e and Art. 143z of the Tax and Social Insurance Procedure Code;
9. to a reinsurer where this is necessary in connection with the conclusion and maintenance of a reinsurance contract;
10. to the lawful heirs of an insured person or of a person entitled to an insurance payment.
11. (new - State Gazette No. 62 of 2016, in force from 09.08.2016) to the chief inspector or an inspector of the Inspectorate to the Supreme Judicial Council.
(2) At the request of the policyholder, the insurer may provide him with information on the indemnities or sums paid under the insurance contract.
Prohibition on information about health status Art. 151. The insurer may not provide to the policyholder, where he is a person other than the insured person, information concerning the health status of the insured persons.
PART THREE
REQUIREMENTS FOR THE FINANCIAL CONDITION OF INSURERS WITH A RIGHT OF ACCESS TO THE SINGLE MARKET AND FOR REINSURERS
Chapter Eleven
VALUATION OF ASSETS AND LIABILITIES
Valuation of assets and liabilities
Art. 152. (Repealed - State Gazette No. 85 of 2023, in force from 01.01.2023).
Segmentation in the calculation of technical reserves Art. 153. In calculating technical reserves, insurers and reinsurers shall segment their insurance and reinsurance obligations into homogeneous risk groups at least by types of activity (lines of business) within the meaning of Regulation (EU) 2015/35.
Calculation of technical reserves
Art. 154. (Amended - State Gazette No. 85 of 2023, in force from 01.01.2023) (1) The value of technical reserves shall be equal to the sum of the best estimate and a risk margin.
(2) The best estimate shall correspond to the probability-weighted average of future cash flows, taking into account the time value of money (expected present value of future cash flows) applying the relevant term structure of the risk-free interest rate.
(3) The calculation of the best estimate must be based on current and reliable information and on realistic assumptions and shall be carried out by means of adequate, applicable and appropriate actuarial and statistical methods.
(4) The projection of the cash flow used for the calculation of the best estimate must take into account all incoming and outgoing cash flows necessary to cover the insurance and reinsurance obligations over the period of their existence.
(5) The best estimate shall be calculated on a gross basis - without deducting the amounts recoverable from reinsurance contracts and from special purpose vehicles for alternative transfer of insurance risk. Those amounts shall be calculated separately and in accordance with Art. 161.
(6) The risk margin shall be such as to ensure that the value of technical reserves is equal to the amount which an insurer, respectively a reinsurer, would be expected to require in order to assume and meet the insurance, respectively reinsurance, obligations.
(7) The insurer, respectively the reinsurer, shall determine separately the best estimate and the risk margin.
(8) Where the future cash flows relating to the insurance and reinsurance obligations can be replaced (replicated) in a reliable manner by financial instruments for which a reliable market value is observed, the value of the technical reserves relating to those future cash flows shall be determined on the basis of the market price of those financial instruments. In that case a separate calculation of the best estimate and of the risk margin shall not be required. (9) Where the insurer or the reinsurer determines separately the best estimate and the risk margin, the risk margin shall be calculated by determining the costs of providing eligible own funds equal in amount to the solvency capital requirement necessary to guarantee the insurance and reinsurance obligations over the period of their existence. (10) The rate used to determine the price of eligible own funds (cost-of-capital rate) shall be the same for all insurers and reinsurers and shall be reviewed periodically. (11) The cost-of-capital rate used shall be equal to the additional percentage over and above the relevant risk-free interest rate which the insurer or the reinsurer would have to pay if it held eligible own funds under Chapter Twelve equal to the solvency capital requirement necessary to guarantee the insurance and reinsurance obligations for the term of their existence. (12) In calculating the technical reserves, account shall also be taken of:
1. the expenses connected with the performance of obligations under insurance and reinsurance contracts;
2. inflation, including claims inflation and expense inflation;
3. all payments to insured persons, reinsured persons and beneficiaries, including future discretionary bonuses which the insurer, respectively the reinsurer, expects to make, irrespective of whether those payments are contractually guaranteed.
(13) (Amended - State Gazette No. 85 of 2023, in force from 01.01.2023) The additional requirements for calculating the best estimate and the risk margin shall be determined by an act of the European Commission and by the regulation under Art. 120, para. 7.
Extrapolation of the relevant term structure of the risk-free interest rate Art. 155. (1) The determination of the relevant term structure of the risk-free interest rate under Art. 154, para. 2 shall be based on and consistent with the information extracted from the relevant financial instruments. That determination shall take into account the relevant financial instruments for the maturities for which the markets for those financial instruments, as well as the bond markets, are sufficiently deep, liquid and transparent. For the maturities for which the markets for the relevant financial instruments or for bonds are no longer sufficiently deep, liquid and transparent, an extrapolation of the term structure of the risk-free interest rate shall be carried out. (2) The extrapolated part of the relevant term structure of the basic risk-free interest rate shall be based on forward interest rates which merge smoothly from one interest rate or from a set of interest rates in connection with the longest maturities of the relevant financial instrument and bonds which can be observed on a deep, liquid and transparent market, into an ultimate forward interest rate. Matching adjustment of the relevant term structure of the risk-free interest rate Art. 156. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018; amended, No. 85 of 2023, in force from 01.01.2023) (1) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) Subject to prior approval of the Commission, an insurer, respectively a reinsurer, may apply a matching adjustment of the relevant term structure of the risk-free interest rate for calculating the best estimate of a portfolio of life insurance or reinsurance obligations, as well as of obligations for annuities arising from non-life insurance contracts. (2) The conditions for granting the approval under para. 1 shall be as follows:
1. the insurer, respectively the reinsurer, has assigned a portfolio of assets consisting of bonds and other assets with similar cash flow characteristics to cover the best estimate of the portfolio of insurance or reinsurance

obligations and maintains that purpose throughout the life cycle of the obligations, but not for the purposes of maintaining the reproduction of the expected cash flows between assets and liabilities where the cash flows have changed materially;
2. the portfolio of insurance or reinsurance obligations in respect of which the matching adjustment is applied and the assigned portfolio of assets are identified, organised and managed separately from other activities of the insurer or reinsurer respectively, and the assigned portfolio of assets may not be used to cover losses arising from other activities thereof;
3. the expected cash flows of the assigned portfolio of assets reproduce each of the future cash flows of the portfolio of insurance or reinsurance obligations in the same currency and there is no mismatch that gives rise to risks that are material relative to the risks inherent in the insurance or reinsurance to which the matching adjustment is applied;
4. the contracts underlying the portfolio of insurance or reinsurance obligations do not give rise to future premium payments;
5. the only underwriting risks connected with the portfolio of insurance or reinsurance obligations are longevity risk, expense risk, revision risk and mortality risk;
6. where the underwriting risk connected with the portfolio of insurance or reinsurance obligations includes mortality risk, the best estimate of the portfolio of insurance or reinsurance obligations does not increase by more than 5 per cent under a mortality risk stress calibrated in accordance with the principles of Article 170(2)–(6);
7. (amended – State Gazette No. 85 of 2023, in force from 01.01.2023) the contracts underlying the portfolio of insurance or reinsurance obligations do not include options for the persons having rights under insurance contracts, or include only a surrender option where the surrender value does not exceed the value of the assets, valued in accordance with Article 117a, covering the insurance or reinsurance obligations at the time the surrender option is exercised;
8. the cash flows of the assigned portfolio of assets are fixed and cannot be changed by the issuers of the assets or by third parties;
9. the insurance or reinsurance obligations of an insurance or reinsurance contract are not divided into different parts when they form part of the portfolio of insurance or reinsurance obligations for the purposes of this paragraph.
(3) Notwithstanding the provisions of paragraph 2, point 8, the insurer or reinsurer respectively may use assets with fixed cash flows, with the exception of inflation dependence, provided that those assets match the cash flows of the portfolio of insurance or reinsurance obligations that depend on inflation.
(4) Where issuers or third parties have the right to change the cash flows of an asset in such a way that the investor receives sufficient compensation to enable him to obtain the same cash flows by reinvesting in assets of equivalent or better credit quality, the right to change the cash flows does not exclude the asset from eligibility for the assigned portfolio in accordance with paragraph 2, point 8. (5) (Amended – State Gazette No. 95 of 2017, in force from 01.01.2018) An insurer or reinsurer respectively that applies the matching adjustment to a portfolio of insurance or reinsurance obligations may not revert to the approach that does not include a matching adjustment. If the person applying the matching adjustment is unable to comply with the conditions under paragraph 2 in the future, it shall inform the Commission immediately and take the necessary measures to restore compliance with those conditions. If the insurer or reinsurer respectively is unable to restore compliance with those conditions within two months from the initial date of non-compliance, it shall cease to apply the matching adjustment to its insurance or reinsurance obligations and may not apply the matching adjustment before the expiry of an additional period of 24 months. (6) The matching adjustment shall not be applied in respect of insurance or reinsurance obligations where the relevant risk-free interest rate term structure for calculating the best estimate for those obligations includes a volatility adjustment in accordance with Article 158. Calculation of the matching adjustment
Article 157. (Amended – State Gazette No. 85 of 2023, in force from 01.01.2023) (1) For each currency, the matching adjustment referred to in Article 156 shall be calculated in accordance with the following principles:
1. the matching adjustment is equal to the difference between:
(a) (amended – State Gazette No. 85 of 2023, in force from 01.01.2023) the effective annual interest rate, calculated as a single discount rate which, when applied to the cash flows of the portfolio of insurance or reinsurance obligations, gives a value equal to the value in accordance with Article 117a of the portfolio of assigned assets; (b) the effective annual interest rate, calculated as a single discount rate which, when applied to the cash flows of the portfolio of insurance or reinsurance obligations, gives a value equal to the value of the best estimate of the portfolio of insurance or reinsurance obligations, whereby the use of the basic risk-free interest rate term structure takes into account the time value of money;
2. the matching adjustment does not include the fundamental spread reflecting the risks retained by the insurer or reinsurer;
3. notwithstanding point 1, the fundamental spread shall be increased where necessary to ensure that the matching adjustments for assets of sub-investment grade credit quality do not exceed the matching adjustments for assets of investment grade credit quality and the same duration and asset class;
4. the use of external credit assessments in the calculation of the matching adjustment shall be in accordance with an act of the European Commission.
(2) For the purposes of paragraph 1, point 2, the fundamental spread:
1. is equal to the sum of:
(a) the credit spread corresponding to the probability of default of the assets; (b) the credit spread corresponding to the expected loss from a downgrade of the assets;
2. for exposures to central governments and central banks of the Member States, is not lower than 30 per cent of the long-term average of the spread over the basic risk-free interest rate of assets observed on financial markets with the same duration, the same credit quality and belonging to the same category;
3. for assets other than exposures to central governments and central banks of the Member States, is not lower than 35 per cent of the long-term average of the spread over the basic risk-free interest rate of assets observed on financial markets with the same duration, the same credit quality and belonging to the same category.
(3) The probability of default referred to in paragraph 2, point 1, letter (a) shall be based on long-term default statistics that are relevant to the asset in terms of its duration, credit quality and class.
(4) Where a reliable credit spread cannot be derived from the statistical data referred to in paragraph 3, the fundamental spread shall be equal to the portion of the long-term average of the spread over the risk-free interest rate determined in paragraph 2, points 2 and 3.
Volatility adjustment to the relevant risk-free interest rate term structure
Article 158. (Amended – State Gazette No. 95 of 2017, in force from 01.01.2018; amended, No. 64 of 2020, in force from 18.07.2020) (1) (Amended – State Gazette No. 95 of 2017, in force from 01.01.2018) Subject to prior approval by the Commission, an insurer or reinsurer respectively may apply a volatility adjustment to the relevant risk-free interest rate term structure for calculating the best estimate under Article 154(2).
(2) For each relevant currency, the volatility adjustment to the relevant risk-free interest rate term structure shall be based on the spread between the interest rate that could be earned on assets included in a reference portfolio for that currency and the values of the relevant basic risk-free interest rate term structure for that currency. The reference portfolio for a currency is representative of the assets that are denominated in that currency and that insurance and reinsurance undertakings have invested for covering the best estimate of the insurance and reinsurance obligations denominated in that currency. (3) The amount of the volatility adjustment to the risk-free interest rate shall correspond to 65 per cent of the risk-corrected currency spread. (4) The risk-corrected currency spread shall be calculated as the difference between the spread referred to in paragraph 2 and the portion of that spread that is attributable to a realistic assessment of expected losses or to unexpected credit risk or other risk of the assets. (5) The volatility adjustment shall be applied only to the relevant risk-free interest rate of the term structure that is not derived by extrapolation in accordance with Article 155. The extrapolation of the relevant risk-free interest rate of the term structure shall be based on that adjusted risk-free interest rate. (6) (Amended – State Gazette No. 64 of 2020, in force from 18.07.2020) For each relevant country, the volatility adjustment to the risk-free interest rate under paragraphs 3–5 for the currency of that country shall, before the application of the 65 per cent factor, be increased by the difference between the risk-corrected spread of the country and twice the risk-corrected currency spread, where that difference is positive and the risk-corrected spread of the country is higher than 85 basis points. The increased volatility adjustment shall be applied for the calculation of the best estimate of the insurance and reinsurance obligations of products sold on the insurance market of that country. The risk-corrected spread of the country shall be calculated in the same way as the risk-corrected currency spread for the currency of that country, but on the basis of a reference portfolio that is representative of the assets that insurers and reinsurers have invested for covering the best estimate of the insurance and reinsurance obligations related to products sold on the insurance market in that country and denominated in the currency of that country. (7) The volatility adjustment shall not be applied in respect of insurance obligations where the relevant risk-free interest rate term structure for calculating the best estimate for those obligations includes a matching adjustment under Article 156. (8) By way of exception from the requirements of Article 170, the solvency capital requirement shall not cover the risk of loss of basic own funds resulting from changes in the volatility adjustment. Use of the technical
information prepared by the European Authority and adopted by an act of the European Commission
Article 159. (1) In calculating the best estimate under Article 154, the matching adjustment under Article 156 and the volatility adjustment under Article 158, the insurer or reinsurer respectively shall use the technical information prepared by the European Authority and adopted by an act of the European Commission in accordance with the procedure under Article 77d(2) of Directive 2009/138/EC.
(2) No volatility adjustment to the relevant risk-free interest rate term structure for calculating the best estimate shall be applied in respect of currencies and national markets for which such an adjustment is not specified in an act of the European Commission under paragraph 1.
(3) The additional requirements for calculating the best estimate and the risk margin shall be laid down by a regulation of the Commission and by an act of the European Commission.
Assessment of financial guarantees and contractual options forming part of insurance and reinsurance contracts
Article 160. (1) In calculating technical provisions, the insurer or reinsurer respectively shall take into account the value of financial guarantees and contractual options forming part of insurance and reinsurance contracts.
(2) Any assumption made by the insurer or reinsurer respectively regarding the likelihood of policyholders exercising contractual options, including early termination and surrender, must be realistic and based on current, up-to-date and reliable information. The assumptions shall take direct or indirect account of the impact of future changes in financial and non-financial conditions on the exercise of those options. Recoverable amounts under reinsurance contracts and from special purpose vehicles for alternative transfer of insurance risk
Article 161. (1) The insurer or reinsurer respectively shall calculate the recoverable amounts under reinsurance contracts and from special purpose vehicles for alternative transfer of insurance risk in accordance with Article 120 and Articles 153–160.
(2) In calculating the recoverable amounts under reinsurance contracts and from special purpose vehicles for alternative transfer of insurance risk, the insurer or reinsurer respectively shall take into account the period between claims and direct payments.
(3) The result of the calculation shall be adjusted to take account of expected losses due to default of the counterparty. That adjustment shall be based on an assessment of the probability of default of the counterparty and the average amount of the loss resulting therefrom (loss given default).
Data quality and application of approximations, including case-by-case approaches, for determining technical provisions
Article 162. (1) The insurer or reinsurer respectively shall have in place internal processes and procedures to ensure that the data used in calculating its technical provisions are appropriate, complete and reliable.
(2) Where, in specific circumstances, the insurer or reinsurer respectively has insufficient data of appropriate quality to apply a reliable actuarial method to a group or subgroup of its insurance and reinsurance obligations, or to claims under reinsurance contracts and from special purpose vehicles for alternative transfer of insurance risk, approximations, including case-by-case approaches, may be applied for calculating the best estimate. Comparison against practical experience
Article 163. (1) The insurer or reinsurer respectively shall have in place processes and procedures to ensure the regular comparison of the best estimates and the assumptions underlying the calculation of those best estimates against practical experience.
(2) Where, as a result of the comparison, a systematic deviation between practical experience and the best estimates of the insurer or reinsurer respectively is established, it shall make the appropriate adjustments to the actuarial methods used and/or to the assumptions made.
Chapter Twelve
OWN FUNDS
General requirements
Article 164. (1) The own funds of the insurer or reinsurer respectively shall comprise basic own funds and ancillary own funds.
(2) Every insurer or reinsurer respectively shall be required at all times to have eligible own funds at least equal to the solvency capital requirement.
(3) Every insurer or reinsurer respectively shall be required at all times to have eligible basic own funds at least equal to the minimum capital requirement or the minimum guarantee capital respectively.
Basic own funds
Article 165. (1) Basic own funds shall comprise the following items:
1. the excess of assets over liabilities, valued in accordance with Chapter Eleven;
2. subordinated liabilities.
(2) The excess under paragraph 1, point 1 shall be reduced by the value of own shares held by the insurer or reinsurer respectively.
Ancillary own funds
Article 166. (1) Ancillary own funds shall comprise items other than basic own funds which can be called up to cover losses.
(2) Ancillary own funds may comprise the following items, to the extent that they do not form basic own funds:
1. letters of credit and guarantees;
2. other legally binding claims arising in favour of the insurer or reinsurer respectively.
(3) In the case of mutual insurance cooperatives, ancillary own funds may also comprise future claims which the cooperative might have against its members by virtue of a call for supplementary contributions within the following 12 months.
(4) If ancillary own funds have been paid in or their payment has been called up, they shall be treated as assets and shall cease to be part of the items of ancillary own funds.
Approval of ancillary own funds and their classification into tiers
Article 167. (1) The amount of ancillary own funds to be taken into account in determining own funds shall be subject to prior approval by the Commission, on a proposal from the Deputy Chairperson.
(2) The value determined for each item of ancillary own funds shall reflect the item's capacity to cover losses and shall be based on reasonable and realistic assumptions. Where an item of ancillary own funds has a fixed nominal value, the value of that item shall be equal to its nominal value where that appropriately reflects its capacity to cover losses. (3) The Commission, on a proposal from the Deputy Chairperson, shall approve:
1. a monetary value for each item of ancillary own funds, or
2. a method for determining the value of each item of ancillary own funds, in which case supervisory approval of the value determined according to the relevant method shall be granted for a specified period.
(4) For each item of ancillary own funds, the Commission, on a proposal from the Deputy Chairperson, shall give its approval on the basis of an assessment of the following:
1. the status of the relevant counterparties with respect to their ability and willingness to pay;
2. the recoverability of the funds, taking into account the legal form of the item and also the conditions that would prevent the successful payment or call of the item;
3. any information on the outcome of past calls for payment of such ancillary own funds which the insurer or reinsurer respectively has made, to the extent that that information can be reliably used to assess the expected outcome of future calls.
(5) The items of own funds of the insurer or reinsurer respectively shall be classified into three tiers in accordance with an act of the European Commission and the regulation under Article 168. Where a particular item of own funds cannot be classified in accordance with a list in the act of the European Commission under Article 168, it shall be classified in the relevant tier by the insurer or reinsurer in compliance with the requirements of the regulation under Article 168. The classification under the second sentence shall be subject to approval by the Commission, on a proposal from the Deputy Chairperson. Delegation
Article 168. The remaining qualitative and quantitative requirements for determining own funds, for their classification and for their eligibility shall be laid down by an act of the European Commission and by a regulation of the Commission.
Chapter Thirteen
SOLVENCY CAPITAL REQUIREMENT
Section I
General rules
Solvency capital requirement
Article 169. The solvency capital requirement shall be calculated in accordance with the standard formula or by means of a full or partial internal model.
Basic principles for calculating the solvency capital requirement
Article 170. (1) The solvency capital requirement shall be calculated on the presumption that the insurer or reinsurer respectively will carry on its business as a going concern.
(2) The solvency capital requirement shall be calibrated to take account of all quantifiable risks to which the insurer or reinsurer respectively is exposed. It shall cover existing business as well as future business expected to be written in the next 12 months. In respect of existing business, it shall cover only unexpected losses.
(3) The solvency capital requirement shall correspond to the value-at-risk of the basic own funds of the insurer or reinsurer respectively, subject to a confidence level of 99.5 per cent over a one-year period.
(4) The solvency capital requirement shall cover at least the following risks:
1. non-life underwriting risk;
2. life underwriting risk;
3. health underwriting risk;
4. market risk;
5. credit risk;
6. operational risk.
(5) The operational risk under paragraph 4, point 6 shall include legal risk but shall exclude risk arising from strategic decisions as well as reputational risk.
(6) In calculating the solvency capital requirement, the insurer or reinsurer respectively shall take account of the effect of risk mitigation techniques, provided that credit risk and other risks arising from the use of such techniques are appropriately reflected in the solvency capital requirement.
Frequency of calculation
Article 171. (Amended – State Gazette No. 95 of 2017, in force from 01.01.2018) (1) The insurer or reinsurer respectively shall calculate the solvency capital requirement at least once a year and shall report the result of the calculation to the Commission.
(2) The insurer or reinsurer respectively shall maintain eligible own funds covering the last reported solvency capital requirement.
(3) The insurer or reinsurer respectively shall continuously monitor the amount of eligible own funds and the solvency capital requirement.
(4) If the risk profile of the insurer or reinsurer respectively deviates significantly from the assumptions underlying the last reported solvency capital requirement, the insurer or reinsurer respectively shall immediately recalculate the solvency capital requirement and shall report it to the Commission.
(5) (Amended – State Gazette No. 95 of 2017, in force from 01.01.2018) Where there is evidence from which it may be concluded that the risk profile of the insurer or reinsurer respectively has changed significantly since the date of the last reporting of the solvency capital requirement, the Commission may require the insurer or reinsurer respectively to recalculate the solvency capital requirement.

Section II
Calculation of the Solvency Capital Requirement on the Basis of the Standard Formula Standard Formula Art. 172. (1) An insurer, respectively a reinsurer, which has not received authorisation to apply a full or partial internal model, shall calculate the Solvency Capital Requirement by means of the standard formula.
(2) The standard formula and the procedure for calculating the Solvency Capital Requirement by means of it shall be determined by an act of the European Commission and by an ordinance of the Commission.
Replacement of Part of the Parameters of the Standard Formula with Parameters Specific to the Insurer, respectively the Reinsurer Art. 173. (1) After prior approval by the Commission, upon a proposal by the Deputy Chairperson, the insurer, respectively the reinsurer, may, within the framework of the standard formula, replace part of its parameters with parameters that are specific to it, for the calculation of the modules of the life underwriting risk, the non-life underwriting risk or the health underwriting risk. (2) These parameters shall be calibrated on the basis of internal data of the respective insurer or reinsurer or of data that have a direct bearing on its activity, using standardised methods. (3) In the approval procedure, the Commission, upon a proposal by the Deputy Chairperson, shall verify the completeness, accuracy and appropriateness of the data used. Significant Deviations from the Assumptions Underlying the Calculation of the Standard Formula Art. 174. Where it is inappropriate for the Solvency Capital Requirement to be calculated in accordance with the standard formula because the risk profile of the respective insurer or reinsurer deviates significantly from the assumptions underlying the calculation of the standard formula, the Commission, upon a proposal by the Deputy Chairperson, in compliance with Art. 173, may by a reasoned decision require it to replace part of the parameters used in the calculation of the standard formula with parameters specific to it, for the calculation of the modules of the life underwriting risk, the non-life underwriting risk or the health underwriting risk. These specific parameters shall be calculated so as to ensure compliance with Art. 170, paras. 2 and 3.
Section III
Solvency Capital Requirement when Using Internal Models Full and Partial Internal Models Art. 175. (1) An insurer, respectively a reinsurer, may calculate the Solvency Capital Requirement using a full or partial internal model after approval by the Commission upon a proposal by the Deputy Chairperson.
(2) A partial internal model may be used for the calculation of one or more of the following elements:
1. one or more risk modules or sub-modules of the basic Solvency Capital Requirement;
2. the capital requirement for operational risk;
3. the adjustment for the loss-absorbing capacity of technical provisions and deferred tax liabilities.
(3) A partial internal model may be used for the entire activity of the insurer, respectively the reinsurer, or only for one or more significant business units.
Test for the Application of an Internal Model
Art. 176. (1) The internal model must be widely used and must have an important role in the governance system of the insurer, respectively the reinsurer, and in particular:
1. in its risk management system and in the decision-making process;
2. in its processes for the assessment and allocation of its economic capital and its solvency capital, including in the assessment of own funds and solvency.
(2) The frequency of calculating the Solvency Capital Requirement by means of the internal model shall correspond to the frequency with which the insurer, respectively the reinsurer, uses the internal model.
(3) The administrative and supervisory body of the insurer, respectively of the reinsurer, shall be obliged to ensure that the design and functioning of the internal model are appropriate and that the internal model continues to reflect appropriately the risk profile of the respective insurer or reinsurer.
Statistical Quality Standards
Art. 177. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) (1) The internal model and the probability distribution forecast on which it is based must meet the criteria under paras. 2 - 9.
(2) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) The methods used to calculate the probability distribution forecast shall be based on adequate, applicable and appropriate actuarial and statistical techniques and shall be consistent with the methods used to calculate technical provisions. The methods used to calculate the probability distribution forecast shall be based on current and reliable information and on realistic assumptions. The insurer, respectively the reinsurer, must be able to justify the assumptions underlying its internal model to the Commission. (3) The data used for the internal model must be accurate, complete and appropriate. The insurer, respectively the reinsurer, shall be obliged to update the data sets used for calculating the probability distribution forecast at least once a year. (4) A specific method for calculating the probability distribution forecast shall be chosen by the insurer, respectively the reinsurer. Irrespective of the chosen calculation method, the ability of the internal model to classify risk must be sufficient to guarantee its wide use and its role in the governance system of the insurer or reinsurer, as well as compliance with the other requirements under Art. 176, para. 1. The internal model must cover all significant risks to which the insurer, respectively the reinsurer, is exposed, covering at least the risks under Art. 170, para. 4. (5) With regard to diversification effects, the insurer, respectively the reinsurer, may take into account in its internal model dependencies both within and between risk categories, provided that the Commission considers that the system for assessing these diversification effects is adequate. (6) The insurer, respectively the reinsurer, may take full account of the effect of risk mitigation techniques in its internal model, provided that credit risk and other risks arising from the use of such techniques are appropriately reflected in the internal model. (7) The insurer, respectively the reinsurer, shall be obliged to assess accurately in its internal model the specific risks relating to financial guarantees and contractual options where these are material. It shall also assess the risks relating to both the options of the insured persons and the contractual options for the insurer, respectively the reinsurer. For this purpose, it shall take into account the impact of future changes in financial and non-financial conditions on the exercise of these options. (8) In its internal model, the insurer, respectively the reinsurer, may take into account future actions of its administrative bodies which it would be reasonable to take in specific circumstances. In these cases, the time necessary to take such actions shall also be taken into account. (9) In its internal model, the insurer, respectively the reinsurer, shall be obliged to take into account all payments to insured and beneficiary persons which it expects to make, irrespective of whether these
payments are contractually guaranteed or not. Calibration Standards Art. 178. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) (1) For the purposes of internal modelling, the insurer, respectively the reinsurer, may use a different time period or risk measurement method from those under Art. 170, para. 3, insofar as the results of the internal model allow the calculation of the Solvency Capital Requirement in such a way as to guarantee to insured and beneficiary persons a level of protection equivalent to that provided for under Art. 170. (2) Where possible, the insurer, respectively the reinsurer, shall derive the Solvency Capital Requirement directly from the probability distribution forecast generated by its internal model, using the Value-at-Risk method under Art. 170, para. 3. (3) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) Where the insurer, respectively the reinsurer, cannot derive the Solvency Capital Requirement directly from the probability distribution forecast generated by the internal model, the Commission may permit the use of approximations in the process of calculating the Solvency Capital Requirement if the respective person can prove that insured persons are provided with a level of protection equivalent to that provided for under Art. 170. (4) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) The Commission may require the insurer, respectively the reinsurer, to apply its internal model to relevant portfolios that represent a basis for comparison, and using assumptions based on external rather than internal data, in order to establish the calibration of the internal model and to verify whether its specifications comply with generally accepted market practice. Review of the Sources of Profit and Loss Art. 179. The insurer, respectively the reinsurer, shall at least once a year review the causes and sources of profits and losses for each significant business unit and demonstrate how the risk categorisation chosen in the internal model explains the causes and sources of profits and losses. The risk categorisation and the review of the sources of profit and loss must reflect the risk profile of the insurer, respectively the reinsurer. Validation Standards Art. 180. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) (1) The insurer, respectively the reinsurer, shall have a regular cycle for model validation, which includes monitoring of the results of the application of the internal model, assessment of the continuing appropriateness of its specifications and testing of its results against practical results. (2) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) The model validation process shall include an effective statistical process for validating the internal model, which allows the insurer, respectively the reinsurer, to demonstrate to the Commission that the resulting capital requirements are appropriate. (3) The statistical methods
applied shall test the appropriateness of the probability distribution forecast not only against incurred losses but also against all material new data and information related to it. (4) The model validation process shall include an analysis of the stability of the internal model and in particular testing of the sensitivity of the results of the internal model to changes in key assumptions underlying it. It shall also include an assessment of the completeness, accuracy and appropriateness of the data used by the internal model. Documentation Standards Art. 181. (1) The insurer, respectively the reinsurer, shall be obliged to document the design and operational details of the internal model. (2) The documentation must:
1. certify compliance with the requirements under Arts. 176 - 180;
2. provide a detailed overview of the theory, assumptions, mathematical and empirical basis on which the internal model is based;
3. indicate the circumstances in which the internal model does not function effectively.
(3) The insurer, respectively the reinsurer, shall document all significant changes in its internal model in accordance with Art. 186.
External Models and Data
Art. 182. The use by the insurer, respectively the reinsurer, of models and data obtained from third parties shall not be grounds for exemption from any of the requirements under Arts. 176 - 181.
Application of the Acts of the European Commission Art. 183. The additional requirements for internal models shall be regulated by an act of the European Commission, as well as by an ordinance of the Commission.
General Provisions in Connection with the Approval of a Full or Partial Internal Model Art. 184. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018; supplemented - State Gazette No. 25 of 2022, in force from 29.03.2022) (1) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) The insurer, respectively the reinsurer, shall submit an application to the Commission for approval of an internal model. At least written evidence that the model meets the requirements under Arts. 176 - 181 shall be attached to the application. Where the application by the insurer, respectively the reinsurer, is for approval of a partial internal model, the requirements under Arts. 176 - 181 shall be adapted to reflect the limited scope of the model. The Commission may require all necessary evidence, and Art. 7 of the Law on Limiting Administrative Regulation and Administrative Control over Business Activity shall not apply. (2) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) The Commission, upon a proposal by the Commission, shall rule within 6 months of receipt of the application under para. 1, accompanied by all necessary evidence. (3) The Commission shall approve the internal model only if it considers that the systems of the insurer, respectively the reinsurer, for identifying, measuring, monitoring, managing and reporting risk are adequate and that the internal model meets the requirements under para. 1. (4) The decision rejecting the application under para. 1 shall be reasoned. (5) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) The Commission may by a reasoned decision require an insurer, respectively a reinsurer, which has received approval to use an internal model, to provide an estimate of the Solvency Capital Requirement according to the standard formula. (6) (New - State Gazette No. 25 of 2022, in force from 29.03.2022) The Commission shall inform the European Authority in accordance with Art. 35, para. 1 of Regulation (EU) No. 1094/2010 of any application by an insurer, respectively a reinsurer, for the use and modification of the internal model. The Commission may also request the European Authority to provide technical assistance in accordance with Art. 8, para. 1, letter "b" of Regulation (EU) No. 1094/2010 when considering the application under para. 1. Specific Provisions for the Approval of a Partial Internal Model Art. 185. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) (1) The Commission, upon a proposal by the Deputy Chairperson, shall approve a partial internal model if the requirements under Art. 184 and the following additional conditions are met:
1. the reason for the limited scope of the model is duly justified by the insurer, respectively by the reinsurer;
2. the resulting Solvency Capital Requirement reflects the risk profile of the insurer, respectively the reinsurer, in a timely manner and is consistent with the principles under Section One;
3. the design of the partial internal model is consistent with the principles under Section One, allowing the partial internal model to be fully integrated into the standard formula of the Solvency Capital Requirement.
(2) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) In the process of considering an application for the use of a partial internal model covering only certain sub-modules of a specific risk module or some of the business units of the insurer, respectively the reinsurer, in connection with a specific risk module or parts of both, the Commission may request the applicant to submit a realistic transition plan for extending the scope of this model. The transition plan must present the manner in which the insurer, respectively the reinsurer, envisages extending the scope of the model to other sub-modules or business units in order to ensure that the model covers the predominant part of their activity with regard to the specific risk module. Policy for Changes to a Full or Partial Internal Model Art. 186. (1) As part of the initial process of approving an internal model, the Commission, upon a proposal by the Deputy Chairperson, shall approve a policy for changes to the model of the insurer, respectively the reinsurer. The insurer, respectively the reinsurer, may change its internal model only in compliance with this policy. (2) The policy under para. 1 shall define the significant and non-significant changes in the internal model. (3) Significant changes to the internal model, as well as changes to the policy under para. 1, shall be subject to prior approval by the Commission, upon a proposal by the Deputy Chairperson. (4) Non-significant changes in the internal model shall not be subject to prior approval where they are developed in accordance with the policy under para. 1. Responsibility of the Administrative Bodies Art. 187. (1) The administrative body of the insurer, respectively of the reinsurer, shall approve the application for approval of an internal model, as well as the application for approval of significant subsequent changes to it. (2) The administrative body of the insurer, respectively of the reinsurer, shall be responsible for the implementation of systems guaranteeing the proper and continuous functioning of the internal model. Return to the Standard Formula Art. 188. After receiving approval to use a full or partial internal model, the insurer, respectively the reinsurer, may not return to calculating the Solvency Capital Requirement according to the standard formula, except in the case of justified necessity and after approval by the Commission, upon a proposal by the Deputy Chairperson. Non-compliance with the Internal Model Art. 189. (1) If, after receiving approval to use an internal model, the insurer, respectively the reinsurer, ceases to comply with the requirements under Arts. 176 - 181, it shall immediately submit to the Commission a plan for restoring compliance with the model within a reasonable period or prove that the consequences of the non-compliance are immaterial. (2) In the event that the insurer, respectively the reinsurer, fails to implement the plan under para. 1, the Commission, upon a
proposal by the Deputy Chairperson, may order it to return to the standard formula for calculating the Solvency Capital Requirement. Significant Deviations from the Assumptions Underlying the Calculation of the Standard Formula Art. 190. Where it is not appropriate for the Solvency Capital Requirement to be calculated in accordance with the standard formula because the risk profile of the respective insurer or reinsurer deviates significantly from the assumptions underlying the calculation of the standard formula, the Commission, upon a proposal by the Deputy Chairperson, may by a reasoned decision order the respective person to use an internal model for calculating the Solvency Capital Requirement or individual risk modules thereof.
Chapter Fourteen
MINIMUM CAPITAL REQUIREMENT
Definition
Art. 191. The Minimum Capital Requirement is the minimum amount to which the eligible basic own funds of the insurer or reinsurer must be equal.
Calculation of the Minimum Capital Requirement Art. 192. (Amended - State Gazette No. 25 of 2022, in force from 19.10.2022; amended - State Gazette No. 70 of 2024, in force 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 Art. 140, para. 2 of the TFEU, and the Regulation of the Council of the European Union, adopted in accordance with Art. 140, para. 3 of the TFEU) (1) The Minimum Capital Requirement shall be calculated in accordance with the following principles:
1. it shall be calculated in a clear and simple manner which allows it to be audited;
2. it shall correspond to such a level of eligible basic own funds below which insured and beneficiary persons are exposed to an unacceptable level of risk if the insurer or reinsurer continues to carry on activity;
3. the linear function under para. 3, which is used to calculate the Minimum Capital Requirement, shall be calibrated to the Value-at-Risk of the basic own funds of the insurer or reinsurer at a confidence level of 85 per cent over one year.
(2) The Minimum Capital Requirement may not be less than the following absolute minimum amounts:
1. (amended - State Gazette No. 25 of 2022, in force from 19.10.2022; amended - State Gazette No. 70 of 2024, in force 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 Art. 140, para. 2 of the TFEU, and the Regulation of the Council of the European Union, adopted in accordance with Art. 140, para. 3 of the TFEU) EUR 2,700,000 - for an insurer, including a captive insurer, licensed for insurance covering one or more of the classes of insurance under items 1 - 9 and 16 - 18, Section II, letter "A" of Annex No. 1, except in the cases under item 2, letter "b", where the absolute minimum amount provided for therein applies;
2. (amended - State Gazette No. 25 of 2022, in force from 19.10.2022; amended - State Gazette No. 70 of 2024, in force 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 Art. 140, para. 2 of the TFEU, and the Regulation of the Council of the European Union, adopted in accordance with Art. 140, para. 3 of the TFEU) EUR 4,000,000 - for an insurer licensed for insurance covering one or more of the classes of insurance under:
a) Section I of Annex No. 1; b) items 10 - 15, Section II, letter "A" of Annex No. 1;
3. (amended - State Gazette No. 25 of 2022, in force from 19.10.2022; amended - State Gazette No. 70 of 2024, in force 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 Art. 140, para. 2 of the TFEU, and the Regulation of the Council of the European Union, adopted in accordance with Art. 140, para. 3 of the TFEU) EUR 3,900,000 - for a reinsurer;
4. (amended - State Gazette No. 25 of 2022, in force from 19.10.2022; amended - State Gazette No. 70 of 2024, in force 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 Art. 140, para. 2 of the TFEU, and the Regulation of the Council of the European Union, adopted in accordance with Art. 140, para. 3 of the TFEU) EUR 1,300,000 - for a captive reinsurer;
5. the sum of the amounts under items 1 and 2 for insurers which carry on activity simultaneously under Section I of Annex No. 1 and under item 1 and/or 2, Section II, letter "A" of Annex No. 1.
(3) Subject to para. 4, the Minimum Capital Requirement shall be calculated as a linear function of all or part of the following variables: technical provisions, written premiums, capital at risk, deferred tax liabilities and administrative expenses of the insurer, respectively of the reinsurer. The variables used shall be measured after deduction of the share of reinsurers. (4) Notwithstanding para. 2, the Minimum Capital Requirement may not be less than 25 per cent and may not exceed 45 per cent of the Solvency Capital Requirement, calculated in accordance with the standard formula or using an internal model and including all capital add-ons imposed under Art. 584. (5) The insurer, respectively the reinsurer, shall calculate the Minimum Capital Requirement at least quarterly and shall report the result of the calculation to the Commission. Insurers, respectively

reinsurers are not obliged to calculate the solvency capital requirement quarterly in the cases of the restrictions under paragraph 4.
(6) Where the minimum capital requirement of an insurer or reinsurer is determined by any of the restrictions referred to in paragraph 4, it shall provide the Commission with an explanation of this.
(7) The methods for calculating the minimum capital requirement shall be determined by an act of the European Commission.
Chapter Fifteen
PROVISION OF INFORMATION TO THE SUPERVISORY AUTHORITY Reliefs in connection with periodic reporting
Article 193. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) (1) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) The Commission may exempt an insurer or reinsurer from providing information under Article 127, paragraph 2, item 1, where the period for its provision is shorter than one year, provided that:
1. the provision of that information would constitute an excessive administrative burden in relation to the nature, scale and complexity of the risks associated with its activity;
2. that information is submitted at least once a year.
(2) Paragraph 1 shall not apply to the quarterly reporting of the result of the calculation of the minimum capital requirement under Article 192, paragraph 5, first sentence.
(3) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) Paragraph 1 shall not apply in respect of insurers or reinsurers which are part of a group within the meaning of Article 233, paragraph 1 or 2, unless they prove to the Commission with justification that regular supervisory reporting more frequently than once a year is inappropriate given the nature, scale and complexity of the risks associated with the activity of the group. (4) The relief under paragraph 1 shall be granted to insurers, respectively reinsurers, which do not represent more than 20 per cent of the life insurance market, respectively the non-life insurance market, and in reinsurance, whereby the market share in non-life insurance shall be determined on the basis of gross written premiums, and the market share in life insurance shall be determined on the basis of gross technical provisions. (5) When applying the relief under paragraph 1, priority shall be given to the smallest insurers, respectively reinsurers. Reliefs in connection with the submission of detailed information
Article 194. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) (1) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) The Commission may exempt an insurer or reinsurer from the detailed provision of information (item by item), provided that:
1. the provision of the information would constitute an excessive administrative burden in relation to the nature, scale and complexity of the risks associated with its activity;
2. the submission of the information is not necessary for the exercise of effective supervision over the insurer or reinsurer;
3. the exemption does not jeopardise the stability of the relevant financial systems in the European Union;
4. the insurer, respectively the reinsurer, can provide the information at any time upon request.
(2) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) Paragraph 1 shall not apply in respect of an insurer or reinsurer which is part of a group within the meaning of Article 233, paragraph 1 or 2, unless they prove to the Commission with justification that detailed provision of information (item by item) is inappropriate given the nature, scale and complexity of the risks associated with the activity of the group, and if financial stability is not jeopardised. (3) Article 193, paragraphs 4 and 5 shall apply to the relief under paragraph 1. Criteria for applying the reporting reliefs
Article 195. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) (1) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) For the application of Articles 193 and 194 and as part of the supervisory review process, the Commission shall assess whether the provision of information would constitute an excessive administrative burden in relation to the nature, scale and complexity of the risks of the insurer or reinsurer, taking into account at least:
1. the volume of its premiums, technical provisions and assets;
2. the volatility of claims and benefits;
3. the market risks arising from investments;
4. the level of risk concentration;
5. the total number of life insurance and non-life insurance classes for which a licence has been granted;
6. the possible consequences of asset management on financial stability;
7. the systems and structures of the insurer, respectively the reinsurer, for providing information for supervisory purposes and the policy on the submission of information under Article 127, paragraph 7;
8. the adequacy of its management system;
9. the level of own funds to cover the solvency capital requirement and the minimum capital requirement;
10. whether the person is a captive insurer or reinsurer covering only risks associated with the industrial or commercial group to which it belongs.
(2) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) When determining the market share under Article 193, paragraph 4 and under Article 194, paragraph 3 in conjunction with Article 193, paragraph 4, the Commission shall apply the guidelines adopted by the European Authority.
Chapter Sixteen
INVESTMENTS
Section I
(New - State Gazette No. 26 of 2020)
Rules on investment
Freedom of investment
Article 196. (1) The insurer, respectively the reinsurer, may not be required to invest in specific categories of assets.
(2) The investment decisions of the insurer, respectively the reinsurer, or of the persons managing their investment activity, may not be subject to prior approval or to a notification regime.
(3) The Commission may, by ordinance, restrict the assets or reference values to which policies under insurance linked to investment funds may be linked.
Location of assets and prohibition of pledging assets
Article 197. (Amended - State Gazette No. 85 of 2023, in force from 01.01.2023) (1) Assets covering technical provisions in respect of risks situated within the European Union may be located in any Member State, as well as in a third country.
(2) Paragraph 1 shall also apply to assets covering provisions for claims against a reinsurer with a registered office in the Republic of Bulgaria, in another Member State or in a third country whose solvency regime is recognised as equivalent.
(3) (Amended - State Gazette No. 85 of 2023, in force from 01.01.2023) The Commission may not impose a requirement to pledge assets covering technical provisions where the reinsurer is an insurance or reinsurance undertaking licensed in the Republic of Bulgaria or in another Member State.
Section II
(New - State Gazette No. 26 of 2020)
Transparency of life insurers and reinsurers covering life insurance obligations Scope
Article 197a. (New - State Gazette No. 26 of 2020) (1) This Section shall apply to:
1. insurers carrying out life insurance activities within the meaning of Section I of Annex No. 1;
2. reinsurers carrying out reinsurance activities within the meaning of Article 4, insofar as those activities cover life insurance obligations.
(2) This Section shall apply to the persons under paragraph 1 where they invest in shares of companies with a registered office in a Member State admitted to trading on a regulated market in a Member State.
Engagement policy
Article 197b. (New - State Gazette No. 26 of 2020; amended, State Gazette No. 16 of 2022) (1) The person under Article 197a, paragraph 1 shall adopt and publish an engagement policy, as well as information on its implementation.
(2) (Amended - State Gazette No. 16 of 2022) In the engagement policy, the person under Article 197a, paragraph 1 shall state how it integrates shareholder engagement in its investment strategy in the companies in which it invests. In the engagement policy, the person under Article 197a, paragraph 1 shall describe:
1. the monitoring of relevant aspects of the activities of the companies in which it invests, including strategy, financial and non-financial results and risk, capital structure and social impact, environmental impact and corporate governance;
2. the conduct of communication with the companies in which it invests;
3. the exercise of voting rights and other rights attached to shares, including the criteria applied for insignificant voting due to the subject matter of the vote or the size of the shareholding in the company;
4. cooperation with other shareholders and communication with the relevant stakeholders in the companies in which it invests;
5. the management of actual and potential conflicts of interest related to shareholder engagement in the companies in which it invests.
(3) The person under Article 197a, paragraph 1 shall annually publish information on the implementation of the engagement policy, which shall contain:
1. a general description of the voting behaviour;
2. an explanation of the most important votes;
3. information on whether the services of a proxy advisor within the meaning of § 1, item 55 of the Supplementary Provisions of the Public Offering of Securities Act have been used;
4. information on how the voting rights attached to shares in the companies in which it has invested have been exercised, except where the vote is insignificant according to the criteria under paragraph 2, item 3.
(4) The engagement policy, including its amendments and supplements, shall be published within 7 days of the adoption of the relevant decision.
(5) The person under Article 197a, paragraph 1 may decide not to adopt an engagement policy, by publishing detailed reasons for this within the period under paragraph 4.
(6) The person under Article 197a, paragraph 1 may decide not to comply with any of the requirements under paragraph 2, respectively paragraph 3, by publishing detailed reasons for this within the period under paragraph 4.
(7) The information under paragraph 3 shall be published within three months after the end of the financial year in which the voting rights were exercised, and the information must remain accessible until the next publication.
(8) The information under paragraphs 1 to 6 shall be published on the website of the person under Article 197a, paragraph 1 and access to it shall be free of charge. Where an asset manager applies the engagement policy and votes on behalf of a person under Article 197a, paragraph 1, the person under Article 197a, paragraph 1 shall indicate by electronic link the place on the website of the asset manager where information on voting is published. Transparency of the equity investment strategy
Article 197c. (New - State Gazette No. 26 of 2020) (1) The persons under Article 197a, paragraph 1 shall publish information on how the main elements of their equity investment strategy are consistent with the profile and duration of their liabilities, and in particular long-term liabilities, and how they contribute to the medium-term and long-term performance of their assets.
(2) Where an asset manager invests on behalf of a person under Article 197a, paragraph 1 at its own discretion for each individual client or through a collective investment undertaking, the person under Article 197a, paragraph 1 shall publicly disclose the following information regarding its arrangements with the asset manager:
1. how the arrangement with the asset manager incentivises the asset manager to align its investment strategy and decisions with the profile and duration of the liabilities of the person under Article 197a, paragraph 1;
2. how that arrangement incentivises the asset manager to make investment decisions based on assessments of the medium-term and long-term financial and non-financial performance of the investee company and to engage with the investee companies in order to improve their performance in the medium and long term;
3. how the method and time horizon of the evaluation of the asset manager's performance and the remuneration for asset management services are in line with the profile and duration of the liabilities of the person under Article 197a, paragraph 1, taking into account absolute long-term returns;
4. how it monitors the portfolio turnover costs incurred by the asset manager and how it defines and monitors the target turnover or range of target turnover of the assets in the portfolio;
5. what the duration of the arrangements with the asset manager is.
(3) Where the arrangements with the asset manager do not contain one or more of the elements listed in paragraph 2, the person under Article 197a, paragraph 1 shall publish detailed reasons for this.
(4) The information under paragraphs 1 to 3 shall be published on the website of the person under Article 197a, paragraph 1, updated annually and upon material changes, and access to it shall be free of charge.
(5) The person under Article 197a, paragraph 1, when performing its obligations under paragraphs 1 to 3, may include that information in its solvency and financial condition report under Article 129, by indicating by electronic link the place on its website where the report is published.
PART FOUR
FINANCIAL CONDITION REQUIREMENTS FOR INSURERS WITHOUT ACCESS TO THE SINGLE MARKET
Chapter Seventeen
REQUIREMENTS FOR TECHNICAL PROVISIONS AND THE ASSETS COVERING THEM Additional rules for the establishment of technical provisions
Article 198. (Amended - State Gazette No. 70 of 2024, in force from the date determined in a 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) of the TFEU, and a Regulation of the Council of the European Union adopted in accordance with Article 140(3) of the TFEU) (1) The technical provisions of an insurer without access to the single market shall be calculated for each class of insurance in which it carries on business, without deducting the share of reinsurers, respectively retrocessionaires.
(2) Where the obligations under an insurance or reinsurance contract are denominated in a foreign currency or the contract contains an indexation clause in a foreign currency, the technical provisions shall be established in the same currency.
(3) (Amended - State Gazette No. 70 of 2024, in force from the date determined in a 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) of the TFEU, and a Regulation of the Council of the European Union adopted in accordance with Article 140(3) of the TFEU) Where the obligations under paragraph 1 are not denominated in a specific currency, the technical provisions shall be established in euro. In that case, the insurer may establish the provisions in the currency in which the premium is agreed, if a reasoned conclusion can be made that the payment of the benefit will be made in that currency. (4) Where a claim for payment is made in a currency other than the currency determined in accordance with paragraph 1 or 2, the provision for outstanding claims shall be established in the currency in which the claim is made. (5) Where the amount of the claim is determined in a currency other than that determined under paragraphs 1 to 3 and this is known to the insurer, it may determine the provision for outstanding claims in that currency. General rules for the coverage of technical provisions
Article 199. (1) The insurer without access to the single market shall be obliged at all times to cover the gross amount of the technical provisions with matching assets under the conditions of this Chapter.
(2) The Commission, on a proposal from the Deputy Chair, may prohibit the free disposal of assets of an insurer under paragraph 1 which does not fulfil the obligation under paragraph 1 or under Article 200, paragraph 3.
Types of assets covering technical provisions
Article 200. (Amended - State Gazette No. 85 of 2023, in force from 01.01.2023) (1) Only the following assets may be used to cover technical provisions:
1. securities admitted to trading on a regulated market or multilateral trading facility in the Republic of Bulgaria or in another Member State, as well as shares, qualifying bonds and other qualifying debt securities admitted to trading on internationally recognised and liquid regulated markets or multilateral trading facilities in a third country;
2. securities issued or guaranteed by the Republic of Bulgaria or by another Member State, as well as qualifying debt securities issued or guaranteed by third countries, their central banks or international organisations in which the Republic of Bulgaria or another Member State is a member, as well as transferable loans for which no bonds are issued, assumed by the Republic of Bulgaria or by another Member State;
3. units issued by collective investment schemes, and units and shares of national investment funds under the Collective Investment Schemes and Other Undertakings for Collective Investment Act, as well as units of collective investment schemes with a registered office in another Member State;
4. ownership rights over land and buildings;
5. (amended - State Gazette No. 85 of 2023, in force from 01.01.2023) claims against reinsurers, including reinsurance recoverables, and against special purpose vehicles for alternative transfer of insurance risk;
6. (repealed - State Gazette No. 85 of 2023, in force from 01.01.2023);
7. (repealed - State Gazette No. 85 of 2023, in force from 01.01.2023);
8. claims under loans against life insurance policies;
9. cash in hand and in current accounts or deposits in banks which are entitled to carry out banking activity in the Republic of Bulgaria or in another Member State;
10. (repealed - State Gazette No. 85 of 2023, in force from 01.01.2023);
11. undisputed claims in connection with the recovery of tax obligations.
(2) Qualifying debt securities within the meaning of paragraph 1 are debt securities with an investment rating from an internationally recognised rating agency.
(3) All assets shall be valued in accordance with the principle of prudence, taking into account the risk of their inability to be realised. The value of claims recognised for the coverage of technical provisions shall be calculated in compliance with the principle of prudence, taking into account the risk of their possible non-satisfaction. (4) Derivatives on securities, including options, futures and swaps, related to assets covering technical provisions, shall be recognised for the coverage of technical provisions only if they contribute to reducing investment risk or facilitate the effective management of the portfolio. They shall be valued in compliance with the principle of prudence and may be taken into account in the valuation of the underlying assets. (5) Claims against third parties shall be recognised for the coverage of technical provisions after deducting all counter-obligations to the third parties. (6) The following shall not be recognised for the coverage of technical provisions:
1. property rights encumbered with a pledge, mortgage or other charges;
2. investments in a subsidiary;
3. claims which are overdue by more than three months after the due date.
(7) In exceptional circumstances and on a reasoned prior request of the insurer, the Commission may temporarily permit the use of other types of assets to cover technical provisions, if the requirements of Article 124 are met.
General rules on diversification
Article 201. (1) The insurer without access to the single market shall invest the gross amount of the technical provisions established in assets under Article 200 subject to the following limits:
1. up to 20 per cent in immovable property, but not more than 10 per cent in a single immovable property or in a group of immovable properties which, by their location, may be considered a single investment;
2. up to 80 per cent in securities under Article 200, paragraph 1, items 1 and 3, but not more than 30 per cent in other assets other than qualifying bonds and other qualifying debt securities;
3. unlimited in assets under Article 200, paragraph 1, item 2;
4. up to 5 per cent in securities issued by a single issuer, whereby the limit shall not apply to the assets under Article 200, paragraph 1, item 2;
5. up to 50 per cent in bank deposits, but not more than 25 per cent of the gross amount in a single bank;
6. up to three per cent in cash in hand and in current accounts.
(2) The maximum amount of investments in immovable property under paragraph 1, item 1 may not exceed 30 per cent of the difference between the gross amount of the technical provisions established and the claims against reinsurers converted in accordance with Article 202, paragraphs 1 and 2.
(3) The maximum amount under paragraph 1, item 4 may be 10 per cent where the insurer invests not more than 40 per cent of the gross amount of the technical provisions in securities of issuers to each of which it has an exposure of over 5 per cent of its assets. The maximum amount under paragraph 1, item 4 may be 20 per cent where the insurer invests the technical provisions in debt securities issued by a credit institution with a registered office in a Member State and subject to special supervision for the purpose of protecting the holders of such securities. In particular, the contributions received against the issue of securities under the second sentence must be invested in accordance with the provisions of the law in assets which throughout the period of validity of the securities can cover the claims under those securities and which, in the event of insolvency of the issuer, will be used for the preferential satisfaction of claims for principal and accrued interest. The investment in units and shares of national investment funds may not exceed 15 per cent of the gross amount of the technical provisions, whereby paragraph 1, item 4 shall also apply and the requirements of Article 124 shall be met. (4) The assets under paragraph 1 may not be pledged, mortgaged or encumbered with other charges. (5) The assets covering technical provisions shall be diversified and distributed so that no single category of assets, investment market or individual investment has a significant share. (6) Investment in categories of assets which are of a high degree of risk due to their nature or the characteristics of the issuer, as well as the share of assets covering technical provisions which have low liquidity, must be limited to reasonable levels. Claims
Article 202. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018; amended, State Gazette No. 85 of 2023, in force from 01.01.2023) (1) (Amended - State Gazette No. 85 of 2023, in force from 01.01.2023) A claim against a reinsurer, including a reinsurance recoverable, may be recognised for the coverage of technical provisions after deducting retained deposits and obligations to the respective reinsurer.
(2) (Amended - State Gazette No. 85 of 2023, in force from 01.01.2023) A claim, respectively a reinsurance recoverable under paragraph 1, shall be recognised for the coverage of technical provisions up to:
1. the value converted under paragraph 1 without limitation, if the reinsurer has an investment credit rating from at least one of the rating agencies determined by a decision of the Commission;
2. fifty per cent of the value converted under paragraph 1, if the reinsurer has a credit rating from at least one of the rating agencies under item 1 below investment grade;
3. twenty per cent of the value converted under paragraph 1, if the reinsurer has no credit rating from any of the rating agencies under item 1.
(3) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018; amended, State Gazette No. 85 of 2023, in force from 01.01.2023) Insurers shall declare to the Commission the reinsurers with which they have concluded reinsurance contracts, as

and provide information on their credit rating within 7 days of concluding the contract. The Commission may determine amounts different from those determined under para. 2 for the recognition of a receivable from a specific reinsurer or of a reinsurance recovery from a specific reinsurer, if there are circumstances that allow a different objective assessment of the stability of the reinsurer. The Commission may not prohibit the conclusion of a reinsurance contract with a reinsurer licensed under this Code or with a reinsurer from a Member State. (4) (Repealed - State Gazette, No. 85 of 2023, in force from 01.01.2023). (5) (Repealed - State Gazette, No. 85 of 2023, in force from 01.01.2023). (6) Receivables under loans granted under life insurance policies shall be recognized as coverage of technical reserves up to the amount of the surrender value under the respective policies under which the loans were granted. (7) (Amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) Paragraphs 1 - 3 shall also apply to receivables under reinsurance contracts concluded with insurers, respectively to reinsurance recoveries from such insurers, which carry on active reinsurance. Receivables from special purpose vehicles Art. 203. (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) (1) A receivable from a special purpose vehicle for alternative transfer of insurance risk may be recognized as coverage of technical reserves after deducting the liabilities to the respective special purpose vehicle and provided that it is licensed in the Republic of Bulgaria or in another Member State and meets the requirements of Directive 2009/138/EC. (2) A receivable shall be recognized as coverage of technical reserves up to:
1. eighty per cent of the converted value under para. 1, if the vehicle has an investment credit rating from at least one of the rating agencies under Art. 202, para. 2, item 1;
2. forty per cent of the converted value under para. 1, if the vehicle has a credit rating from at least one of the rating agencies under Art. 202, para. 2, item 1 outside the investment grade;
3. two per cent of the converted value under para. 1, if the vehicle has no credit rating from any of the rating agencies under Art. 202, para. 2, item 1.
(3) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) Insurers shall declare to the Commission the special purpose vehicles for alternative transfer of insurance risk with which they have concluded contracts, as well as information on their credit rating within 7 days of the conclusion of the contract. The Commission may determine amounts different from those determined under para. 2 for the recognition of a receivable from a specific special purpose vehicle for coverage of technical reserves, if there are circumstances that allow a different objective assessment of the stability of the vehicle. The Commission may allow coverage of technical reserves also with receivables from a special purpose vehicle licensed in a third country, where it meets requirements similar to the requirements under para. 1 and an objective assessment of its stability and solvency can be made. Deferred acquisition costs Art. 204. (Repealed - State Gazette, No. 85 of 2023, in force from 01.01.2023). Rules on territorial distribution Art. 205. (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) (1) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) Technical reserves shall be covered by assets located in the territory of the Republic of Bulgaria or in the territory of a Member State. With permission of the Commission, issued for each individual case, technical reserves may also be covered by assets located in the territory of a third country. (2) The requirement for territorial distribution of assets under para. 1 shall not apply in cases where the technical reserves are covered by investments in receivables from reinsurers in the ratio determined in Art. 202. (3) The location of assets shall be:
1. for the right of ownership over immovable property - the location of the immovable property;
2. for securities:
a) the seat of the issuer; b) the seat of the bank - where the securities are guaranteed by a bank; c) the seat of the depositary - where the securities are dematerialized;
3. for deposits - the place where the deposit contract was concluded;
4. for other receivables - the seat of the debtor;
5. for shares in investment funds - the location of the assets with a predominant share included in the fund, determined in accordance with the conditions of items 1 - 4.
Rules on currency matching
Art. 206. (Amended - State Gazette, No. 85 of 2023, in force from 01.01.2023; amended, No. 70 of 2024, in force from the date determined in a Decision of the Council of the European Union on the adoption of the euro by the Republic of Bulgaria, adopted in accordance with Art. 140, paragraph 2 of the TFEU, and a Regulation of the Council of the European Union, adopted in accordance with Art. 140, paragraph 3 of the TFEU) (1) Where the coverage under an insurance contract is determined in a given currency, the insurer's liabilities shall be accounted for as payable in the same currency. The assets covering the technical reserves shall be in the same currency in which the liabilities arising from the contracts under which the technical reserves are formed are denominated. (2) (Amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) The insurer may not apply para. 1 in covering the technical reserves with assets if the application of this principle would lead to maintaining assets in that currency in an amount not more than 7 per cent of the assets in other currencies. (3) (Amended - State Gazette, No. 70 of 2024, in force from the date determined in a Decision of the Council of the European Union on the adoption of the euro by the Republic of Bulgaria, adopted in accordance with Art. 140, paragraph 2 of the TFEU, and a Regulation of the Council of the European Union, adopted in accordance with Art. 140, paragraph 3 of the TFEU) Paragraph 1 shall not apply to the coverage of technical reserves in a currency other than the euro or another currency of a Member State, if investments in that currency are regulated, it is subject to transfer restrictions or for other similar reasons is not suitable for coverage of technical reserves. (4) Up to 20 per cent of the total amount of technical reserves may be covered with assets in a currency other than that in which they are formed, provided that the total amount of assets for coverage of technical reserves in all currencies is at least equal to the total amount of liabilities in all currencies. (5) (Amended - State Gazette, No. 70 of 2024, in force from the date determined in a Decision of the Council of the European Union on the adoption of the euro by the Republic of Bulgaria, adopted in accordance with Art. 140, paragraph 2 of the TFEU, and a Regulation of the Council of the European Union, adopted in accordance with Art. 140, paragraph 3 of the TFEU) Where the technical reserves are formed in another currency of a Member State, the assets for their coverage may be in euro. Special rules for the coverage of the reserve under a unit-linked life insurance Art. 207. (1) Articles 201, 202 and 206 shall not apply to the assets for covering reserves under a unit-linked life insurance, and Art. 124 shall apply. (2) Where under a unit-linked life insurance part of the insurer's liabilities are guaranteed, the technical reserves representing their value shall be covered with assets under the general
procedure.
Chapter Eighteen
OWN FUNDS. MINIMUM GUARANTEE CAPITAL.
(Title amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) Own funds Art. 208. (Amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) (1) (Amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) The own funds of an insurer without access to the single market, reduced by the intangible assets, must at all times be at least equal to the minimum guarantee capital. (2) The own funds of the person under para. 1 shall consist of its assets reduced by the foreseeable liabilities. The items to be included in calculating the amount of own funds shall be determined by an ordinance of the Commission. (3) (Amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) An insurer without access to the single market which is a mutual insurance cooperative shall be obliged to maintain own funds in the amount of the minimum guarantee capital under Art. 210. Solvency margin Art. 209. (Repealed - State Gazette, No. 85 of 2023, in force from 01.01.2023). Guarantee capital Art. 210. (Amended - State Gazette, No. 85 of 2023, in force from 01.01.2023; amended, No. 70 of 2024, in force from the date determined in a Decision of the Council of the European Union on the adoption of the euro by the Republic of Bulgaria, adopted in accordance with Art. 140, paragraph 2 of the TFEU, and a Regulation of the Council of the European Union, adopted in accordance with Art. 140, paragraph 3 of the TFEU) The guarantee capital may not be less than:
1. (amended - State Gazette, No. 70 of 2024, in force from the date determined in a Decision of the Council of the European Union on the adoption of the euro by the Republic of Bulgaria, adopted in accordance with Art. 140, paragraph 2 of the TFEU, and a Regulation of the Council of the European Union, adopted in accordance with Art. 140, paragraph 3 of the TFEU) two million three hundred thousand euro - for an insurer licensed for insurance covering classes of insurance under items 1 - 9 and 16 - 18, Section II, letter "A" of Annex No. 1;
2. (amended - State Gazette, No. 70 of 2024, in force from the date determined in a Decision of the Council of the European Union on the adoption of the euro by the Republic of Bulgaria, adopted in accordance with Art. 140, paragraph 2 of the TFEU, and a Regulation of the Council of the European Union, adopted in accordance with Art. 140, paragraph 3 of the TFEU) three million five hundred thousand euro - for an insurer licensed for insurance covering classes of insurance under Section I of Annex No. 1;
3. the sum of the amounts under items 1 and 2 - for insurers carrying on activity simultaneously under Section I of Annex No. 1 and under item 1 and/or 2, Section II, letter "A" of Annex No. 1.
Chapter Nineteen
ADDITIONAL REQUIREMENTS FOR THE SOLVENCY OF INSURERS - PART OF A GROUP Information on transactions within an insurance group Art. 211. (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018; amended, No. 85 of 2023, in force from 01.01.2023) (1) Subject to supervision shall be the transactions of an insurer without access to the single market which is part of a group with the following persons:
1. an undertaking related to it;
2. an undertaking participating in it;
3. an undertaking related to an undertaking participating in it;
4. a natural person holding a participation in the insurer - part of an insurance group, or a participation in an undertaking related to it;
5. a natural person holding a participation in an undertaking participating in the insurer - part of an insurance group;
6. a natural person holding a participation in an undertaking related to an undertaking participating in the insurer - part of an insurance group.
(2) The transactions under para. 1 shall include:
1. loans and other forms of crediting;
2. guarantees and off-balance-sheet operations;
3. (amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) transactions with own funds serving to cover the minimum guarantee capital;
4. investments;
5. reinsurance operations;
6. allocation of expenses;
7. others.
(3) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) The risk management, internal control and accounting procedures of an insurer - part of a group, must ensure conditions for monitoring, assessment and control of the transactions under para. 1. The Commission may prescribe amendment and supplement of these procedures where they do not sufficiently guarantee the solvency of the insurer - part of a group. (4) The insurer which is part of a group shall submit, together with the quarterly reports, a report on the significant transactions under para. 1. (5) If, on the basis of the review of the procedures under para. 3 or of the information provided under para. 4, the Commission, on a proposal of the Deputy Chair, considers that solvency is endangered, it shall apply the following measures:
1. order the preparation of a plan under Art. 215, and/or,
2. apply a coercive administrative measure under Art. 587.
Adjusted solvency of insurers within a group
Art. 212. (1) The adjusted solvency of an insurer which is a participating undertaking in at least one insurer shall be calculated according to methods determined by an ordinance of the Commission.
(2) When calculating the adjusted solvency in accordance with para. 1, the undertakings which shall be included are:
1. related to the participating insurer under para. 1;
2. participating in the participating insurer under para. 1, and
3. related to the undertakings participating in the participating insurer under para. 1.
(3) If the adjusted solvency calculated under para. 1 is a negative value, the Commission, on a proposal of the Deputy Chair, shall apply the measures under Art. 211, para. 5 to the participating insurer under para. 1.
Additional supervision of an insurer whose parent undertaking is an insurance holding company or a mixed financial holding company Art. 213. (1) With regard to insurers whose parent undertaking is an insurance holding company or a mixed financial holding company, a method of additional supervision determined by an ordinance of the Commission shall apply. (2) When applying the method under para. 1, the activity of all undertakings related to the insurance holding company, respectively to the mixed financial holding company, shall be taken into account. (3) If, as a result of the applied method under para. 1, it is established that the solvency of the insurer is or may be endangered, the Commission, on a proposal of the Deputy Chair, shall apply to it the measures under Art. 211, para. 5.
PART FIVE
RECOVERY MEASURES
Chapter Twenty
MEASURES FOR RECOVERY OF THE FINANCIAL CONDITION Establishment and notification of deterioration of the financial condition Art. 214. (Amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) (1) The insurer, respectively the reinsurer, shall be obliged to adopt and apply procedures for establishing a deteriorating financial condition and to notify the Commission immediately of such deterioration. (2) The insurer shall mandatorily notify the Commission when it establishes that:
1. (amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) there are no sufficient eligible own funds to cover the solvency capital requirement (non-compliance with the solvency capital requirement) - no later than three working days after establishment;
2. (amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) there are no sufficient eligible basic own funds to cover the minimum guarantee capital, respectively the minimum capital requirement (non-compliance with the minimum capital requirement) - no later than three working days after establishment;
3. there is a risk of non-compliance under item 1 or 2 in the next three months - no later than 5 working days after establishment.
Plan for restoration of solvency and short-term plan Art. 215. (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018; amended, No. 85 of 2023, in force from 01.01.2023) (1) (Amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) Within two months of the establishment of non-compliance with the solvency capital requirement, the insurer, respectively the reinsurer, shall be obliged to prepare and submit for approval by the Commission, on a proposal of the Deputy Chair, a realistic plan for achieving solvency which provides, within a period not longer than 6 months from the date of establishment of the non-compliance:
1. (amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) restoration of the eligible own funds to a level ensuring coverage of the solvency capital requirement, and/or
2. limitation of the risk profile so as to guarantee compliance with the solvency capital requirement with the available eligible own funds.
(2) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018; amended, No. 85 of 2023, in force from 01.01.2023) Within one month of the establishment of non-compliance with the minimum capital requirement, respectively the minimum guarantee capital, the insurer, respectively the reinsurer, shall be obliged to prepare and submit for approval by the Commission, on a proposal of the Deputy Chair, a realistic short-term plan which provides, within a period not longer than three months from the date of establishment of the non-compliance:
1. (amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) restoration of the eligible basic own funds to a level ensuring coverage of the minimum capital requirement, respectively the minimum guarantee capital, and/or
2. limitation of the risk profile so as to guarantee compliance with the minimum capital requirement with the available eligible basic own funds.
(3) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) Where the circumstances under para. 1 or 2 have been established by the Commission, it shall order the insurer or the reinsurer immediately to prepare the respective plan and shall determine a deadline for its preparation which may not be longer than the deadlines under para. 1, respectively under para. 2. (4) The plans under paras. 1 and 2 shall also include data or evidence on:
1. a forecast estimate of acquisition, administrative and other management expenses, including commissions of insurance or reinsurance intermediaries;
2. a forecast estimate of income and expenses in respect of direct insurance activity, active and passive reinsurance;
3. a forecast balance sheet;
4. (amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) a forecast estimate of the financial means intended to cover the technical reserves, the solvency capital requirement, and the minimum capital requirement, respectively the minimum guarantee capital;
5. an overall reinsurance policy;
6. measures to limit the risk profile, where such are provided for, and the manner in which they affect the capital requirements;
7. other specific measures for bringing into compliance with the requirements of the Code;
8. sources of the funds for the implementation of the plan;
9. additional requirements determined by an act of the European Commission with regard to insurers applying Part Three and reinsurers.
(5) The Commission, on a proposal of the Deputy Chair, shall rule within 30 days of the submission of the plan, refusing to approve it where the requirements under para. 1, 2 or 4 have not been complied with, as well as where the proposed measures are not realistic or do not sufficiently guarantee the solvency of the insurer, the interests of the insured or the performance of obligations arising from reinsurance contracts, or other mandatory provisions of the law have been violated. Extension of the deadlines for implementation of the plan for restoration of solvency Art. 216. (1) The Commission, on a proposal of the Deputy Chair, may extend the 6-month period under Art. 215, para. 1 by not more than three months, if it considers that this is necessary for the purposes of the recovery of the insurer, respectively the reinsurer, provided that the interests of the insured or the performance of obligations arising from reinsurance contracts are not endangered. (2) In the event of an exceptional adverse situation established by the European Authority, and where necessary - after consultations with the European Systemic Risk Board, affecting insurers and reinsurers representing a significant share of the market or of the affected types of activity, the Commission may extend, in respect of the affected persons, the period under para. 1 by not more than 7 years, taking into account all relevant factors, including the average duration of the technical reserves. (3) An insurer, respectively a reinsurer, which benefits from an extension of the period under para. 2 shall submit to the Commission every three months a progress report. The report shall be submitted no later than 15 days after the end of the quarter to which it relates and shall contain the measures taken and the progress noted for restoring the level of eligible own funds to cover the solvency capital requirement or for lowering the risk profile to guarantee compliance with the solvency capital requirement. (4) The Commission shall revoke the extension of the period under para. 2 where the progress report shows that between the date of establishment of non-compliance with the solvency capital requirement and the date of submission of the progress report there is no significant progress in achieving restoration of the level of eligible own funds to cover the solvency capital requirement or for lowering the risk profile to guarantee compliance with the solvency capital requirement. (5) The Commission may request the European Authority to establish an adverse situation under para. 2 where:
1. insurers or reinsurers representing a significant share of the market or of the affected types of activity are unable to overcome non-compliance with the solvency capital requirement within the period under Art. 215, para. 1, respectively within the period under para. 1;
2. one or more of the following circumstances are present on the market:
a) an unforeseen, acute and sharp collapse of the financial markets; b) prolonged conditions of low interest rates; c) catastrophic events with a significant impact; d) another circumstance determined by an act of the European Commission.
(6) After establishing an adverse situation under para. 2, the Commission shall assist the European Authority in giving an ongoing assessment of whether the conditions for establishing the adverse situation continue to be present and shall notify it of their cessation.
Non-compliance with capital requirements
Art. 217. (Amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) The Commission, on a proposal of the Deputy Chair, may prohibit the free disposal of assets of the insurer, respectively the reinsurer, where non-compliance has been established with:
1. (amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) the minimum capital requirement, respectively the minimum guarantee capital;
2. (amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) the solvency capital requirement and the Deputy Chair considers that there is a danger that the financial condition of the insurer or reinsurer will deteriorate further.
Additional coercive measures
Art. 218. (1) Where, notwithstanding the measures under Art. 215, the financial condition of an insurer, respectively a reinsurer, continues to deteriorate, the Deputy Chair and the Commission may also apply other coercive administrative measures to protect the interests of users of insurance services and to guarantee the performance of obligations under reinsurance contracts. (2) The measures under para. 1 shall correspond to the severity of the financial difficulties of the insurer, respectively the reinsurer, and to their duration in time.
PART SIX
TRANSFER OF PORTFOLIO. TRANSFORMATION
Chapter Twenty-One
TRANSFER OF INSURANCE AND/OR REINSURANCE PORTFOLIO Transfer of portfolio Art. 219. (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018; amended, No. 85 of 2023, in force from 01.01.2023) (1) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) An insurer (transferring insurer) may transfer part or all of its portfolio of insurance contracts to another insurer (assuming insurer) after written permission of the Commission. (2) A transfer of an insurance portfolio shall be allowed where:

1. the receiving insurer holds a licence for the classes of insurance and the risks thereof included in the insurance portfolio that is the subject of the transfer;
2. the receiving insurer has the right to cover the risks under the contracts included in the insurance portfolio in the states in which those risks are located;
3. (amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) after the transfer the receiving insurer will have the necessary eligible own funds to cover the solvency capital requirement, respectively the minimum guarantee capital;
4. the receiving insurer is not implementing measures to restore its financial position;
5. the transfer of the insurance portfolio does not affect the interests of the insured.
Request for issuance of authorisation for transfer of an insurance portfolio Art. 220. (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018; amended, No. 85 of 2023, in force from 01.01.2023) (1) For the issuance of an authorisation for transfer of an insurance portfolio, a request shall be submitted, to which the following shall be attached:
1. a written agreement for the transfer of the insurance portfolio, which contains a list of the insurance contracts being transferred or a clear identification of the insurance contracts being transferred, including the classes of insurance and the risks thereof, and the territorial distribution of the covered risks by state;
2. data on the receiving insurer, where these are not evident from the portfolio transfer agreement, and where the receiving insurer is not headquartered in the Republic of Bulgaria - also data on the Member States in which it has the right to cover risks;
3. a statement of the technical reserves and of the written premiums corresponding to the contracts that are the subject of the transfer;
4. the source primary data for the technical reserves corresponding to the contracts that are the subject of the transfer; the source primary data for the technical reserves shall be provided in the form of an electronic document signed with a qualified electronic signature, in a format and with content determined by an order of the Deputy Chairperson;
5. a list of the assets to be transferred, with their individualisation, as well as evidence of the ownership of those assets;
6. data on guarantees provided by the transferring insurer or by a third party in the event of a possible increase in the reserves and payments under the insurance contracts included in the portfolio subject to transfer;
7. an actuarial report and a declaration by the responsible actuary of the transferring company on the sufficiency of the technical reserves corresponding to the insurance contracts being transferred;
8. (amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) a forecast of the amount of the solvency capital requirement and of the eligible own funds of the receiving insurer after the transfer of the portfolio;
9. (amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) a forecast of the amount of the solvency capital requirement and of the eligible own funds of the transferring insurer after the transfer of the portfolio;
10. appropriate information on the management and organisational structure of the receiving insurer, proving its ability to service the users of insurance services under the insurance contracts being transferred.
(2) After receiving the documents and data under para. 1, the Deputy Chairperson may require the submission of other data and evidence to clarify the financial stability of the receiving insurer and its ability to service the users of insurance services under the insurance contracts being transferred after the transfer.
(3) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) The Commission, on a proposal from the Deputy Chairperson, shall rule on the request for transfer of an insurance portfolio within a two-month period from its receipt. Art. 34, paras. 2, 4 and 5 shall apply, and the period for remedying irregularities or providing additional information shall be not less than 14 days. (4) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) The Commission, on a proposal from the Deputy Chairperson, shall refuse to issue an authorisation if the requirements of this Code and the acts implementing it have not been complied with or the interests of the insured have not been protected. Notification of interested persons. Right to terminate the contract Art. 221. (1) The receiving insurer shall notify the insured in writing of the transfer of the insurance portfolio and of its terms within a 14-day period from the transfer under the procedure of Art. 222, para. 1. Notification shall be deemed effected also if it has been published on the website of the transferring and the receiving insurer, as well as in at least two central daily newspapers. In the case of a transfer of a portfolio with insurances under Section I of Annex No. 1, the publication on the website of the transferring and the receiving insurer shall be maintained until the expiry of the limitation period under each of the transferred contracts. (2) The insured has the right to terminate the contract by notifying the receiving insurer in writing within 60 days of receipt of the notification, respectively of the date of the last publication in a central daily newspaper under para. 1, sentence two. (3) The insured under life insurances have the right to receive the surrender value corresponding to the insurance contract as at the day of the transfer, and the insured under other insurances - the corresponding part of the premium for the unexpired term of the contract, provided that no insurance indemnity has been paid or is not due to be paid. Effect of the transfer Art. 222. (1) The transfer of an insurance portfolio shall have effect from the entry into force of the authorisation under Art. 219, para. 1, and simultaneously with the transfer of the insurance contracts the assets covering the technical reserves shall also be transferred. (2) In the event that the insured has not availed himself of his right under Art. 221, para. 2, the transfer shall produce its effect in respect of all persons who have rights or obligations under the same insurance contract. (3) After the transfer under para. 1, the transferring insurer shall be released from its obligations under the transferred insurance contracts. Transfer of an insurance portfolio within the European Union Art. 223. (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) (1) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) An insurer may transfer part or all of its portfolio of insurance
contracts, including those concluded under the conditions of the right of establishment or the freedom to provide services, to a receiving insurer headquartered in another Member State after authorisation by the Commission, and Arts. 219 - 222 shall apply accordingly. (2) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) The Commission, on a proposal from the Deputy Chairperson, shall issue an authorisation after receiving from the competent authority of the Member State of origin of the receiving insurer a document certifying that after the transfer the receiving insurer will have the necessary eligible own funds to cover the solvency capital requirement. (3) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) Where the insurer transfers insurance contracts concluded through its branch, the Commission shall request the opinion of the competent authority of the Member State of the branch. (4) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) In the cases under paras. 1 and 3, the Commission, on a proposal from the Deputy Chairperson, shall issue an authorisation after receiving the consent of the competent authorities of the Member States where the insurance contracts were concluded under the conditions of the right of establishment or the freedom to provide services. (5) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) If within a three-month period from the inquiry the Commission has not received a reply from the competent authorities under paras. 2 - 4, a positive opinion shall be deemed given, respectively tacit consent shall be deemed to exist. (6) In the cases under paras. 1 and 3, the receiving insurer shall publish a notice of the transfer of the insurance portfolio in accordance with the legislation of the Member State where the risk is located. Transfer of an insurance portfolio by a branch of an insurer from a third country within the European Union Art. 224. (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) (1) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) A branch of an insurer from a third country registered in the Republic of Bulgaria may transfer part or all of its insurance portfolio to a receiving insurer headquartered in the Republic of Bulgaria or in another Member State after authorisation by the Commission on a proposal from the Deputy Chairperson. Arts. 219 - 222 shall apply accordingly. (2) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) In the case of a transfer of an insurance portfolio to a receiving insurer from another Member State, the Commission, on a proposal from the Deputy Chairperson, shall issue an authorisation after receiving from the competent authority of the Member State of origin of the receiving insurer a document certifying that after the transfer that insurer will have the necessary eligible own funds to cover the solvency capital requirement. (3) (Amended - State Gazette,
No. 95 of 2017, in force from 01.01.2018) In the case of a transfer of an insurance portfolio to a receiving insurer from a third country through a branch registered in the Republic of Bulgaria, the Commission shall issue an authorisation if after the transfer the branch has the necessary eligible own funds to cover the solvency capital requirement. Where the branch of the receiving insurer from a third country is subject to supervision by the competent authority under Art. 62, para. 3 of another Member State, the Commission shall issue an authorisation after receiving a document from the respective authority certifying that after the transfer the insurer will have the necessary eligible own funds to cover the solvency capital requirement. In cases where the insurance portfolio is transferred to a branch of an insurer from a third country established in the territory of another Member State, the Commission shall issue an authorisation after receiving a document from the competent authority of the Member State of the branch or, where necessary, from the competent authority under Art. 62, para. 3, certifying that after the transfer the receiving insurer will have the necessary eligible own funds to cover the solvency capital requirement, that the legislation of the Member State of the branch permits such a transfer and that the competent authority agrees that it be carried out. (4) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) In the cases under paras. 1 - 3, the Commission, on a proposal from the Deputy Chairperson, shall issue an authorisation after receiving the consent of the competent authority of the Member State where the risk is located, where that State is not the Republic of Bulgaria. (5) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) If within a three-month period from the inquiry the Commission has not received a reply from the competent authorities under paras. 2 - 4, a positive opinion shall be deemed given, respectively tacit consent shall be deemed to exist. (6) In the cases under paras. 1 - 3, the receiving insurer shall publish a notice of the transfer of the insurance portfolio in accordance with the legislation of the Member State where the risk is located. (7) A transfer of an insurance portfolio containing insurance contracts covering risks located in the Republic of Bulgaria to a branch of an insurer from a third country headquartered in another Member State shall not be permitted. Giving consent in the case of transfer of an insurance portfolio within the European Union Art. 225. (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) (1) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) In the case of a transfer of an insurance portfolio within the European Union including insurance contracts in respect of which the Republic of Bulgaria is the Member State where the risk is located, the Commission, on a proposal from the Deputy Chairperson, shall give
consent to the transfer within a three-month period from receipt of the request of the authority competent to issue the authorisation for the transfer, if the interests of the insured persons are protected. (2) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) In the case of a transfer of an insurance portfolio within the European Union including insurance contracts in respect of which the Republic of Bulgaria is the Member State of the seat of a branch of a transferring insurer from another Member State, the Commission, on a proposal from the Deputy Chairperson, shall give consent to the transfer within a three-month period from receipt of the request of the authority competent to issue the authorisation for the transfer, if the interests of the insured persons are protected. (3) In the event of failure to rule within the period under para. 1, respectively under para. 2, tacit consent shall be deemed to exist. (4) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) The Commission, on a proposal from the Deputy Chairperson, shall refuse to give consent where insurance contracts covering risks located in the Republic of Bulgaria are transferred to:
1. a branch of an insurer from a third country headquartered in another Member State;
2. an insurer from a Member State that does not have the right to cover risks in the territory of the Republic of Bulgaria.
Certification of the solvency capital requirement of an insurer headquartered in the Republic of Bulgaria in the case of transfer of an insurance portfolio from an insurer from another Member State Art. 226. (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) (1) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) Within a three-month period from receipt of a request from the respective competent authority of the Member State of origin of the transferring insurer which intends to transfer an insurance portfolio of contracts concluded under the conditions of the right of establishment or the freedom to provide services to an insurer headquartered in the Republic of Bulgaria, the Commission shall issue a document certifying that after the transfer the receiving insurer will have the necessary eligible own funds to cover the solvency capital requirement. (2) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) For the purposes of issuing the certificate under para. 1, the Commission shall require from the insurer headquartered in the Republic of Bulgaria the documents under Art. 220, para. 1, items 1, 3, 5 - 8 and 10. (3) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) The Commission shall refuse the issuance of a document under para. 1 if the receiving insurer does not have the right to cover the risks under the contracts included in the insurance portfolio in any of the states in which those risks are located, as well as if after the transfer the receiving insurer will not have the necessary eligible own funds to cover the solvency capital requirement, and also where the receiving insurer is implementing a recovery plan and in this connection the interests of the insured are endangered. Certification of the solvency capital requirement of an insurer headquartered in the Republic of Bulgaria in the case of transfer of an insurance portfolio from an insurer from a third country established in a Member State through a branch Art. 227. (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) (1) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) Within a three-month period from receipt of the request of the respective competent authority of the Member State of the branch of an insurer from a third country which intends to transfer an insurance portfolio to an insurer headquartered in the Republic of Bulgaria or to a branch of an insurer from a third country registered in the Republic of Bulgaria, as well as in cases where the Commission is the competent authority under Art. 62, para. 3, the Commission shall issue a document certifying that after the transfer the receiving insurer will have the necessary eligible own funds to cover the solvency capital requirement. (2) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) For the issuance of the document under para. 1, the Commission shall require from the insurer, respectively from the branch
of an insurer from a third country headquartered in the Republic of Bulgaria, the documents under Art. 220, para. 1, items 1, 3, 5 - 8 and 10. (3) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) The Commission shall refuse the issuance of a document under para. 1 if after the transfer the receiving insurer, respectively a branch of an insurer from a third country registered in the Republic of Bulgaria, will not have the necessary eligible own funds to cover the solvency capital requirement and in this connection the interests of the insured are endangered. (4) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) The Commission shall also refuse the issuance of a document under para. 1 where, as a result of the transfer, a branch of an insurer from a third country headquartered in the Republic of Bulgaria will take over a portfolio of contracts covering risks located in other Member States. Special rules for the transfer of a reinsurance portfolio Art. 228. For the transfer of a portfolio of reinsurance contracts between reinsurers, between insurers or between an insurer and a reinsurer, this chapter shall apply with the exception of Art. 219, para. 2, item 5, Art. 223, paras. 3 - 6 and Arts. 224 and 225.
Chapter Twenty-Two
TRANSFORMATION OF AN INSURER OR REINSURER
Conditions for transformation of an insurer or reinsurer Art. 229. (Amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) (1) A transformation of an insurer, respectively a reinsurer, shall be carried out with an authorisation of the Commission, provided that:
1. the rights of the users of insurance services are guaranteed, respectively the performance of obligations under reinsurance contracts;
2. (amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) after the transformation the person has the necessary eligible own funds to cover the solvency capital requirement, respectively the minimum guarantee capital.
(2) Insofar as otherwise is not provided for in this chapter, the provisions of the Commerce Act or of the Cooperatives Act shall apply accordingly. A transformation by change of legal form, as well as by change of the subject of activity, shall not be permitted.
(3) A transformation by merger or absorption shall be carried out only between insurers in compliance with the requirement of Art. 24, para. 1, respectively between reinsurers.
(4) In the case of a transformation by division or separation, the newly established companies must also be insurers, respectively reinsurers.
Authorisation for transformation of an insurer or reinsurer Art. 230. (Amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) (1) For the issuance of an authorisation under Art. 229, para. 1, a request shall be submitted, to which the following shall be attached:
1. the decision of the competent body of each of the receiving and/or transforming companies to carry out the transformation;
2. a transformation agreement or plan;
3. a report of the management body of each of the transforming and receiving companies under Art. 262i of the Commerce Act, indicating also the reasons why the transformation is necessary;
4. (amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) a calculation of the amount of the solvency capital requirement and the eligible own funds of each company participating in the transformation as at the time of adoption of the transformation decision;
5. (amended - State Gazette, No. 85 of 2023, in force from 01.01.2023) a forecast of the amount of the solvency capital requirement and the eligible own funds of each company arising after the transformation;
6. a balance sheet and an income statement of each company participating in the transformation as at the end of the month preceding the date of submission of the request;
7. an authorisation from the Commission for Protection of Competition - in the case of a transformation by merger or absorption;
8. the annexes under Art. 31, para. 1, items 1, 2 and 5 - 9 - for each insurance, respectively reinsurance, company arising after the transformation, as well as for each receiving insurer, respectively reinsurer, with changes reflected as a result of the transformation;
9. the annexes under Art. 31, para. 1, items 5 - 9 and para. 3, items 1 and 2 - for each mutual insurance cooperative arising after the transformation, as well as for each receiving cooperative, with changes reflected as a result of the transformation;
10. other documents in connection with establishing the circumstances under Art. 229, para. 1 at the request of the Commission.
(2) The Commission shall rule on the request for transformation within a 4-month period from receipt of the request. Upon establishing irregularities or if additional information is necessary, Art. 34, paras. 2, 4 and 5 shall apply accordingly, and the period for remedying the irregularities or providing additional information shall be not less than 15 days. The request under para. 1 shall be considered after payment of a fee for consideration of documents. (3) The Commission shall issue the transformation authorisation simultaneously with the issuance of a licence for carrying out insurance, respectively reinsurance, activity to the newly established companies. (4) The Commission shall refuse to issue an authorisation if the requirements of this Code have not been complied with, the interests of the insured persons have not been protected or the performance of obligations under reinsurance contracts has not been guaranteed. (5) The insurers participating in the transformation shall be obliged to notify the insured persons of the transformation carried out in compliance with Art. 221 and Arts. 223 - 228 respectively.
PART SEVEN
INSURERS AND REINSURERS - PART OF A GROUP, AND SUPERVISION OVER THEM
Chapter Twenty-Three
GENERAL RULES
General provisions
Art. 231. This Part shall regulate:
1. the supervision of insurers or reinsurers that are part of a group;
2. the powers of the Commission and the Deputy Chairperson in connection with group supervision.
Group supervision
Art. 232. (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) (1) Insurers, respectively reinsurers, that are part of a group shall be subject to supervision at group level in accordance with this Part.
(2) An insurer, respectively reinsurer, headquartered in the Republic of Bulgaria that is part of a group shall separately continue to have all obligations and to be subject to supervision under this Code, unless otherwise provided for in this Part.
(3) Insurers headquartered in the Republic of Bulgaria that are part of a group and apply Part Four shall be subject to supervision at group level in accordance with Part Four.
(4) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) Where the Commission is the group supervisor, the powers for group supervision shall be exercised by it, unless otherwise provided for in this Code.
(5) The Commission shall adopt an ordinance for the implementation of this Part for the purpose of implementing the guidelines of the European Authority.
Group
Art. 233. (1) A group is a group of undertakings consisting of a participating undertaking and its subsidiary undertakings. The group shall also include the undertakings in which the participating undertaking or its subsidiary undertakings have participations, or undertakings that are managed jointly by virtue of a contract or their founding instruments or articles of association, or undertakings in which more than half of the members of their management or supervisory bodies are the same persons during the respective financial year and up to the date of preparation of the consolidated financial statement. (2) A group is also a group of undertakings that is based on the creation, by contract or otherwise, of strong and stable financial links between those undertakings and that may include mutual insurance cooperatives or associations of a mutual insurance type, provided that:

1. one of these undertakings actually exercises, through coordination at central level, a dominant influence over the decisions, including financial decisions, of the other undertakings that are part of the group, and
2. the establishment and termination of such relations for the purposes of group supervision shall be subject to prior approval by the group supervisor.
(3) The undertaking under paragraph 2 exercising coordination at central level shall be considered a parent undertaking, and the other undertakings under paragraph 2 shall be considered subsidiaries.
(4) A participating undertaking is:
1. a parent undertaking;
2. an undertaking which, directly or through control, holds 20 or more than 20 per cent of the capital or of the voting rights of another undertaking;
3. an undertaking linked to another undertaking through common management, by virtue of a contract or their instruments of incorporation or articles of association;
4. an undertaking in which more than half of the members of the administrative or supervisory body are at the same time more than half of the members of the administrative or supervisory body of another undertaking during the relevant financial year and until the date of preparation of the consolidated financial statements.
(5) A related undertaking is a subsidiary undertaking, an undertaking in which a participation within the meaning of paragraph 4, item 2 is held, or an undertaking linked to another undertaking under the conditions of paragraph 4, items 3 and 4; (6) For the purposes of group supervision, as well as for the purposes of identifying a group, the Commission, the Deputy Chairperson or another authority of a Member State which carries out group supervision shall regard as:
1. a parent undertaking - any undertaking which they consider actually exercises a dominant influence over another undertaking;
2. a subsidiary undertaking - any undertaking over which they consider that a parent undertaking actually exercises a dominant influence;
3. a participation - the holding, directly or indirectly, of voting rights or capital in an undertaking over which they consider that a significant influence is actually exercised.
(7) Undertakings are traders, legal persons which are not traders, and unincorporated entities carrying out activity in the Republic of Bulgaria or outside it.
(8) An insurance holding company is a parent undertaking which is not a mixed financial holding company and whose main activity is the acquisition and holding of participations exclusively or mainly in subsidiary undertakings which are insurers or reinsurers, including insurers or reinsurers from a Member State or from a third country, where at least one of those subsidiary undertakings is an insurer or reinsurer with a registered office in the Republic of Bulgaria or in another Member State. (9) A mixed-activity insurance holding company is a parent undertaking other than an insurer, a third-country insurer, a reinsurer, a third-country reinsurer, an insurance holding company or a mixed financial holding company, where at least one of its subsidiary undertakings is an insurer or reinsurer with a registered office in the Republic of Bulgaria or in another Member State. (10) A mixed financial holding company is a mixed financial holding company within the meaning of § 1, item 14 of the supplementary provisions of the Financial Conglomerates Supplementary Supervision Act. Application of group supervision Art. 234. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) (1) Supervision at the level of the group shall apply to:
1. an insurer, respectively a reinsurer, which is a participating undertaking in at least one insurer or reinsurer, insurer or reinsurer from a third country, where group supervision shall be carried out in accordance with Chapters Twenty-Four and Twenty-Five;
2. an insurer or reinsurer whose parent undertaking is an insurance holding company or a mixed financial holding company with a registered office in a Member State, where group supervision shall be carried out in accordance with Chapters Twenty-Four and Twenty-Five;
3. an insurer or reinsurer whose parent undertaking is an insurance holding company or a mixed financial holding company with a registered office in a third country or a third-country insurer or reinsurer, where group supervision shall be carried out in accordance with Chapter Twenty-Six, Section One;
4. an insurer or reinsurer whose parent undertaking is a mixed-activity insurance holding company, where group supervision shall be carried out in accordance with Chapter Twenty-Six, Section Two.
(2) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) In the cases under paragraph 1, item 1 or 2, where the participating insurer or reinsurer, or insurance holding company or mixed financial holding company with a registered office in a Member State is either a related undertaking of a supervised entity, or is itself a supervised entity or a mixed financial holding company which is subject to supplementary supervision under the Financial Conglomerates Supplementary Supervision Act, the Commission may, after consultation with the other interested supervisory authorities, decide not to carry out at the level of that participating insurer or reinsurer, or insurance holding company or mixed financial holding company, supervision of risk concentration under Art. 263, supervision of intra-group transactions under Art. 264, or both types of supervision. (3) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) Where equivalent provisions under this Code and under the Financial Conglomerates Supplementary Supervision Act apply to a mixed financial holding company in the field of risk-based supervision, and where the Commission is the group supervisor, the Commission may, after consultation with the other interested supervisory authorities, apply only the relevant provisions of the Financial Conglomerates Supplementary Supervision Act. (4) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) Where equivalent provisions under this Code and under the Credit Institutions Act apply to a mixed financial holding company in the field of risk-based supervision, and where the Commission is the group supervisor, the Commission may, after consultation with the consolidating supervisory authority in the banking and investment sector, apply only the relevant provisions which apply to the most significant sector within the meaning of Art. 3, paragraphs 1 - 4 of the Financial Conglomerates Supplementary Supervision Act. (5) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) Where the Commission is the group supervisor, the Commission shall notify the European Supervisory Authority, the European Banking Authority and the European Securities and Markets Authority of the decisions under paragraphs 3 and 4. (6) The cases under paragraph 1 are not mutually exclusive and the Deputy Chairperson may apply more than one supervision approach under paragraph 1 in respect of the same group. Scope of group supervision Art. 235. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) (1) The exercise of group supervision in accordance with Art. 234 does not include an obligation for the supervisory authority to have a supervisory role at individual level in respect of the third-country insurer or reinsurer, the insurance holding company, the mixed financial holding company and the mixed-activity insurance holding company separately, with the exception of the powers under Art. 82 in respect of an insurance
holding company and a mixed financial holding company. (2) Where the Commission is the group supervisor, the Commission may, on a proposal from the Deputy Chairperson, decide for each individual case not to include in the group supervision under Art. 234 an undertaking which is part of it, where:
1. the undertaking is in a third country in which there are legal impediments to providing the necessary information, in which case the rules for calculating own funds under Art. 250 shall apply;
2. the undertaking which is to be included is of negligible interest for the purposes of group supervision;
3. the inclusion of the undertaking would be inappropriate or misleading for the purposes of group supervision.
(3) Where several undertakings from the same group, taken individually, may be excluded under paragraph 2, item 2, they shall be included where, taken together, they are not of negligible interest for the purposes of group supervision.
(4) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) Before taking a decision under paragraph 2, item 2 or 3, the Commission shall obtain the opinion of the other interested supervisory authorities.
(5) Paragraphs 2 - 4 shall also apply where the Commission is the group supervisor of an insurer, reinsurer, insurance holding company or mixed financial holding company with a registered office in another Member State.
(6) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) If, on the grounds under paragraph 2, item 2 or 3, a group supervisor other than the Commission does not include a local insurer or reinsurer within the scope of group supervision, the Commission may request from the person at the head of the group any information necessary for the supervision of the insurer or reinsurer. If, under paragraph 2, item 2 or 3, the Commission does not include an insurer or reinsurer in group supervision, the supervisory authority of the Member State in which the registered office of the insurer or reinsurer is located may request from the person at the head of the group in the Republic of Bulgaria any information necessary for the supervision of the insurer or reinsurer. Ultimate parent undertaking with a registered office in the European Union Art. 236. (1) Where the participating insurer or reinsurer or the insurance holding company or mixed financial holding company under Art. 234, paragraph 1, item 1 or 2 is a subsidiary undertaking of another insurer, reinsurer, insurance holding company or mixed financial holding company with a registered office in a Member State, Chapters Twenty-Four and Twenty-Five shall apply only at the level of the ultimate parent undertaking - insurer, reinsurer, insurance holding company or mixed financial holding company, with a registered office in a Member State. (2) Where the ultimate parent undertaking - insurer or reinsurer, or insurance holding company or mixed financial holding company with a registered office in a Member State under paragraph 1, is a subsidiary undertaking of an undertaking which is subject to supplementary supervision in accordance with Article 5(2) of Directive 2002/87/EC of the European Parliament and of the Council of 16 December 2002 on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate and amending Council Directives 73/239/EEC, 79/267/EEC, 92/49/EEC, 92/96/EEC, 93/6/EEC and 93/22/EEC, and Directives 98/78/EC and 2000/12/EC of the European Parliament and of the Council, the Deputy Chairperson may, after consultation with the other interested supervisory authorities, decide not to carry out at the level of that ultimate parent undertaking or holding company supervision of risk concentration under Art. 263, supervision of intra-group transactions under Art. 264, or both types of supervision. Ultimate parent undertaking at national level Art. 237. (1) The Commission, on a proposal from the Deputy Chairperson, may apply group supervision to a local insurer, reinsurer, insurance holding company or mixed financial holding company at the head of a group within the meaning of Art. 234, paragraph 1, item 1 or 2, where the ultimate parent undertaking has its registered office in another Member State, after consultation with the group supervisor and with the ultimate parent undertaking in the other Member State. The
decision shall be reasoned before the group supervisor and before the ultimate participating undertaking in the other Member State. Where the Commission is the group supervisor and has received a decision within the meaning of the second sentence from another supervisory authority, it shall notify the other members of the supervisory college thereof. (2) Paragraph 1 shall not apply where the ultimate parent undertaking at national level is a subsidiary undertaking of a parent undertaking from another Member State which has authorised that subsidiary undertaking to apply Chapter Twenty-Four, Section I, Subsection VI. (3) The Commission, on a proposal from the Deputy Chairperson, may limit group supervision at the level of the parent undertaking in the Republic of Bulgaria to one or several sections of Chapter Twenty-Four. (4) Where the Commission, on a proposal from the Deputy Chairperson, decides to apply Chapter Twenty-Four, Section I at the level of the ultimate parent undertaking at national level, it shall recognise as final and apply the method for calculating group solvency chosen by the group supervisor in respect of the parent undertaking from another Member State. (5) Where the Commission, on a proposal from the Deputy Chairperson, decides to apply Chapter Twenty-Four, Section I at the level of the ultimate parent undertaking at national level, it shall recognise as final and apply the decision approving an internal model approved at the level of the ultimate parent undertaking for calculating the group solvency capital requirement and the solvency capital requirement of the insurers and reinsurers which are part of it. (6) Where in the case under paragraph 5 the Commission, on a proposal from the Deputy Chairperson, considers that the risk profile of the ultimate parent undertaking at national level deviates significantly from the internal model approved at group level, and if that parent undertaking does not comply with the Commission's instructions, it may:
1. impose a capital add-on to the group solvency capital requirement calculated with the internal model, or
2. in exceptional cases, where a capital add-on under item 1 would not be appropriate, order it to calculate the group solvency capital requirement using the standard formula.
(7) The Commission's decision under paragraph 6 shall be reasoned before the group supervisor and before the ultimate participating undertaking in the other Member State. Where the Commission is the group supervisor and has received a decision within the meaning of the first sentence from another supervisory authority in respect of a group whose ultimate participating undertaking is located in the Republic of Bulgaria, the Commission shall notify the other members of the supervisory college thereof. (8) Where the Commission, on a proposal from the Deputy Chairperson, decides to apply Chapter Twenty-Four, Section I at the level of the ultimate parent undertaking at national level, that undertaking may not submit a request for the application of Chapter Twenty-Four, Section I, Subsection VI in respect of its subsidiary undertaking. (9) Group supervision headed by an ultimate parent undertaking at national level shall be subject to Chapters Twenty-Four and Twenty-Five respectively, unless otherwise provided in paragraphs 2 - 8. Parent undertaking covering several Member States Art. 238. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) (1) The Commission may conclude an agreement with a supervisory authority of another Member State where there is another related ultimate parent undertaking, for the purpose of carrying out group supervision at the level of the subgroup covering several Member States. (2) Where the Commission has concluded an agreement within the meaning of paragraph 1, group supervision at the level of the ultimate parent undertaking within the meaning of Art. 237 may not be applied in respect of an ultimate parent undertaking in Member States other than the Member State where the subgroup under paragraph 1 is located. (3) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) The reasons for concluding the agreement under paragraph 1 shall be provided to the group supervisor. Where the Commission is the group supervisor and has received reasons for an agreement from other supervisory authorities, the Commission shall notify the other members of the supervisory college thereof. (4) Art. 237, paragraphs 2 - 9 shall apply accordingly. (5) The conditions for taking a decision to conclude an agreement under paragraph 1 shall be determined by an act of the European Commission. Identification code and personal profile in the secure electronic service system of mixed-activity insurance holding companies, ultimate parent undertakings and undertakings included in the scope of the group Art. 238a. (New - State Gazette No. 63 of 2025, in force from 01.08.2025; supplemented, No. 25 of 2026) (1) A mixed-activity insurance holding company and an ultimate parent undertaking established on the territory of the Republic of Bulgaria, and every undertaking included in the scope of the group, shall be required to have a legal entity identifier. (2) The person under paragraph 1 shall notify the Commission of its
identification code within 7 days of the issuance of the relevant code. (3) When providing information to the European Authority on the activity of a person under paragraph 1, its identification code shall also be indicated. (4) (New - State Gazette No. 25 of 2026) An insurance holding company, a mixed financial holding company and a mixed-activity insurance holding company established on the territory of the Republic of Bulgaria shall be required to have at all times a personal profile registered in the information system for secure electronic service as a module of the Electronic Governance Portal within the meaning of the Electronic Governance Act, and to notify the Commission through that system within 7 days of the registration of the profile.
Chapter Twenty-Four
FINANCIAL CONDITION
Section I
Group solvency
Subsection I
General provisions
Supervision of group solvency
Art. 239. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) (1) In carrying out supervision of group solvency, paragraphs 2 and 3, Art. 265 and Chapter Twenty-Five shall apply.
(2) In the cases under Art. 234, paragraph 1, item 1, the participating undertaking insurer, respectively reinsurer, shall ensure that the available eligible own funds in the group are at all times at least equal to the group solvency capital requirement calculated in accordance with Subsections II, III and IV.
(3) In the case under Art. 234, paragraph 1, item 2, the insurers and reinsurers in the group shall ensure that the available eligible own funds in the group are at all times at least equal to the group solvency capital requirement calculated in accordance with Subsection V.
(4) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) Where the Commission is the group supervisor, it shall carry out a supervisory review for compliance with the requirements within the meaning of paragraphs 2 and 3 in accordance with Chapter Twenty-Five. Art. 214, paragraph 1, paragraph 2, items 1 and 3, Art. 215, paragraphs 1 and 3 - 5 and Art. 216 shall apply accordingly. (5) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) Where the Commission is the group supervisor, it shall immediately notify the other authorities - members of the supervisory college, where the undertaking at the head of the group, whether local or not, has notified the Commission of non-compliance with the group solvency capital requirement or of a risk of such non-compliance in the next three months. The supervisory college shall analyse the situation in the group. Frequency of calculation of the group solvency capital requirement Art. 240. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) (1) At least once a year, the local insurer or reinsurer which is a participating undertaking shall calculate the group solvency capital requirement and report the result and the relevant data for carrying out the calculation to the group supervisor. (2) At least once a year, the local insurance holding company or mixed financial holding company shall calculate the group solvency capital requirement and report the result and the relevant data for carrying out the calculation to the group supervisor. The group supervisor may, after consultation with the other interested supervisory authorities, as well as with the group itself, designate an insurer or reinsurer from the group to report the information under the first sentence. (3) The local insurer, respectively reinsurer, which is a participating undertaking, or the local insurance holding company, respectively mixed financial holding company, shall monitor the group solvency capital requirement on an ongoing basis. Where the risk profile of the group deviates significantly from the assumptions underlying the last reported solvency capital requirement, the person under the first sentence shall immediately recalculate the group solvency capital requirement and report it to the group supervisor. The group supervisor may require a recalculation of the group solvency capital requirement if its risk profile has changed materially since the date of the last reporting of its solvency capital requirement. (4) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) Where the Commission is the group supervisor, it shall have:
1. the power under paragraph 2, second sentence also where the registered office of the insurance holding company, respectively of the mixed financial holding company at the head of the group is not in the Republic of Bulgaria;
2. the power under paragraph 3, third sentence also where the registered office of the insurer or reinsurer, or of the insurance holding company or financial holding company at the head of the group is not in the Republic of Bulgaria.
Subsection II
Methods for calculating the group solvency capital requirement and main principles Choice of calculation method Art. 241. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) (1) The calculation of solvency at group level by insurers and/or

reinsurers under Art. 234, para. 1, item 1 shall be carried out in accordance with the technical principles and by one of the following methods:
1. Method based on accounting consolidation - Method 1 (main method);
2. Deduction and aggregation method - Method 2 (alternative method).
(2) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) A local insurer or reinsurer which is a participating undertaking under Art. 234, para. 1, item 1 shall calculate the solvency of the group under Method 1. Where the Commission is the group supervisor, it shall require the application of the first sentence also where the insurer or reinsurer which is a participating undertaking under Art. 234, para. 1, item 1 is from another Member State. (3) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) A local insurer or reinsurer which is a participating undertaking may, with the permission of the group supervisor, calculate the solvency of the group under Method 2 or with a combination of Method 1 and Method 2, where the application of Method 1 alone would not be appropriate. Where the Commission is the group supervisor, it shall take a decision under the first sentence after consultation with the interested supervisory authorities of the other Member States and with the group. The second sentence shall also apply where the Commission is the group supervisor of a group headed by an insurer or reinsurer from another Member State. Inclusion of proportional share Art. 242. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) (1) When calculating the solvency of the group, the proportional share held by the participating undertaking in its related undertakings shall be taken into account. (2) For the purposes of para. 1, the proportional share shall comprise one of the following:
1. the percentages used for the preparation of the consolidated accounting statements, where Method 1 is used;
2. the proportional share of the subscribed capital held directly or indirectly by the participating undertaking, where Method 2 is used.
(3) Irrespective of the method used, where the related undertaking is a subsidiary and does not have sufficient eligible own funds to cover its capital requirement for solvency, the total deficit of funds of the subsidiary shall be taken into account.
(4) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) Where, in the assessment of the supervisory authorities, the liability of the parent undertaking holding a share of the capital is strictly limited to that share of the capital, the Commission, when performing the functions of group supervisor, respectively a supervisory authority of another Member State performing that function, may nevertheless permit the deficit of funds of the subsidiary to be taken into account on a proportional basis. (5) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) The Commission, when performing the functions of group supervisor, respectively a supervisory authority of another Member State performing that function, after consultation with the other interested supervisory authorities and with the group, shall determine the proportional share to be taken into account in the following cases where:
1. there are no capital links between some of the undertakings in the group;
2. a supervisory authority has determined that the voting rights or capital held, directly or indirectly, by one undertaking may be qualified as a participation, since in the assessment of the supervisory authority significant influence is actually exercised over that undertaking;
3. a supervisory authority has determined that one undertaking is a parent undertaking of another undertaking, since in the assessment of the supervisory authority it actually exercises a dominant influence over the other undertaking.
Elimination of double use of eligible own funds Art. 243. (1) The double use of own funds eligible to cover the capital requirement for solvency between the different insurers or reinsurers included in the calculation shall not be permitted.
(2) For this purpose, when calculating the solvency of the group, provided that the methods described in Subsection IV do not provide for this, the following amounts shall be excluded:
1. the value of any asset of a participating undertaking - insurer or reinsurer, which represents a source of financing of own funds eligible to cover the capital requirement for solvency of any of its related undertakings - insurers or reinsurers;
2. the value of any asset of a related undertaking - insurer or reinsurer of a participating undertaking - insurer or reinsurer, which represents a source of financing of own funds eligible to cover the capital requirement for solvency of that participating undertaking - insurer or reinsurer;
3. the value of any asset of a related undertaking - insurer or reinsurer of a participating undertaking - insurer or reinsurer, which represents a source of financing of own funds eligible to cover the capital requirement for solvency of any other related undertaking - insurer or reinsurer of that participating undertaking - insurer or reinsurer.
(3) Notwithstanding the provisions of paras. 1 and 2, the following elements may be included in the calculation to the extent that they are eligible to cover the capital requirement for solvency of the respective related undertaking:
1. funds from the positive result arising in a related undertaking - life insurer or life reinsurer, of the participating undertaking - insurer or reinsurer, for which the solvency of the group is calculated;
2. subscribed but unpaid capital of a related undertaking - insurer or reinsurer of the participating undertaking - insurer or reinsurer, for which the solvency of the group is calculated.
(4) Notwithstanding para. 3, in any case the following shall be excluded from the calculation:
1. subscribed but unpaid capital which represents a potential liability for the participating undertaking;
2. subscribed but unpaid capital of a participating undertaking - insurer or reinsurer, which represents a potential liability for a related undertaking - insurer or reinsurer;
3. subscribed but unpaid capital of a related undertaking - insurer or reinsurer, which represents a potential liability for another related undertaking - insurer or reinsurer of the same participating undertaking - insurer or reinsurer.
(5) Where the Deputy Chairperson or a supervisory authority of another Member State assesses that certain own funds, other than those referred to in paras. 3 and 4, eligible to cover the capital requirement for solvency of a related undertaking - insurer or reinsurer, cannot actually be made available to cover the capital requirement for solvency of a participating undertaking - insurer or reinsurer whose group solvency is being calculated, those own funds may be included in the calculation to the extent that they are eligible to cover the capital requirement for solvency of the related undertaking. (6) The amount of own funds referred to in paras. 3, 4 and 5 may not exceed the capital requirement for solvency of the related undertaking - insurer or reinsurer. (7) The eligible ancillary own funds of a related undertaking - insurer or reinsurer of a participating undertaking - insurer or reinsurer, for which the solvency of the group is calculated, which are subject to prior approval by a supervisory authority, may be included in the calculation if they have been duly approved by the supervisory authority competent for the supervision of the related undertaking. Elimination of intra-group generation of capital Art. 244. (1) When calculating the solvency of a group, own funds eligible to cover the capital requirement for solvency which arise from reciprocal financing between a participating undertaking - insurer or reinsurer, and any one of the following undertakings shall not be taken into account:
1. a related undertaking;
2. a participating undertaking;
3. another related undertaking of any of its participating undertakings.
(2) Where the solvency of a group is calculated, own funds eligible to cover the capital requirement for solvency of a related undertaking - insurer or reinsurer, of the participating undertaking - insurer or reinsurer, for which the solvency of the group is calculated, shall not be taken into account where the respective own funds arise from reciprocal financing with any other related undertaking of that participating undertaking - insurer or reinsurer. (3) Reciprocal financing shall be deemed to exist at least where an insurer or reinsurer, or any of its related undertakings, holds shares or units, or grants loans to another undertaking which directly or indirectly holds own funds eligible to cover the capital requirement for solvency of the first undertaking. Valuation Art. 245. (Amended - State Gazette No. 85 of 2023, in force from 10.10.2023) The valuation of assets and liabilities shall be carried out in accordance with Art. 117a. Subsection III Application of the calculation methods Related undertakings - insurers and reinsurers Art. 246. (1) Where an insurer or reinsurer has more than one related undertaking - insurer or reinsurer, the solvency of the group shall be calculated by including each related undertaking - insurer or reinsurer. (2) Where the registered office of a related undertaking - insurer or reinsurer of the insurer or reinsurer for which the solvency of the group is calculated is in a Member State other than the Republic of Bulgaria, the calculation shall take into account, in respect of the related undertaking, the capital requirement for solvency and the own funds eligible to cover that requirement as provided for in the other Member State. Intermediate insurance holdings Art. 247. (1) When calculating the solvency of a group of an insurer or reinsurer which, through an insurance holding company or a mixed financial holding company, holds a participation in a related undertaking which is an insurer, reinsurer, third-country insurer or third-country reinsurer, the position of that intermediate insurance holding company or mixed financial holding company shall be taken into account. (2) Solely for the purposes of this calculation, the intermediate insurance holding company or mixed financial holding company shall be treated as an insurer or reinsurer to which the rules of Chapter Thirteen apply in respect of the capital requirement for solvency and of Chapter Twelve in respect of own funds eligible to cover the capital requirement for solvency. (3) In the event that the intermediate insurance holding company or mixed financial holding company holds subordinated debt or other eligible own funds which are subject to limits, they shall be recognised as eligible own funds up to the amount calculated by applying the limits under the regulation referred to in Art. 168 to the total amount of eligible own funds at group level relative to the capital requirement for solvency at group level. (4) The eligible ancillary own funds of
the intermediate insurance holding company or mixed financial holding company, for which prior approval by the supervisory authority would be required under Art. 167 if held by an insurer or reinsurer, may be included in the calculation of the solvency of the group only if they have been approved by the group supervisor. For the purposes of the first sentence, subscribed but unpaid capital of the intermediate insurance holding company or mixed financial holding company may also be recognised as ancillary own funds. Third-country insurers and equivalence of the regime in relation to third-country insurers Art. 248. (1) Where the solvency of a group of an insurer or reinsurer which is a participating undertaking in a third-country insurer or reinsurer is calculated in accordance with Art. 255, solely for the purposes of that calculation the third-country insurer shall be treated as a related undertaking - local insurer or reinsurer. (2) Where in the third country of the registered office of the insurer or reinsurer under para. 1 it is required that it be subject to licensing and subject to a solvency regime which is at least equivalent to the regime under Part Four, when calculating the solvency of the group in respect of that insurer or reinsurer, the capital requirement for solvency and the own funds eligible to comply with that requirement shall be taken into account as laid down in the respective third country. (3) In cases where the European Commission has adopted an act on equivalence or provisional equivalence of the supervisory regime in a third country under Art. 227, paragraphs 4 or 5 of Directive 2009/138/EC, the regime in the respective third country shall be deemed equivalent to the regime under Part Four. (4) Where no equivalence act under para. 3 has been adopted and the Commission is the group supervisor, the equivalence assessment shall be carried out by it in cooperation with the European Authority and after consultation with the other interested supervisory authorities of the Member States. Where, in respect of the same third country, a decision on the equivalence of the supervisory regime has previously been adopted by a supervisory authority in another Member State, the Commission may not adopt a different decision, unless substantial changes in the regime under Part Four, respectively in the supervisory regime of the third country, have to be taken into account. (5) The assessment of the equivalence of the supervisory regime in the third country shall be carried out in accordance with criteria adopted by an act of the European Commission. (6) Where the Commission is not the group supervisor, in the event of disagreement with a decision on the equivalence of the supervisory regime in a third country adopted by another group supervisor, the Commission may, within three months of notification of the adopted decision, refer the matter for consideration by the European Authority in accordance with Art. 19 of Regulation (EU) No.
1094/2010. Credit institutions, investment firms and financial institutions Art. 249. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) (1) When calculating the solvency of a group of an insurer or reinsurer - participating undertaking in a credit institution, investment firm or financial institution, the participating undertaking - local insurer or reinsurer, may apply respectively Method 1 or 2 for calculating supplementary capital adequacy under the annex to Arts. 6 and 7 of the Financial Conglomerates Supplementary Supervision Act. Method 1 may be applied only where the group supervisor has assessed that the level of integrated management and internal control in respect of the companies included in the scope of consolidation is satisfactory. The chosen method shall be applied consistently over time. (2) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) Where the Commission is the group supervisor, it may, ex officio or at the request of the participating undertaking, deduct any participation under para. 1 from the own funds eligible to cover the solvency of the group of the participating undertaking. Lack of necessary information Art. 250. (1) Where information necessary for calculating the solvency of the group is lacking in relation to a related undertaking in a Member State or in a third country, the accounting value of that undertaking shall be deducted from the eligible own funds for covering the solvency of the group. (2) In that case, the unrealised profits connected with the participation in that undertaking shall not be recognised as eligible own funds for covering the solvency of the group. Subsection IV Calculation methods Method based on accounting consolidation - Method 1 (main method) Art. 251. (1) Under the accounting consolidation method, the local insurer or reinsurer heading the group shall calculate the solvency of the group on the basis of the consolidated accounting statements. (2) The solvency of the group of the local insurer or reinsurer heading the group shall be equal to the difference between the eligible own funds for covering the capital requirement for solvency, calculated on the basis of the consolidated data, and the capital requirement for solvency at group level, calculated on the basis of the consolidated data. (3) The eligible own funds and the capital requirement for solvency shall be calculated in accordance with Chapter Twelve and Chapter Thirteen at group level on the basis of the consolidated data. (4) The capital requirement for solvency on the basis of consolidated data (consolidated capital requirement for solvency of the group) shall be calculated either in accordance with the standard formula, complying with the principles under Chapter Thirteen, Sections One and Two, or in accordance with an approved internal model, complying with the principles under Chapter Thirteen, Sections One and Three. (5) The consolidated capital requirement for solvency of the group may
not be less than the sum of the minimum capital requirement for solvency of the insurer or reinsurer heading the group and the proportional share of the minimum capital requirement of the related insurers and reinsurers. (6) The minimum amount of the consolidated capital requirement for solvency of the group shall be covered by eligible basic own funds determined in accordance with the regulation referred to in Art. 168. For determining whether those eligible funds may be used to cover the minimum consolidated capital requirement of the group, the principles under Subsection III shall apply accordingly. Art. 214, para. 2, items 2 and 3 and Art. 215, paras. 2 - 5 shall also apply accordingly. Group internal model Art. 252. (Amended - State Gazette No. 25 of 2022, in force from 29.03.2022) (1) A local insurer or reinsurer which is a participating undertaking, together with its related insurers and reinsurers, as well as the related insurers of a local insurance holding company or of a local mixed financial holding company, may submit a request to the competent group supervisor for permission to calculate the consolidated capital requirement of the group, and also the capital requirements for solvency of the insurers and reinsurers in the group, by means of an internal model. Where an insurer or reinsurer with registered office in the Republic of Bulgaria is a related undertaking within a group, it shall have the right to participate in a request under the first sentence at the initiative of the participating insurer or reinsurer, respectively of another insurer or reinsurer which is a related undertaking of an insurance holding company or mixed financial holding company. (2) (Amended - State Gazette No. 25 of 2022, in force from 29.03.2022) Where the Commission is the group supervisor and receives a request under para. 1, it shall notify the supervisory authorities participating in the supervisory college and the European Authority and shall promptly send them the request together with all accompanying documents. The Commission, in its capacity as a member of the supervisory college, may request the European Authority to provide technical assistance in accordance with Art. 8, para. 1, letter "b" of Regulation (EU) No. 1094/2010 in relation to the decision on the request. (3) In the event of a request under para. 1 or 2, the Commission, in its capacity as group supervisor or as a member of the supervisory college, shall cooperate with the other members of the supervisory college to adopt, within 6 months of receipt of the request with all documents by the group supervisor, a joint decision to grant or refuse to grant permission to use an internal model, as well as the possible conditions under which the permission is to be granted. (4) Where a joint decision is reached on a request for approval of a group internal model, the Commission, respectively the other supervisory authority, in its capacity as group supervisor, shall serve it on the applicant
together with the exhaustive reasons for it. (5) Where no joint decision is reached within the period under para. 3, the Commission, in its capacity as group supervisor, shall take a decision on the request for approval of a group internal model on its own after discussing the comments and objections made by the other supervisory authorities within the 6-month period. The decision on its own shall be reasoned and served on the other members of the supervisory college and on the applicant. The decision shall

adopted as final and subject to application. Sentences one, two and three shall apply respectively where the commission is not the group supervisor.
(6) Where no joint decision has been reached and the period under paragraph 3 has not expired, the commission may refer the matter to the European Authority under the procedure of Article 19 of Regulation (EU) No 1094/2010. Where the commission is the group supervisor and the European Authority has been seised under the procedure of Article 19 of Regulation (EU) No 1094/2010, the commission shall defer the adoption of an independent decision until the European Authority has ruled and shall adopt the decision in accordance with that ruling. The decision of the commission, respectively of another group supervisor, on a request for approval of a group internal model, adopted in accordance with a ruling of the European Authority under the procedure of Article 19(3) of Regulation (EU) No 1094/2010, shall be deemed final and subject to application. (7) (Amended - State Gazette No. 25 of 2022, in force from 29.03.2022) In the event that the European Authority does not adopt a decision under paragraph 6 in accordance with Article 19(3) of Regulation (EU) No 1094/2010, the final decision shall be adopted by the commission where it is the group supervisor. That decision shall be deemed final and subject to application. The six-month period shall be considered a conciliation period within the meaning of Article 19(2) of Regulation (EU) No 1094/2010. (8) The uniform conditions for the joint decision-making process shall be determined by an act of the European Commission. Deviations from the assumptions underlying a group internal model at the level of an individual insurer or reinsurer
Article 253. (1) Where the commission, on a proposal of the deputy chairperson, considers that the risk profile of a local insurer or reinsurer deviates significantly from the internal model approved at group level under Article 252, and if that person does not comply with the commission's instructions, it may:
1. impose a capital add-on to its solvency capital requirement calculated with the internal model, or
2. in exceptional cases, where a capital add-on under item 1 is not appropriate, order that it calculate its solvency capital requirement using the standard formula.
(2) In the case under paragraph 1, item 2, the commission, on a proposal of the deputy chairperson, may order a capital add-on under the procedure of Article 584(1), items 1 or 3 also to the solvency capital requirement of that person calculated by applying the standard formula.
(3) The decision to apply measures under paragraph 1 or 2 shall be reasoned and provided to the insurer, respectively the reinsurer, as well as to the other members of the supervisory college.
Group capital add-on
Article 254. (1) Where the commission is the group supervisor, the deputy chairperson shall monitor on an ongoing basis whether the consolidated solvency capital requirement appropriately reflects the risk profile of the group and in particular shall monitor whether any of the preconditions under Article 584(1) has arisen, especially in cases where:
1. a specific risk existing at group level is not sufficiently covered by the standard formula or by the internal model used because it is difficult to quantify, or
2. relevant supervisory authorities have ordered a capital add-on to the solvency capital requirement of one or more related insurers or reinsurers.
(2) Where in the cases under paragraph 1 it is established that the risk profile of the group is not adequately reflected, the commission, on a proposal of the deputy chairperson, may order a capital add-on to the consolidated solvency capital requirement of the group in compliance with Article 584 respectively.
Deduction and aggregation method - method 2 (alternative method)
Article 255. (1) Under the deduction and aggregation method, the local insurer, respectively reinsurer, which is a participating undertaking, shall calculate its solvency as the difference between:
1. the aggregated eligible own funds of the group under paragraph 2, and
2. the value of the related insurers and reinsurers in the local insurer or reinsurer which is a participating undertaking, and the aggregated solvency capital requirement of the group under paragraph 3.
(2) The aggregated eligible own funds of the group shall be the sum of:
1. the eligible own funds for covering the solvency capital requirement of the local insurer or reinsurer which is a participating undertaking;
2. the proportional share of the local insurer or reinsurer which is a participating undertaking in the eligible own funds for covering the solvency capital requirement of the related insurers and reinsurers.
(3) The aggregated solvency capital requirement of the group shall be the sum of:
1. the solvency capital requirement of the local insurer or reinsurer which is a participating undertaking;
2. the proportional share of the solvency capital requirement of the related insurers and reinsurers.
(4) If the participation in the related insurers or reinsurers is wholly or partly indirect, their value in the local insurer or reinsurer which is a participating undertaking shall include the value of that indirect participation, taking into account the sequence of the respective participations, and the elements under:
1. paragraph 2, item 2 shall include the corresponding proportional shares of the own funds eligible for covering the solvency capital requirement of the related insurers and reinsurers, respectively under,
2. paragraph 3, item 2 shall include the corresponding proportional shares of the solvency capital requirement of the related insurers and reinsurers.
(5) In the case of a request for permission to calculate the solvency capital requirement of the insurers and reinsurers within the group by means of an internal model, submitted by an insurer or reinsurer which is a participating undertaking, together with its related insurers and/or reinsurers or jointly by the related insurers of a local insurance holding company or of a local mixed financial holding company, Articles 252 and 253 shall apply respectively. (6) Where the commission is the group supervisor, the commission, on a proposal of the deputy chairperson, shall assess whether the aggregated solvency capital requirement appropriately reflects the risk profile of the group and in particular shall assess the existence of specific risks existing at group level which are not sufficiently covered because they are difficult to quantify. (7) Where it establishes that the risk profile of the group deviates significantly from the assumptions underlying the aggregated solvency capital requirement of the group, the commission, on a proposal of the deputy chairperson, may order a capital add-on to the aggregated solvency capital requirement of the group in compliance with Article 584 respectively. Subsection V Supervision of the solvency of a group of insurers and reinsurers which are subsidiaries of an insurance holding company or of a mixed financial holding company Solvency of a group of an insurance holding company or of a mixed financial holding company
Article 256. (1) Where insurers or reinsurers are subsidiaries of an insurance holding company or of a mixed financial holding company, the calculation of the solvency of the group shall be carried out at the level of the insurance holding company or the mixed financial holding company, applying Article 241(2) and (3) and Articles 242 - 255.
(2) For the purposes of this calculation, the parent undertaking shall be treated as an insurer or reinsurer which has the obligation to calculate a solvency capital requirement under Chapter Thirteen. The eligible own funds for covering the solvency capital requirement of the parent undertaking shall be determined under Chapter Twelve. Subsection VI Supervision of the solvency of a group in respect of groups with centralised risk management Group with centralised risk management
Article 257. (1) A group with centralised risk management is a group consisting of an insurer, reinsurer, insurance holding company or mixed financial holding company and their respective subsidiary insurers and reinsurers, for each of which a permission under Article 258 has been issued. For groups with centralised risk management headed by an insurance holding company or a mixed financial holding company, this subsection shall apply respectively.
(2) A local insurer or reinsurer which is a subsidiary of another insurer or reinsurer may be included within the scope of a group with centralised risk management if all of the following conditions are met:
1. the subsidiary is included within the scope of group supervision carried out by the group supervisor at the level of the parent undertaking in accordance with this Part and that authority has not adopted a decision under Article 235(2) in respect of it;
2. the risk management processes and internal control mechanisms of the parent undertaking meet the requirements of the relevant supervisory authorities with regard to the sound management of the subsidiary;
3. the parent undertaking has obtained a permission under Article 265(7) from the competent group supervisor;
4. the parent undertaking has obtained a permission under Article 276(2) from the competent group supervisor;
5. the parent undertaking has submitted a request for permission for the subsidiary to be subject to the regime under this subsection and the permission has been issued under the procedure of Article 258.
Decision on the request
Article 258. (Amended - State Gazette No. 25 of 2022, in force from 29.03.2022) (1) A request under Article 257(2), item 5 in respect of a local insurer or reinsurer shall be submitted to the commission. The commission shall immediately notify the other members of the supervisory college and provide them with the request together with all its annexes.
(2) The decision on the request shall be adopted jointly with the agreement of all participants in the supervisory college or by the group supervisor where no agreement has been reached. The commission shall cooperate with the other members of the supervisory college in order to adopt, within three months of the date of receipt of the request with all annexes by all members of the college, a joint decision to issue or to refuse to issue the requested permission, as well as the possible conditions under which the permission is to be issued. (3) Where a joint decision on the request is reached, it shall be served on the applicant together with its reasons. The decision shall be deemed final in the relations between the supervisory authorities and subject to application. (4) Where no joint decision is reached within the period under paragraph 2, the group supervisor shall adopt an independent decision on the request after discussing the comments and objections made by the other supervisory authorities within the three-month period. The decision shall contain exhaustive reasons and an explanation where the comments and objections of the other supervisory authorities have not been accepted. The decision together with its reasons shall be served on the other members of the supervisory college and on the applicant. The decision shall be deemed final in the relations between the supervisory authorities and subject to application. Sentences one, two, three and four shall also apply where the commission is the group supervisor and it rules independently on a request under Article 257(2), item 5. (5) Where no joint decision has been reached and the period under paragraph 2 has not expired, the commission may refer the matter to the European Authority under the procedure of Article 19 of Regulation (EU) No 1094/2010. Where the commission is the group supervisor and the European Authority has been seised under the procedure of Article 19 of Regulation (EU) No 1094/2010, the commission shall defer the adoption of an independent decision until the European Authority has ruled and shall adopt the decision in accordance with that ruling. The decision of the commission, respectively of another authority in its capacity as group supervisor, adopted in accordance with a ruling of the European Authority under the procedure of Article 19(3) of Regulation (EU) No 1094/2010, shall be deemed final in the relations between the supervisory authorities and subject to application. (6) (Amended - State Gazette No. 25 of 2022, in force from 29.03.2022) In the event that the European Authority does not adopt a decision under paragraph 5 in accordance with Article 19(3) of Regulation (EU) No 1094/2010, the final decision shall be adopted by the commission where it is the group supervisor. The decision shall be deemed final in the relations between the supervisory authorities and subject to application. The three-month period shall be considered a conciliation period within the
meaning of Article 19(2) of the same Regulation. (7) The uniform conditions for the joint decision-making process shall be determined by an act of the European Commission. (8) Paragraphs 4 - 7 shall apply in all cases where the commission is the group supervisor and it is competent to rule on a request in relation to an insurer which does not have its seat in the Republic of Bulgaria. Determination of the solvency capital requirement of subsidiaries of a group with centralised risk management
Article 259. (1) For the calculation of the solvency capital requirement of an insurer or reinsurer which is a subsidiary in a group with centralised risk management, paragraphs 2 - 9 shall apply notwithstanding the provisions of Articles 252 and 253.
(2) Where the solvency capital requirement of a local insurer or reinsurer under paragraph 1 is determined in accordance with an internal model approved at group level under Article 252, and the commission, on a proposal of the deputy chairperson, considers that its risk profile deviates significantly from that internal model, and if that person does not comply with the commission's instructions, it may propose:
1. a capital add-on to its solvency capital requirement calculated with the internal model, or
2. in exceptional cases, where a capital add-on under item 1 is not appropriate, to order that it calculate the solvency capital requirement using the standard formula.
(3) Where the solvency capital requirement of a local insurer or reinsurer under paragraph 1 is calculated using the standard formula and the commission, on a proposal of the deputy chairperson, considers that its risk profile deviates significantly from the assumptions underlying the standard formula, and if that person does not comply with the commission's instructions, it may in exceptional cases propose:
1. that the person replace part of the parameters used in the calculation under the standard formula with parameters specific to it for calculating the modules of the life underwriting risk, non-life underwriting risk or health underwriting risk under Article 174, or
2. a capital add-on to its solvency capital requirement in the cases under Article 584.
(4) The commission shall discuss the proposal under paragraph 2, respectively under paragraph 3, in the supervisory college, setting out its reasons before the college and before the insurer or reinsurer.
(5) The commission shall take action to achieve an agreed decision within the supervisory college on the proposed measures or on other possible measures. Sentence one shall also apply where the commission is a member of a supervisory college and another supervisory authority has proposed measures within the meaning of paragraph 2 or 3 in respect of an insurer or reinsurer licensed by it. The agreed decision reached shall be deemed final in the relations between the supervisory authorities and subject to application. In the event that no agreed decision is reached within one month of the date of the proposal under paragraph 2 or 3, the commission, respectively the other supervisory authority which proposed the measures, may adopt the decision independently. (6) Where the commission and the group supervisor do not reach agreement, as well as where no agreed decision has been reached and the period under paragraph 5 has not expired, the commission may request assistance from the European Authority under the procedure of Article 19 of Regulation (EU) No 1094/2010. Where the European Authority has been seised under the procedure of Article 19 of Regulation (EU) No 1094/2010, the commission shall defer the adoption of an independent decision until the European Authority has ruled and shall adopt the decision in accordance with that ruling. The decision of the commission adopted in accordance with a ruling of the European Authority under the procedure of Article 19(3) of Regulation (EU) No 1094/2010 shall be deemed final in the relations between the supervisory authorities and subject to application. The one-month period under paragraph 5, sentence four shall be considered a conciliation period within the meaning of Article 19(2) of the same Regulation. (7) The independent decision under paragraph 5, respectively under paragraph 6, shall be reasoned and provided to the insurer or reinsurer and to the supervisory college. (8) Paragraph 6 shall also apply to the resolution of disagreements regarding the application of paragraph 2 or 3 between the commission, where it is the group supervisor, and another supervisory authority within the supervisory college. (9) The ruling of the European Authority in the cases under paragraph 8 must not replace the discretion of the national supervisory authorities where it is in accordance with European Union law. The European Authority must resolve the disagreements by mediating between the supervisory authorities. Non-compliance with the solvency capital requirement or the minimum capital requirement by subsidiaries in a group with centralised risk management
Article 260. (1) Where a local insurer or reinsurer which is a subsidiary in a group with centralised risk management does not comply with the solvency capital requirement and notwithstanding the requirements of Article 214(2), items 1 and 3, Article 215(1) and (3) - (5) and Article 216, the commission, on a proposal of the deputy chairperson, shall immediately send to the supervisory college the recovery plan submitted by the insurer or reinsurer for achieving, within a 6-month period from the establishment of the non-compliance with the solvency capital requirement, the restoration of its compliance.
(2) The commission shall take action to achieve an agreed decision within the supervisory college for the approval of the submitted plan no later than 4 months from the date of establishment of the non-compliance with the solvency capital requirement. Sentence one shall also apply where another supervisory authority has proposed the approval of a recovery plan in respect of an insurer or reinsurer licensed by it. (3) Where no agreement is reached under paragraph 2, the commission shall adopt an independent decision on the approval of the recovery plan, discussing the comments and objections of the other participants in the supervisory college. (4) Where it establishes a deterioration of the financial condition under Article 214(1) of a local insurer or reinsurer which is a subsidiary in a group with centralised risk management, the commission shall immediately notify the supervisory college of the measures it proposes to be taken. Except in emergency situations, the measures shall be discussed within the supervisory college. (5) The commission shall take action to achieve an agreed decision within the supervisory college in relation to the proposed measures within a period not longer than one month from the notification. Sentence one shall also apply where the commission is a member of a supervisory college and another supervisory authority has proposed measures in respect of an insurer or reinsurer licensed by it. (6) Where no agreement is reached under paragraph 5, the commission shall adopt an independent decision on the application of measures in respect of the insurer or reinsurer, discussing the comments and objections of the other participants in the supervisory college. (7) Where a local insurer or reinsurer which is a subsidiary of a group with centralised risk management does not comply with the minimum capital requirement and notwithstanding the requirements of Article 214(2), items 2 and 3, Article 215(2) - (5), the commission shall immediately send to the supervisory college the short-term plan submitted by the insurer or reinsurer, so that the objectives of the short-term plan can be achieved within three months from the establishment of the non-compliance with the minimum capital requirement. The commission shall notify the supervisory college of the measures applied to the insurer or reinsurer to ensure compliance with the plan. (8) If the commission and the group supervisor do not reach agreement on the approval of the recovery plan within the 4-month period under paragraph 2 or on the approval of the proposed measures within the one-month period under paragraph 5, as well as if no agreed decision has been reached and if the said periods have not expired, and if there is no emergency situation under paragraph 4, the commission may request assistance from the European Authority under the procedure of Article 19 of Regulation (EU) No 1094/2010. Where the European Authority has been seised under the procedure of Article 19 of
Regulation (EU) No 1094/2010, the commission shall defer the adoption of an independent decision until the European Authority has ruled and shall adopt the decision in accordance with that ruling. The decision of the commission adopted in accordance with the ruling of the European Authority under the procedure of Article 19(3) of Regulation (EU) No

1094/2010, is adopted as final in the relations between the supervisory authorities and is subject to application. The one-month period under paragraph 5 is considered a conciliation period within the meaning of Article 19, paragraph 2 of the same regulation. The reasoned decision of the commission is served on the insurer, respectively the reinsurer, and on the members of the supervisory college. (9) Paragraph 8 also applies to the resolution of disagreements regarding the application of paragraphs 1 - 6 between the commission, when it is the group supervisor, and another supervisory authority within the supervisory college. (10) The ruling of the European Authority under paragraph 8 does not replace the right of discretion of the commission when it is in accordance with European Union law. In cases of disagreements between supervisory authorities, the European Authority assists in their resolution. Exclusion of a subsidiary undertaking - insurer or reinsurer, from the scope of a group with centralized risk management Art. 261. (1) A subsidiary undertaking which is an insurer or reinsurer is excluded from the scope of a group with centralized risk management and shall no longer be subject to supervision under the rules of this subsection when:
1. the condition under Art. 257, para. 2, item 1 is no longer met;
2. the condition under Art. 257, para. 2, item 2 is not met and the group does not restore compliance within an appropriate period;
3. the conditions under Art. 257, para. 2, items 3 and 4 are met.
(2) When the commission is the group supervisor and it decides to exclude an undertaking under para. 1, item 1 from the scope of group supervision, it shall immediately notify the relevant supervisory authority and the parent undertaking. The commission shall take the decision under the first sentence after coordination within the supervisory college. (3) The parent undertaking of a group with centralized risk management is responsible for the ongoing compliance with the conditions under Art. 257, para. 2, items 2 - 4. In the event that any of these conditions ceases to be met, the respective parent undertaking shall immediately notify the commission and the relevant supervisory authority of the subsidiary undertaking, and shall submit a plan for restoring compliance with the condition within an appropriate period. (4) When the commission is the group supervisor of a group with centralized risk management, it shall verify ex officio at least once a year whether the conditions under Art. 257, para. 2, items 2 - 4 are complied with. The commission, on a proposal from the deputy chairperson, shall carry out the verification under the first sentence also at the request of an interested authority from the supervisory college. When the commission is a member of a supervisory college and a local insurer or reinsurer is included in the scope of a group with centralized risk management, it may request the relevant group supervisor to verify the existence of the conditions under Art. 257, para. 2, items 2 - 4 in relation to the local insurer or reinsurer. (5) When in the cases of verification under para. 4 weaknesses are identified, the commission shall order the respective parent undertaking to submit a plan for restoring compliance with the violated conditions within an appropriate period. (6) When the commission is the group supervisor under para. 4, first sentence, it shall assess whether the plan under para. 3, respectively under para. 5, is sufficient, respectively whether it is being implemented after coordination with the supervisory college. When it is established that the plan is insufficient, respectively that it is not being implemented, and that the conditions under Art. 257, para. 2, items 2 - 4 are not met, the commission shall immediately notify the interested supervisory authority thereof. (7) The excluded insurer, respectively reinsurer, may again be included in the scope of the group with centralized risk management in accordance with the procedure under Art. 258. Implementing acts Art. 262. The criteria for assessing whether the conditions under Art. 257, para. 2 are met and the criteria for assessing the existence of an emergency situation under Art. 260, para. 4, as well as the procedures for exchange of information between supervisory institutions and for the exercise of their powers and obligations under this subsection are in accordance with an act of the European Commission.
Section II
Risk concentration, intra-group transactions, risk management and internal control Supervision of risk concentration Art. 263. (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) (1) Risk concentration within the group means the sum of all exposures that may cause a loss to which the undertakings in the group are exposed, which are sufficiently large to threaten the solvency or the overall financial condition of the insurers and/or reinsurers in the group. (2) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) The commission shall carry out supervisory review of risk concentrations in groups for which the commission is the group supervisor, irrespective of whether the seat of the parent undertaking is in the Republic of Bulgaria. The supervisory review of risk concentrations in a group whose parent undertaking is a local insurer, reinsurer, insurance holding company or mixed financial holding company shall be carried out by the group supervisor. In the review of risk concentrations, the commission shall also monitor the possible risk of contagion within the group, the risk of conflict of interest, as well as the level or volume of risks. (3) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) A local insurer, reinsurer, insurance holding company or mixed financial holding company which is a parent undertaking of a group shall report to the group supervisor at least once a year every significant risk concentration at group level. When the parent undertaking of a group is a local insurance holding company or mixed financial holding company, the group supervisor may, after coordination with the supervisory college and with the group, designate an insurer or reinsurer to provide the information under the first sentence. The commission shall require information within the meaning of the first sentence and has the power under the second sentence also when the commission is the group supervisor of a group whose parent undertaking is an undertaking which does not have its seat in the Republic of Bulgaria. (4) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) In the cases under para. 3, the exposures, as well as all types of risks subject to reporting in all cases, shall be determined by the group supervisor after coordination with the commission and the other interested supervisory authorities, and with the group. When the commission is the group supervisor, the commission has the right to determine the risks subject to reporting under the first sentence, after coordination with the other interested supervisory authorities and the group, also when the parent undertaking of the group does not have its seat in the Republic of Bulgaria. When determining the risks subject to reporting under the second sentence and when participating in the coordination under the first sentence, the commission shall take into account the specific structure of the group and its risk management. (5) (Amended -
State Gazette, No. 95 of 2017, in force from 01.01.2018) For determining significant risk concentrations, when the commission is the group supervisor, the commission, after coordination with the interested supervisory authorities and with the group, shall determine appropriate thresholds on the basis of the solvency requirements, the technical provisions or both indicators together. (6) For the supervision of risk concentration, Art. 265 and Chapter Twenty-five shall apply. (7) The concept of "significant risk concentration", the manner of identifying a significant risk concentration and the calculation of appropriate thresholds for the purposes of para. 5 are in accordance with an act of the European Commission. Supervision of intra-group transactions Art. 264. (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) (1) An intra-group transaction is any transaction in which an insurer or reinsurer depends directly or indirectly on other undertakings of the same group or on any natural or legal person closely linked to the undertakings of that group, for the performance of a contractual or non-contractual obligation, for consideration or not. (2) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) The commission shall carry out supervisory review of intra-group transactions in a group for which the commission is the group supervisor, irrespective of whether the seat of the parent undertaking is in the Republic of Bulgaria. The supervisory review of intra-group transactions in a group whose parent undertaking is a local insurer, reinsurer, insurance holding company or mixed financial holding company shall be carried out by the group supervisor. (3) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) A local insurer, reinsurer, insurance holding company or mixed financial holding company which is a parent undertaking of a group shall report to the group supervisor at least once a year all significant intra-group transactions, including those concluded with a natural person closely linked to an undertaking in the group, and particularly significant transactions - immediately, when possible. When the parent undertaking of a group is a local insurance holding company or mixed financial holding company, the group supervisor may, after coordination with the supervisory college and with the group, designate an insurer or reinsurer to provide the information under the first sentence. The commission shall require the information under the first sentence and has the powers under the second sentence also when the commission is the group supervisor of a group whose parent undertaking does not have its seat in the Republic of Bulgaria. (4) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) The intra-group transactions under para. 3, first sentence, subject to reporting in all cases, shall be determined by the group supervisor after coordination with the commission and the other interested supervisory
authorities, and with the group. When the commission is the group supervisor, the commission has the power to determine the intra-group transactions subject to reporting under the first sentence, after coordination with the other interested supervisory authorities and the group, also when the parent undertaking of the group is a person which does not have its seat in the Republic of Bulgaria. When determining the transactions subject to reporting under the second sentence and when participating in their coordination under the first sentence, the commission shall take into account the specific structure of the group and its risk management. (5) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) For determining significant intra-group transactions, when the commission is the group supervisor, the commission, after coordination with the interested supervisory authorities and with the group, shall determine appropriate thresholds on the basis of the solvency requirements, the technical provisions or both indicators together. (6) For the supervision of intra-group transactions, Art. 265 and Chapter Twenty-five shall apply. (7) The concept of "significant intra-group transaction" is in accordance with an act of the European Commission. Supervision of the system of governance Art. 265. (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018; amended and supplemented, No. 63 of 2025, in force from 01.08.2025) (1) (Amended - State Gazette, No. 63 of 2025, in force from 01.08.2025) The requirements under Art. 76 - 79, Art. 86 - 100 and Art. 110 - 112 shall apply accordingly at group level. (2) Notwithstanding the requirements of para. 1, the local insurer, respectively reinsurer, or the local insurance holding company, respectively mixed financial holding company, which is a parent undertaking of a group, shall be obliged to ensure that the risk management systems, the internal control systems and the reporting procedures are applied consistently in all undertakings included in the scope of group supervision, so that these systems and procedures can be controlled at group level. (3) Notwithstanding the requirements of paras. 1 and 2, the internal control mechanisms of the group shall include at least:
1. appropriate mechanisms with regard to the solvency of the group in order to identify and measure all material risks assumed and ensure an appropriate ratio of eligible own funds to risks;
2. reliable reporting and accounting procedures for monitoring and managing intra-group transactions and risk concentration.
(4) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) The commission shall carry out supervisory review under the procedure of Chapter Twenty-five of the systems and procedures under paras. 1 - 3 in the groups for which the commission is the group supervisor, irrespective of whether the seat of the parent undertaking of the group is in the Republic of Bulgaria. The supervisory review of the systems and procedures under paras. 1 - 3 in a group whose parent undertaking is a local insurer, reinsurer, insurance holding company or mixed financial holding company shall be carried out by the group supervisor. (5) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) The local insurer, reinsurer, insurance holding company or mixed financial holding company which is a parent undertaking of a group shall carry out its own risk and solvency assessment at group level. This assessment shall be subject to the supervisory review of the group supervisor. When the commission is the group supervisor, it shall carry out the supervisory review of the own risk and solvency assessment under the procedure of Chapter Twenty-five. (6) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) When at group level the calculation of solvency is based on the method based on accounting consolidation, the local insurer, reinsurer, insurance holding company or mixed financial holding company which is the parent undertaking of the group shall explain to the group supervisor the difference between the sum of the solvency capital requirements of the related insurers and reinsurers in the group and the consolidated solvency capital requirement of the group. When the commission is the group supervisor, the commission shall require explanations in the cases under the first sentence also when the parent undertaking of the group is not seated in the Republic of Bulgaria. (7) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) The local insurer, reinsurer, insurance holding company or mixed financial holding company which is the parent undertaking of the group may, with the permission of the group supervisor, undertake its own risk and solvency assessment simultaneously at group level and at the level of one, more or all of the insurers or reinsurers in the group and prepare a single document covering all assessments. When the commission is the group supervisor, it shall grant such permission after coordination with the members of the supervisory college and after duly discussing their comments and objections. (8) When the group uses the option under para. 7, it shall provide the single document to all interested supervisory authorities simultaneously. The use of the option under para. 7 does not exempt a local insurer, respectively reinsurer, which is a subsidiary undertaking of a group, from the obligation to comply fully with the requirements under Art. 90 within the simultaneous assessment. The second sentence also applies to
a local insurer or reinsurer which is a subsidiary undertaking of a group whose parent undertaking is not a local person.
Chapter Twenty-five
GROUP SUPERVISOR. SUPERVISORY COLLEGE. COOPERATION BETWEEN SUPERVISORY AUTHORITIES AND OTHER MEASURES TO SUPPORT GROUP SUPERVISION Group supervisor Art. 266. (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) (1) For each group within the meaning of Art. 234, para. 1, item 1 or 2, one supervisory authority shall be designated from among the authorities of the Member States in which the group is located, responsible for the coordination and performance of group supervision (group supervisor). (2) The group supervisor shall be determined in accordance with paras. 3 - 10. (3) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) The group supervisor is the commission when it exercises supervisory functions in relation to all insurers and reinsurers in the group individually. (4) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) Outside the cases under para. 3, the commission is the group supervisor if:
1. a local insurer or reinsurer is the parent undertaking of the group;
2. an insurance holding company or mixed financial holding company is the parent undertaking of a group including a local insurer or reinsurer, and the group has no insurers or reinsurers in another Member State;
3. a local insurance holding company or local mixed financial holding company is the parent undertaking of a local insurer or reinsurer, when the group has at least one subsidiary insurer or reinsurer in another Member State as well;
4. the insurer, respectively reinsurer, in the group with the largest balance sheet total is seated in the Republic of Bulgaria in all other cases.
(5) Paragraph 4 shall apply accordingly for determining the group supervisor of the groups under Art. 234, para. 1 or 2, when the commission is not the group supervisor, as well as when a local insurer or reinsurer is part of a group headed by an insurer, reinsurer, insurance holding company or mixed financial holding company from another Member State. (6) The interested supervisory authorities, at the request of any one of them, may take a joint decision to derogate from the rules under paras. 3 - 5 and choose another group supervisor, when their application would be inappropriate, taking into account the structure of the group and the relative importance of the activities of the insurers and reinsurers in the different States. (7) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) For determining a different group supervisor, the commission may request the initiation of a discussion within the college whether the criteria under paras. 3 - 5 are appropriate. A new discussion may not be held more often than once a year. The commission shall assist in reaching a joint decision within a three-month period from the submission of a request for a discussion. Before taking a decision, the interested supervisory authorities shall obtain the opinion of the group. The authority designated as group supervisor under para. 6 shall serve the joint decision together with detailed reasons on the group to which it relates. (8) Within the three-month period under para. 7, the commission or another interested authority may refer the matter to the European Authority under the procedure of Art. 19 of Regulation (EU) No. 1094/2010. In this case, the taking of a joint decision shall be deferred until the ruling of the European Authority and shall comply with it. The joint decision shall be recognized as final and shall be applied by the respective supervisory authorities. The three-month period shall be considered a conciliation period within the meaning of Article 19, paragraph 2 of the same regulation. Referral to the European Authority shall not be allowed if a joint decision has been reached, as well as if the three-month period under para. 7 has expired. After reaching a joint decision, the fifth sentence of para. 7 shall also apply. (9) If no joint decision is reached, the group supervisor shall be determined in accordance with paras. 3 - 5. Powers of the group supervisor Art. 267. (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) (1) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) The commission has the following powers in relation to group supervision:
1. coordinates the collection and dissemination of useful or essential information in the normal course of business, as well as in emergency situations, including dissemination of information relevant to the task of supervision of a supervisory authority;
2. carries out supervisory review and assessment of the financial condition of the group;
3. assesses whether the group complies with the rules on solvency, risk concentration and intra-group transactions under Chapter Twenty-four;
4. assesses the system of governance of the group under Art. 265 and whether the members of the management or supervisory body of the participating undertaking heading the group meet the requirements for qualification and good repute under Art. 79, 80 and 82;
5. plans and coordinates supervisory activities through regular, at least annual, meetings or through other appropriate measures both in the normal course of business and in emergency situations in cooperation with the interested supervisory authorities and taking into account the nature, scale and complexity of the risks associated with the activities of all undertakings that are part of the group;
6. performs tasks, takes measures and makes decisions related to group supervision under this code, in connection with:
a) approval of an internal model at the level of the group; b) application of the regime for supervision of groups with centralized risk management; c) other tasks.
(2) In connection with group supervision, the commission shall approve an internal model at the level of the group.
(3) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) When another authority is designated as group supervisor, the commission shall cooperate with it for the exercise of its powers.
Supervisory college
Art. 268. (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) (1) In order to assist in the performance under Art. 267, a supervisory college shall be established for each group under Art. 266, para. 4 or 5 under the chairmanship of the group supervisor.
(2) The supervisory college is a permanent and flexible structure for cooperation, coordination and assistance in decision-making in relation to group supervision. The supervisory college shall ensure that the processes of cooperation, exchange of information and consultation between the supervisory

the bodies that are its members are carried out effectively in accordance with the provisions of this Part, so as to promote the convergence of their respective decisions and activities. Where a group supervisor does not exercise the powers under Article 267, or, respectively, where a member of a supervisory college does not cooperate to the necessary extent in accordance with the requirements of the second sentence, the Commission may refer the matter to the European Authority in accordance with Article 19 of Regulation (EU) No 1094/2010.

(3) Members of the supervisory college shall be the group supervisor, the supervisory authorities of all Member States in which the registered offices of all subsidiaries of the group are situated, and the European Authority in accordance with Article 21 of Regulation (EU) No 1094/2010. The supervisory authorities of significant branches and related undertakings may also participate in the supervisory college. They shall participate solely for the purpose of effective exchange of information. In order to ensure the effectiveness of the work of the supervisory college, certain actions may be carried out in a reduced composition of the participating authorities.

(4) Unless otherwise provided in an implementing act under Directive 2009/138/EC, the establishment and functioning of the supervisory college shall be governed by a coordination agreement between the group supervisor and the other interested supervisory authorities. Where the Commission is the group supervisor, it shall take the initiative to conclude a coordination agreement, respectively to amend and supplement it, where necessary.

(5) In compliance with the implementing acts under Directive 2009/138/EC, the coordination agreement shall lay down procedures concerning:

the process of joint decision-making by the supervisory authorities for:
(a) determining the group supervisor;
(b) approving a group internal model;
(c) adding capital at group level;
consultations:
(a) for adopting amendments to the coordination agreement; (b) in cases where there is non-compliance with the group solvency capital requirement or there is a risk of such non-compliance.

(6) Notwithstanding the powers conferred on the group supervisor and the other supervisory authorities, the coordination agreement may assign additional tasks to the group supervisor, to other supervisory authorities and to the European Authority where this would lead to more efficient group supervision and would not prevent supervisory actions of the members of the college arising from their powers.

(7) The coordination agreement may provide for procedures for consultation between the supervisory authorities in relation to other aspects of group supervision, as well as with a view to cooperation with other supervisory authorities.

(8) In the event of a dispute concerning the coordination agreement, the Commission may refer the matter to the European Authority and request its assistance in accordance with Article 19 of Regulation (EU) No 1094/2010. Where the Commission is the group supervisor and the European Authority has been referred a dispute concerning the coordination agreement, it shall take its final decision in accordance with the decision of the European Authority and shall send the decision of the European Authority to the other interested supervisory authorities.

(9) (Amended - State Gazette No 95 of 2017, in force from 01.01.2018) The Commission, as group supervisor, shall provide the European Authority with information on the functioning of the supervisory colleges which it chairs, as well as information on difficulties encountered.

(10) Additional requirements in connection with the coordination of group supervision shall be laid down by an act of the European Commission.

Cooperation and exchange of information between supervisory authorities

Article 269. (Amended - State Gazette No 95 of 2017, in force from 01.01.2018) (1) (Amended - State Gazette No 95 of 2017, in force from 01.01.2018) The Commission shall cooperate with the other supervisory authorities competent for the supervision of the individual insurers or reinsurers within the group, especially in cases where an insurer or reinsurer of such a group is faced with financial difficulties.

(2) (Amended - State Gazette No 95 of 2017, in force from 01.01.2018) In order to ensure that all supervisory authorities under paragraph 1, including the group supervisor where it is different from the Commission, have the same information, the Commission shall exchange with the other supervisory authorities information necessary for the performance and support of their supervisory powers. For this purpose the Commission shall provide to and receive from the other supervisory authorities information on actions of the group, on supervisory actions taken in respect of an undertaking of the group, information provided by the group, as well as other relevant information. The information shall be provided immediately after the Commission obtains access to it, and also upon request by another supervisory authority, but no later than two weeks from the date of the request. Where the Commission is the group supervisor, it shall provide the other interested supervisory authorities and the European Authority with information on persons having close links with the group, on the content of the solvency and financial condition report, as well as the information received directly from subsidiaries of the group, in particular in connection with the legal structure, the governance structure and the organisation of the group. If a supervisory authority has not communicated significant information or a request for cooperation has been refused, in particular for the exchange of significant information, or no action has been taken within two weeks, the Commission may refer the matter to the European Authority.

(3) (Amended - State Gazette No 95 of 2017, in force from 01.01.2018) The Commission shall send an invitation to a meeting of all supervisory authorities involved in the supervision of the group on the day following the learning of any of the following circumstances:

significant non-compliance with the solvency capital requirement or non-compliance with the minimum capital requirement by a local insurer or reinsurer;
significant non-compliance with the group solvency capital requirement, calculated on the basis of consolidated data or of the aggregated solvency capital requirement depending on the chosen calculation method;
occurrence of other exceptional circumstances.

(4) An act of the European Commission shall determine:

the data which the group supervisor must regularly collect and provide to the other interested supervisory authorities or which the other interested supervisory authorities must report to the group supervisor;
the significant or relevant data for group-level supervision with a view to enhancing convergence in the field of supervisory reporting;
the procedures and forms for providing information to the group supervisor, as well as the procedures for cooperation and exchange of information between supervisory authorities.

Coordination between supervisory authorities

Article 270. (Amended - State Gazette No 95 of 2017, in force from 01.01.2018) (1) (Amended - State Gazette No 95 of 2017, in force from 01.01.2018) The Commission shall carry out coordination within the supervisory college before it takes a decision which is relevant to the supervisory powers of other supervisory authorities in the following cases:

changes in the shareholder structure, the organisational or management structure of the insurance and reinsurance undertakings in a given group, which changes require approval or authorisation under this Code;
a decision to extend the deadlines for implementation of the recovery plan for solvency under Article 216;
imposition of serious sanctions or application of extraordinary measures, including a requirement to add capital to the solvency capital requirement and imposition of a restriction on the use of an internal model for calculating the solvency capital requirement.

(2) (Amended - State Gazette No 95 of 2017, in force from 01.01.2018) In the cases under paragraph 1, items 2 and 3, the Commission shall also take the opinion of the group supervisor where the Commission itself is not such an authority.

(3) (Amended - State Gazette No 95 of 2017, in force from 01.01.2018) Before taking a decision based on information received from another supervisory authority, the Commission shall take the opinion of that supervisory authority.

(4) (Amended - State Gazette No 95 of 2017, in force from 01.01.2018) Notwithstanding the requirements of Articles 267 and 268, the Commission may decide not to carry out coordination with the other supervisory authorities in urgent cases or where such coordination could jeopardise the effectiveness of the decision. In that case the Commission shall notify the other interested supervisory authorities immediately.

Request for collection of information by the group supervisor

Article 271. (Amended - State Gazette No 95 of 2017, in force from 01.01.2018) (1) (Amended - State Gazette No 95 of 2017, in force from 01.01.2018) Where the Commission is the group supervisor whose parent undertaking has its registered office in another Member State, it may request the competent authority of the other Member State to collect from the parent undertaking any information necessary for the exercise of its powers as group supervisor and to provide it to the Commission. Where a group supervisor whose parent undertaking has its registered office in the Republic of Bulgaria requests the Commission to collect information, the Commission shall take the necessary actions and provide the requested information.

(2) (Amended - State Gazette No 95 of 2017, in force from 01.01.2018) Where the Commission, in its capacity as group supervisor, needs information under Article 274 which has already been provided to another supervisory authority, it shall request the information from that authority. Upon request, the Commission shall provide information under Article 274 to another group supervisor where it has such information.

Cooperation with the supervisory authorities of credit institutions and investment firms

Article 272. (Amended - State Gazette No 95 of 2017, in force from 01.01.2018) (1) (Amended - State Gazette No 95 of 2017, in force from 01.01.2018) Where a local insurer or reinsurer, a credit institution or an investment firm are directly or indirectly linked or have a common participating undertaking, the Commission shall cooperate closely with the supervisory authority of the respective credit institution or investment firm.

(2) (Amended - State Gazette No 95 of 2017, in force from 01.01.2018) The Commission shall have the right to receive information from the authority which supervises the credit institution or, respectively, the investment firm under paragraph 1, in connection with the exercise of its supervisory powers, and they shall be obliged to provide such authority with information necessary for the exercise of its supervisory powers in respect of the credit institution or, respectively, the investment firm.

Professional secrecy

Article 273. (1) The exchange of information under Articles 269 - 272 between supervisory authorities may not be restricted by rules on the protection of professional secrecy.

(2) The information received by the Commission in connection with the supervision of a group carried out under this Part shall be subject to the rules under Articles 24 and 25 of the Financial Supervision Commission Act.

Access to information

Article 274. (Amended - State Gazette No 95 of 2017, in force from 01.01.2018) (1) Natural and legal persons included within the scope of group supervision, with residence or registered office in the Republic of Bulgaria, and their related undertakings and participating undertakings shall exchange any information necessary for the purposes of group supervision, including with persons of the group with residence or registered office in other Member States, without restriction.

(2) (Amended - State Gazette No 95 of 2017, in force from 01.01.2018) The persons under paragraph 1 shall provide to the Commission or to another supervisory authority of a Member State responsible for group supervision any information necessary for the purposes of group supervision. The Commission, in its capacity as group supervisor, may require and receive any information necessary for the purposes of group supervision from any person with residence or registered office in another Member State which is part of the group. Article 114, paragraph 3 and Article 127 shall apply accordingly.

(3) (Amended - State Gazette No 95 of 2017, in force from 01.01.2018) Where the Commission is the group supervisor, it may exempt the group from the obligation to provide periodic reporting information where the period for its provision is shorter than one year, if a relief within the meaning of Article 193 applies to each insurer and reinsurer of the group and taking into account the nature, scale and complexity of the risks associated with the group's activities.

(4) (Amended - State Gazette No 95 of 2017, in force from 01.01.2018) Where the Commission is the group supervisor, it may exempt the group from the obligation to provide detailed information (item by item) if a relief within the meaning of Article 194 applies to each insurer and reinsurer of the group and taking into account the nature, scale and complexity of the risks associated with the group's activities, as well as whether such relief would not conflict with the objective under Article 2, paragraph 2.

(5) (Amended - State Gazette No 95 of 2017, in force from 01.01.2018) The Commission may request information necessary for group supervision directly from another undertaking within the group only where such information has been requested from the insurer or reinsurer subject to group supervision and has not been provided by it within a reasonable period.

Verification of information

Article 275. (Amended - State Gazette No 95 of 2017, in force from 01.01.2018) (1) (Amended - State Gazette No 95 of 2017, in force from 01.01.2018) The Commission may order an on-site verification of the information under Article 274 at the premises on the territory of the Republic of Bulgaria of:

an insurer or, respectively, a reinsurer subject to group supervision;
a related undertaking of a person under item 1;
a parent undertaking of a person under item 1;
a related undertaking of a parent undertaking of a person under item 1.

(2) (Amended - State Gazette No 95 of 2017, in force from 01.01.2018) Where the Commission intends to verify information in relation to a person, whether or not subject to supervision, which is part of a group and is located in another Member State, it shall send a request to the respective supervisory authority in the Member State to carry out the verification.

(3) (Amended - State Gazette No 95 of 2017, in force from 01.01.2018) Where the Commission has received a request under paragraph 2 from the respective supervisory authority in the Member State, it shall, within its powers, no later than one week from receipt of the request, take the necessary actions. The verification shall be carried out by officials of the Commission or by an external auditor or expert, or by ensuring the possibility for the requesting authority to carry it out with its own officials. The Commission shall notify the group supervisor of the actions taken.

(4) The Commission may carry out the verification under paragraph 2 with its own officials or send a representative to participate in a verification organised by the supervisory authority in the respective Member State. Where the authority which made the request under paragraph 3 does not carry out the verification itself, it may send representatives to participate in the verification. Where a verification under the first or second sentence is joint, the European Authority may also participate in it.

(5) The Commission may refer the matter to the European Authority where:

following a request made to another supervisory authority to carry out a verification under paragraph 2, no action has been taken within two weeks;
officials of the Commission have been prevented from exercising their right to participate in a verification under paragraph 4.

Group solvency and financial condition report

Article 276. (Amended - State Gazette No 95 of 2017, in force from 01.01.2018) (1) A local insurer or reinsurer or, respectively, a local insurance holding undertaking or mixed financial holding undertaking which is a parent undertaking of a group shall annually disclose publicly a report on the solvency and financial condition at group level. Articles 129 - 133 shall apply accordingly.

(2) A local insurer or reinsurer or, respectively, a local insurance holding undertaking or mixed financial holding undertaking may, with the permission of the group supervisor, provide a single report on its solvency and financial condition which includes:

the information at group level subject to disclosure under paragraph 1;
the information for each of the subsidiaries within the group, which information must be individualised and disclosed in accordance with Articles 129 - 133.

(3) (Amended - State Gazette No 95 of 2017, in force from 01.01.2018) Where the Commission is the group supervisor, before considering a request for permission under paragraph 2, it shall carry out coordination with the members of the supervisory college and take into account their comments and objections.

(4) (Amended - State Gazette No 95 of 2017, in force from 01.01.2018) Where the single report under paragraph 2 disclosed by a parent undertaking of a local insurer or reinsurer does not reveal for it the information subject to disclosure for comparable persons on the market in the Republic of Bulgaria, and where the omission is significant, the Commission shall order the respective local insurer or reinsurer to disclose the necessary additional information.

Structure of the group

Article 277. A local insurer or reinsurer or, respectively, a local insurance holding undertaking or mixed financial holding undertaking which is a parent undertaking of a group shall annually, by 31 January, disclose publicly:

the legal, governance and organisational structure of the group, including an up-to-date chart of the group;
a description of all subsidiaries, significant related undertakings and significant branches belonging to the group, whether or not subject to supervision under this Code.

Compulsory measures

Article 278. (Amended - State Gazette No 95 of 2017, in force from 01.01.2018) (1) Where an insurer or reinsurer, part of a group, does not comply with the requirements under this Part or where those requirements are complied with but nevertheless there is a threat to solvency, or where intra-group transactions or risk concentration jeopardise the financial condition of the insurer or reinsurer, the necessary measures to correct the situation within the shortest possible time shall be taken by:

the group supervisor - in respect of an insurance holding undertaking or mixed financial holding undertaking;
the national supervisory authority - in respect of the insurer or, respectively, the reinsurer.

(2) (Amended - State Gazette No 95 of 2017, in force from 01.01.2018) If in the case under paragraph 1, item 1 the Commission is not the supervisory authority in the Member State of the registered office of the insurance holding undertaking or mixed financial holding undertaking, it shall notify the respective supervisory authorities of its conclusions with a view to the necessary measures being taken by them. Where the Commission has been notified by a supervisory authority which is the group supervisor of a group headed by an insurance holding undertaking or mixed financial holding undertaking with registered office in the Republic of Bulgaria of circumstances under paragraph 1, item 1, the Commission shall apply the respective measures or sanctions in accordance with its powers.

(3) (Amended - State Gazette No 95 of 2017, in force from 01.01.2018) If in the case under paragraph 1, item 2 the Commission, in its capacity as group supervisor, is not the supervisory authority in the Member State of the registered office of the insurer or reinsurer, it shall notify the respective supervisory authorities of its conclusions with a view to the necessary measures being taken by them. Where the Commission has been notified by a supervisory authority which is the group supervisor of circumstances under paragraph 1, item 2, the Commission shall apply the respective measures or sanctions in accordance with its powers.

(4) (Amended - State Gazette No 95 of 2017, in force from 01.01.2018) In the cases under paragraph 2 or 3 the Commission shall apply the measures under Article 587 in accordance with its competence. The measures under the first sentence shall also apply to the insurance holding undertaking and the mixed financial holding undertaking. The Commission shall coordinate the measures at its discretion with other supervisory authorities within the supervisory college.

Chapter Twenty-six
SUPERVISION OF GROUPS IN RESPECT OF THIRD-COUNTRY GROUPS AND IN RESPECT OF GROUPS HEADED BY A MIXED ACTIVITY INSURANCE HOLDING UNDERTAKING

Section I
Groups headed by an insurer, reinsurer, mixed activity insurance holding undertaking or mixed financial holding undertaking with registered office in a third country

Third-country groups with an equivalent regime

Article 279. (1) Where a local insurer or reinsurer is part of a third-country group under Article 234, paragraph 1, item 3, whose supervisory regime is equivalent to the regime in the European Union, the Commission shall recognise the group supervision carried out by the authorities of that country.

(2) Chapter Twenty-five shall apply accordingly to cooperation with the supervisory authorities of the third country.

Third-country groups where the regime is not equivalent

Article 280. (1) Where a local insurer or reinsurer is part of a third-country group under Article 234, paragraph 1, item 3, whose supervisory regime is not equivalent, as well as where, in a regime of temporary equivalence, Article 279 does not apply on the ground of Article 281, paragraph 5, the Commission shall apply as appropriate one of the following measures:

apply accordingly the regime under Articles 239 - 256 and Articles 263 - 277;
require the group to establish an insurance holding undertaking or mixed financial holding undertaking in a Member State, at the level of which supervision under Chapters Twenty-four and Twenty-five is to apply.

(2) The general principles and methods under Chapters Twenty-four and Twenty-five shall apply at the level of the insurance holding undertaking, mixed financial holding undertaking, third-country insurer or third-country reinsurer.

(3) Solely for the purposes of calculating the solvency of the group, the parent undertaking shall be considered an insurer or reinsurer,

which is subject to the requirements of this Code in connection with determining the eligible own funds to cover the capital requirement for solvency, and its capital requirement for solvency is determined by applying:
1. Article 247, where that undertaking is an insurance holding company or a mixed financial holding company;
2. Article 248, where that undertaking is an insurer or reinsurer of a third country.
Establishment of equivalence
Art. 281. (1) The equivalence of the regime for supervision of groups in third countries with the regime in the European Union is established:
1. by an act of the European Commission under Article 260, paragraph 3 of Directive 2009/138/EC;
2. by an act of the European Commission for temporary equivalence under Article 260, paragraph 5 in conjunction with paragraph 6 of Directive 2009/138/EC;
3. by the commission and the other interested supervisory authorities of the group under the procedure of paragraphs 2 - 5.
(2) Where there is no act under paragraph 1, item 1 or 2, the assessment for establishing equivalence of the regime is carried out by the commission or by an interested supervisory authority which would be the group supervisor, according to the criteria under Article 266, paragraphs 3 - 5 (acting group supervisor) at its discretion or when requested by the parent undertaking, of an insurer or reinsurer of the group. The European Authority assists the acting group supervisor in accordance with Article 33, paragraph 2 of Regulation (EU) No 1094/2010. (3) The commission, in its capacity as acting group supervisor and with the assistance of the European Authority, conducts consultation with the other interested supervisory authorities. The decision is taken on the basis of criteria adopted by an act of the European Commission and may not contradict other decisions taken earlier in respect of the same third country, except in cases where it is necessary to take into account a substantial change of the regime under this Part or in the respective third country. (4) Where the commission disagrees with a decision under paragraph 3 of another supervisory authority in its capacity as acting group supervisor, it may refer the matter to the European Authority. (5) In the case of an act under paragraph 1, item 2, Article 279 applies, except in cases where in a Member State there is a subsidiary undertaking of the third-country group which has a larger balance sheet figure than that of the parent undertaking with its seat in a third country. In that case the acting group supervisor must be the group supervisor. Levels of establishment of the equivalence regime Art. 282. (1) Where the third-country parent undertaking at the head of the group is a subsidiary undertaking of an insurance holding company, mixed financial holding company, insurer or reinsurer of a third country, the establishment of equivalence under Art. 281 is carried out at the level of the ultimate parent undertaking. (2) Where there is no equivalence regime at the level under paragraph 1, the commission in its capacity as acting group supervisor may carry out establishment at a lower level where there is a parent undertaking - insurance holding company, mixed financial holding company, insurer or reinsurer of a third country. The reasons for this decision are sent to the group. (3) Article 280 applies accordingly. Cooperation with supervisory authorities of third countries Art. 283. (Amended - State Gazette, issue 95 of 2017, in force from 01.01.2018) In connection with the supervision of insurance groups of third countries, the commission cooperates with supervisory authorities of third countries on the basis of bilateral agreements or on the basis of agreements concluded at the level of the European Union.
Section II
Group headed by a mixed-activity insurance holding company Intra-group transactions Art. 284. (Amended - State Gazette, issue 95 of 2017, in force from 01.01.2018) (1) (Amended - State Gazette, issue 95 of 2017, in force from 01.01.2018) Where the parent undertaking of one or more domestic insurers or reinsurers is a mixed-activity insurance holding company, the commission supervises the transactions between the respective insurers or reinsurers, as well as between them and the mixed-activity insurance holding company and its other related undertakings. (2) Articles 264 and 269 - 275 apply accordingly. Cooperation with supervisory authorities of third countries Art. 285. (Amended - State Gazette, issue 95 of 2017, in force from 01.01.2018) In connection with the supervision of groups headed by a mixed-activity insurance holding company, the commission cooperates with supervisory authorities of third countries on the basis of bilateral agreements, as well as on the basis of agreements concluded at the level of the European Union.
PART THREE
DISTRIBUTION OF INSURANCE AND REINSURANCE PRODUCTS TITLE ONE .
GENERAL PROVISIONS
Chapter Twenty-Seven
GENERAL PROVISIONS
Distribution of insurance and reinsurance products Art. 286. (Amended - State Gazette, issue 101 of 2018, in force from 07.12.2018; amended and supplemented, issue 85 of 2023, in force from 10.10.2023) (1) The provisions of this Part of the Code, in addition to what is applicable under Part Two for insurers and reinsurers, apply to the activity of distribution of insurance and reinsurance products on the territory of the Republic of Bulgaria carried out by the persons under Art. 23, paragraph 1, items 1 - 3 and 5 and paragraph 2. (2) (New - State Gazette, issue 85 of 2023, in force from 10.10.2023) In the distribution of insurance products with the designation "pan-European personal pension product" or "PEPP", created by a provider under Art. 6, paragraph 1, letter "b" of Regulation (EU) 2019/1238, the respective insurer licensed under classes of insurance under Section I of Annex No. 1 and the insurance intermediaries under Art. 294, paragraph 1 apply the provisions of Art. 146, paragraphs 6 - 8, Art. 288, paragraphs 1 and 3, Art. 288a, paragraph 2, Art. 299, Art. 301, paragraph 5, Art. 324, paragraph 1, items 1, 3 - 5 and 7 and paragraph 5, Art. 325, Art. 325a, paragraph 1, Arts. 329, 333, 338a, 340, 341, Art. 342, paragraphs 1 - 4 and 7 - 13 and the acts implementing them. (3) (Previous paragraph 2 - State Gazette, issue 85 of 2023, in force from 10.10.2023) The distribution of insurance products includes the activities of providing advice, offering or carrying out other preparatory work for the conclusion of insurance contracts, of providing assistance for the conclusion of insurance contracts or of providing assistance in the exercise of rights and performance of obligations under insurance contracts, in particular in the submission of insurance claims, including the provision of information on one or more insurance products in accordance with criteria chosen by users of insurance services through an internet page or other means, and the compilation of a ranking of insurance products, including comparison of prices and products, or the offering of a discount on the price of the insurance product where the user can directly or indirectly conclude an insurance contract through an internet page or other means. (4) (Previous paragraph 3 - State Gazette, issue 85 of 2023, in force from 10.10.2023) The distribution of reinsurance products includes the activities of providing advice, offering or carrying out other preparatory work for the conclusion of reinsurance contracts or of concluding reinsurance contracts, or of providing assistance in the exercise of rights and performance of obligations under reinsurance contracts, as well as in the submission of claims, including where these activities are carried out by a reinsurer without the involvement of a reinsurance intermediary. (5) (Previous paragraph 4 - State Gazette, issue 85 of 2023, in force from 10.10.2023) The following do not constitute distribution of insurance or reinsurance products:
1. the incidental provision of information in the course of carrying out another professional activity performed as an occupation, if:
(a) the person providing the information does not take additional steps to provide assistance for the conclusion or performance of an insurance contract; (b) the purpose of the activity under letter "a" is not to provide assistance to the user of insurance services in the conclusion or performance of a reinsurance contract;
2. the carrying out as an occupation of the activity of settling insurance claims on behalf of an insurer or reinsurer, as well as determining the amount of the damage caused and preparing expert valuations in connection with insurance claims;
3. the provision to insurance or reinsurance intermediaries or to insurers or reinsurers only of data and information about potential policyholders, if the person does not take additional steps to provide assistance for the conclusion of an insurance or reinsurance contract;
4. the provision only of information about insurance or reinsurance products, about an insurance or reinsurance intermediary, about an insurer or reinsurer to potential policyholders, if the person does not take additional steps to provide assistance for the conclusion of an insurance or reinsurance contract.
(6) (Previous paragraph 5 - State Gazette, issue 85 of 2023, in force from 10.10.2023) An insurance, respectively reinsurance, product is a set of terms forming the content of an insurance, respectively reinsurance, contract and intended for the market.
(7) (Previous paragraph 6 - State Gazette, issue 85 of 2023, in force from 10.10.2023) The provisions of this Part of the Code do not apply to insurers, respectively reinsurers, as well as to intermediaries carrying out activities for the distribution of insurance and reinsurance products, in respect of risks situated in third countries, as well as to activities for the distribution of insurance and reinsurance products carried out in third countries. Distributor of insurance products Art. 287. (Amended - State Gazette, issue 101 of 2018, in force from 07.12.2018) A distributor of insurance products is any insurer, insurance intermediary and intermediary offering insurance products as an ancillary activity. General principles of the distribution of insurance products. Prohibition on placing signs, markings or other indications Art. 288. (Amended - State Gazette, issue 101 of 2018, in force from 07.12.2018) (1) (Amended - State Gazette, issue 101 of 2018, in force from 07.12.2018) In the distribution of insurance products, insurers, insurance intermediaries and intermediaries offering insurance products as an ancillary activity are obliged to act honestly, fairly and professionally in accordance with the best interest of the users of insurance services. (2) (Amended - State Gazette, issue 101 of 2018, in force from 07.12.2018) In the distribution of insurance products, the insurer must identify itself as an insurer, respectively the insurance intermediary or the intermediary offering insurance products as an ancillary activity must identify itself as an intermediary of the respective type. The obligation under the first sentence also applies in respect of company or advertising signs, inscriptions and materials. (3) Any information from a distributor of insurance products addressed to users of insurance services, including marketing communications, must be accurate, clear and not misleading. Marketing communications must be clearly identified as such. A marketing communication is any message addressed to a defined or undefined circle of persons, regardless of the form or means of communication, which has the purpose of presenting an insurance product or concluding an insurance contract. (4) It is prohibited to place signs, markings or other indications on or in a visible place on a motor vehicle or other property which directly or indirectly indicate the existence of a concluded insurance contract in connection with that motor vehicle or other property. (5) An insurer or reinsurer may not require in any form the placing of the signs, markings or other indications under paragraph 4 as a preliminary condition for the conclusion and/or entry into force of the insurance contract in connection with the respective motor vehicle or other property and/or for the coverage of one or more risks under the insurance contract, and may not agree or include in the general terms of such insurance the placing of the signs, markings or other indications under
paragraph 4 as an obligation of the insured, the policyholder or the third-party beneficiary. The absence of such signs, markings or other indications may not be grounds for exclusion from coverage of one or more risks under the insurance contract, for amendment or termination of the insurance contract, or be tied to any adverse legal consequences for the insured, the policyholder or the third-party beneficiary. (6) The prohibition under paragraph 4 does not apply to the signs, markings or other indications whose placing is expressly regulated by a normative act, as well as to signs, markings or other indications which advertise a natural or legal person, its trade sign or mark, its product, goods, service, trademark or other similar, and they are not tied to the conclusion of the insurance contract, where:
1. the motor vehicle or other property is owned by the same person or is taken by it under rent, lease or another legal basis for which there is a concluded contract, or
2. their placing is in performance of a written advertising contract concluded with a natural or legal person which is the owner, user, tenant or lessee of the motor vehicle or other property on which the respective signs, markings or other indications are placed.
General principles for the remuneration of distributors of insurance products Art. 288a. (New - State Gazette, issue 101 of 2018, in force from 07.12.2018) (1) Distributors of insurance products establish appropriate policies for the remuneration of their employees, which policies do not impede their ability to act entirely in the interest of the users of insurance services and to make an appropriate recommendation or provide information in an impartial, clear and non-misleading manner. The insurer's policy under the first sentence also applies to the remuneration which the insurer pays to representatives acting on its behalf. Remuneration based on sales targets is not permitted to create an incentive for recommending a particular product to a user of insurance services in cases where this would lead to a breach of the interests of the users of insurance services. (2) Distributors of insurance products may not receive remuneration, may not remunerate and may not assess the work results of their employees in a manner which contradicts their obligation to act entirely in the interest of their clients. Distributors of insurance products may not create arrangements through remuneration, sales targets or otherwise which stimulate distributors or their employees to recommend a given insurance product to a user of insurance services where the distributors of insurance products could offer another insurance product which better meets the needs of the user. Publication of the rules established in protection of the public interest Art. 289. (Amended - State Gazette, issue 101 of 2018, in force from 07.12.2018) (1) (Amended - State Gazette, issue 101 of 2018, in force from 07.12.2018) The commission publishes and updates on its internet page information on the provisions of Bulgarian legislation established in protection of the public interest, in compliance with which the distribution of insurance products and the performance of obligations under insurance contracts in the Republic of Bulgaria must be carried out, including whether stricter requirements are envisaged than those under European Union law. (2) The conclusion of insurance contracts may not be restricted where the mandatory provisions of Bulgarian legislation established in protection of the public interest have been complied with. Complaints of users and consumer organisations Art. 290. (Amended - State Gazette, issue 101 of 2018, in force from 07.12.2018) (1) The commission establishes and maintains an organisation for the consideration of complaints of users of insurance services, consumer organisations and other interested persons against distributors of insurance services and products. Every complaint received is considered and receives a response within one month from the date of receipt of the complaint. (2) Every insurer and insurance broker establishes and maintains an organisation for the consideration of complaints of users of insurance services. The insurer, respectively the
insurance broker, is obliged to register, consider and respond to the complaint within one month from the date of its receipt. The insurer, respectively the insurance broker, is obliged to analyse the complaints received and to take measures to eliminate weaknesses in its activity established on the basis of the complaints. (3) (Amended - State Gazette, issue 101 of 2018, in force from 07.12.2018) Where an insurance agent or an intermediary offering insurance products as an ancillary activity has received a complaint from a user of insurance services, it is obliged to forward it to the insurer on whose behalf it carries out intermediation within three days of receipt ?. Market monitoring Art. 290a. (New - State Gazette, issue 101 of 2018, in force from 07.12.2018) The commission and the deputy chairperson carry out monitoring of the market of insurance products, including the market of ancillary insurance products which are placed on the market, distributed or sold in or from the Republic of Bulgaria. Ancillary insurance products within the meaning of the first sentence are the insurance products distributed through intermediaries offering insurance products as an ancillary activity.
Chapter Twenty-Eight
REQUIREMENTS IN CONNECTION WITH THE DIRECT OFFERING AND CONCLUSION OF INSURANCE BY AN INSURER Product oversight and governance requirements Art. 291. (Amended - State Gazette, issue 101 of 2018, in force from 07.12.2018) (1) Every insurer is obliged to establish, maintain, apply and review a procedure for the development and approval of each insurance product or of substantial changes to an existing insurance product before its offering or distribution to users of insurance services. The product development and approval process must be proportionate and appropriate according to the nature of the insurance product. (2) In the process of approval of insurance products, the insurer is obliged to identify a target market for each product and to assess all relevant risks for such identified target market, as well as to ensure that the planned distribution strategy corresponds to the identified target market and that the insurance product is distributed on the identified target market. (3) The insurer is obliged periodically to review the insurance products which it offers or distributes, taking into account any event which may substantially affect the potential risk in respect of the specific target market, in order to assess at least whether the product still corresponds to the needs of the identified target market and whether the planned distribution strategy is still appropriate. (4) The insurer which develops an insurance product is obliged to provide to the insurance intermediaries and to the intermediaries which provide insurance products as an ancillary activity all necessary information regarding the insurance product and the product approval procedure, including the identified target market. (5) Paragraphs 1 - 4 do not apply to insurance products constituting insurance of large risks. (6) Where an insurer offers insurance products which are not created by it, the insurer must have appropriate arrangements for obtaining all necessary information regarding the insurance product and the product approval procedure, including the identified target market, as well as for understanding the characteristics and the identified target market of each insurance product. The insurer is obliged to comply with paragraphs 2 - 4 also for the products which are not created by it and which it distributes. Requirements for qualification and good repute of employees who offer insurance and reinsurance products Art. 292. (Amended - State Gazette, issue 101 of 2018, in force from 07.12.2018) (1) Every insurer and reinsurer is obliged to ensure that its employees directly engaged in the activities of distribution of insurance or reinsurance products, as well as the respective persons in the management structure of the insurer who are responsible for the activities of distribution of insurance or reinsurance products, possess the knowledge and skills defined in Annex No. 3 in order to perform their tasks and obligations adequately. The insurer, respectively the
reinsurer, provides professional training for every person who enters employment with the insurer, respectively the reinsurer, in a position which envisages direct engagement with the activities of

distribution of insurance, respectively reinsurance, products, which guarantees the acquisition of the knowledge and skills specified in Annex No. 3.
(2) The insurer and the reinsurer shall ensure the conduct of not less than 15 hours of professional training annually for each of the employees directly engaged in the activities of distribution of insurance or reinsurance products, including the members of its management board who are responsible for the activities of distribution of insurance or reinsurance products, depending on the nature of the products offered, the position and duties of the person and the nature of the activity of the insurer, respectively of the reinsurer. (3) Every insurer and reinsurer shall duly document the continuing professional training or development completed by the persons within the year. Evidence of compliance with the requirements under the first sentence shall be presented to the commission upon request. (4) Every employee of an insurer and of a reinsurer who is directly engaged in the activities of distribution of insurance or reinsurance products must meet the good repute requirements introduced in the policy under Art. 77, para. 1, item 3, letter "н", and also to:

has not been sentenced to imprisonment for a deliberate crime of a general nature, unless rehabilitated;
has not been deprived of the right to hold a position of material responsibility;
has not been, in the last three years before the initial date of insolvency determined by the court, a member of a management or supervisory body or an unlimitedly liable partner in a company for which insolvency proceedings have been opened, or a company terminated due to insolvency, if unsatisfied creditors remain;
has not been declared insolvent, if unsatisfied creditors remain, and is not in insolvency proceedings.
Management and control of the requirements for qualification and good repute of employees who offer insurance and reinsurance products Art. 293. (Amended - State Gazette, No. 101 of 2018, in force from 07.12.2018) (1) The insurer, respectively the reinsurer, is obliged to carry out ongoing control of compliance with the requirements for qualification and good repute of the employees, as well as of the respective persons in the management structure of the insurer, respectively of the reinsurer, who are responsible for the activity of distribution of insurance or reinsurance products. (2) The insurer, respectively the reinsurer, shall designate a function within the management system to apply the rules and procedures under para. 1. Art. 79, para. 1, para. 3, second sentence, paras. 4 and 5, Art. 80, para. 1, items 3 - 9 and paras. 7, 8 and 9 shall apply.
PART TWO
INSURANCE AND REINSURANCE INTERMEDIARIES
(Title amended - State Gazette, No. 101 of 2018, in force from 07.12.2018)
Chapter Twenty-Nine
GENERAL RULES AND EXCEPTIONS
General provisions

Art. 294. (Amended - State Gazette, No. 101 of 2018, in force from 07.12.2018; amended, No. 25 of 2022, in force from 29.03.2022; supplemented, No. 67 of 2025) (1) An insurance intermediary is any natural or legal person which is not an insurer or reinsurer or their employee, nor an intermediary offering insurance products as an ancillary activity, and which person, for remuneration, carries out an activity of distribution of insurance products. The insurance intermediary is:
1. an insurance broker or an insurance agent registered under the conditions and in accordance with the procedure of this Code;
2. an insurance intermediary from another Member State which carries out activity on the territory of the Republic of Bulgaria under the conditions of the right of establishment or the freedom to provide services.
3. (new - State Gazette, No. 67 of 2025) a branch of an insurance intermediary from a third country, registered under the Commerce Act, and under the conditions and in accordance with the procedure of this Code.
(2) (Amended - State Gazette, No. 25 of 2022, in force from 29.03.2022) An intermediary offering insurance products as an ancillary activity is any natural or legal person, other than a credit institution or an investment firm within the meaning of Art. 4, paragraph 1, item 1, respectively item 2 of Regulation (EU) No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and amending Regulation (EU) No. 648/2012 (OJ, L 176/1 of 27 June 2013) and which, for remuneration, commences or carries out an activity of distribution of insurance products on the territory of the Republic of Bulgaria as an ancillary activity, if the following conditions are simultaneously present:
1. the main professional activity of the natural or legal person is not the distribution of insurance products;
2. the natural or legal person solely distributes certain insurance products in addition to a good or service;
3. the insurance products which it distributes do not cover life insurance risks or liability risks, unless such cover is ancillary to the good or service which the intermediary offers as its main activity by occupation.
(3) An intermediary offering insurance products as an ancillary activity may be:
1. a natural or legal person with permanent residence, respectively with registered office in the Republic of Bulgaria, which is subject to registration under the procedure of this Code;
2. a natural or legal person with permanent residence, respectively with registered office in the Republic of Bulgaria under para. 2, which carries out activity without registration under the procedure of Art. 295, para. 1;
3. an intermediary offering insurance products as an ancillary activity from another Member State which carries out activity on the territory of the Republic of Bulgaria under the conditions of the right of establishment or the freedom to provide services.

4. (new - State Gazette, No. 67 of 2025) a branch of a trader from a third country, registered under the Commerce Act, and under the conditions and in accordance with the procedure of this Code or carrying out activity without registration under the procedure of Art. 295, para. 1.
(4) A reinsurance intermediary is any natural or legal person which is not an insurer or reinsurer or its employee and which, for remuneration, commences or carries out an activity of distribution of reinsurance products. The reinsurance intermediary may be:
1. an insurance broker registered under the conditions and in accordance with the procedure of this Code;
2. an insurance or reinsurance intermediary from another Member State which carries out activity on the territory of the Republic of Bulgaria under the conditions of the right of establishment or the freedom to provide services.
3. (new - State Gazette, No. 67 of 2025) a branch of a reinsurance broker from a third country, registered under the Commerce Act, and under the conditions and in accordance with the procedure of this Code.
(5) Insurance and reinsurance intermediaries may also carry out other commercial activity, insofar as this Code or another law does not provide otherwise.
(6) Where an insurance intermediary or an intermediary offering insurance products as an ancillary activity concludes an insurance contract on behalf of an insurer and receives from the user of the insurance service an insurance premium or instalment, it shall be deemed that the premium or instalment has been received by the insurer. Where an intermediary under the first sentence receives from an insurer a payment under an insurance contract intended for a user of insurance services, it shall not be deemed paid to the user of insurance services until the moment when he actually receives it. Exceptions Art. 295. (Amended - State Gazette, No. 101 of 2018, in force from 07.12.2018; amended, No. 70 of 2024, in force from the date determined in a Decision of the Council of the European Union on the adoption of the euro by the Republic of Bulgaria, adopted in accordance with Art. 140, paragraph 2 of the TFEU, and a Regulation of the Council of the European Union adopted in accordance with Art. 140, paragraph 3 of the TFEU; supplemented, No. 63 of 2025, in force from 01.08.2025) (1) Insofar as otherwise is not provided, Part Three of this Code shall not apply to intermediaries offering insurance products as an ancillary activity, if the following conditions are simultaneously met:
1. the insurance is ancillary to a good or service supplied by a given supplier, where this insurance covers a risk of damage to, loss of or destruction of the good, or of non-use of the service provided by the supplier, or a risk of damage to or loss of baggage and other risks related to travel booked through the supplier;
2. (amended - State Gazette, No. 70 of 2024, in force from the date determined in a Decision of the Council of the European Union on the adoption of the euro by the Republic of Bulgaria, adopted in accordance with Art. 140, paragraph 2 of the TFEU, and a Regulation of the Council of the European Union adopted in accordance with Art. 140, paragraph 3 of the TFEU) the amount of the premium for the insurance product does not exceed EUR 600, calculated on a pro rata annual basis, or, by way of derogation, if the insurance is ancillary to a service referred to in item 1 and that service is provided for a period of three months or less, the amount of the premium paid per person does not exceed EUR 200.
(2) Where it carries out an activity of distribution of insurance products through a person under para. 1, the insurer is obliged to ensure that this person:
1. (supplemented - State Gazette, No. 63 of 2025, in force from 01.08.2025) before the conclusion of the insurance contract provides the user of insurance services with information about:
a) the identification data of the insurer and its address; b) the procedures for submitting complaints against the insurer;
2. applies appropriate and proportionate mechanisms:
a) compliance with the requirements of Art. 288, 288a and 333; b) before offering an insurance contract to the user of insurance services, takes into account his requirements and needs;
3. sufficiently in advance of the conclusion of the insurance contract and insofar as applicable to the given insurance, having regard to its class, provides the user of insurance services with the insurance product information document under Art. 325a, para. 7.
(3) The insurer shall keep a list of the intermediaries under para. 1 with which it has concluded a contract.
Entry in the register of the commission
Art. 296. (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018; amended, No. 101 of 2018, in force from 07.12.2018; amended and supplemented, No. 67 of 2025) (1) (Amended and supplemented - State Gazette, No. 67 of 2025) Insurance brokers, insurance agents, intermediaries subject to registration offering insurance products as an ancillary activity, as well as branches of insurance intermediaries and traders from third countries, registered under the Commerce Act, with registered office, respectively with permanent residence, in the Republic of Bulgaria shall be entered in the register of the commission under Art. 30, para. 1, item 12 of the Financial Supervision Commission Act under the conditions and in accordance with the procedure of the Code. The Member States in which the intermediary carries out activity under the right of establishment or the freedom to provide services shall also be entered in the register. (2) (Supplemented - State Gazette, No. 67 of 2025) The insurance agent and the intermediary subject to registration offering insurance products as an ancillary activity shall be registered at the request of the insurers for which they carry out distribution of insurance products, except in the cases under Art. 319, para. 2, second sentence and under Art. 323i, para. 3, second sentence and para. 4. The insurance broker shall be registered at its own request. (3) With regard to intermediaries - legal persons, all members of their management bodies shall be entered in the register under Art. 30, para. 1, item 12 of the Financial Supervision Commission Act. An insurance intermediary, respectively an intermediary offering insurance products as an ancillary activity, which is subject to registration, which is a trader, shall maintain an up-to-date list of all its employees who are directly engaged in the distribution of insurance products, together with the evidence of compliance with the requirements for qualification and good repute, and shall present them to the commission upon request. (4) The carrying out of insurance intermediation on the territory of the Republic of Bulgaria without registration under para. 1 by persons who are not registered as insurance intermediaries or as intermediaries offering insurance products as an ancillary activity is not permitted, except in the cases under Art. 295, para. 1, as well as in the cases of carrying out activity under the conditions of the right of establishment or the freedom to provide services. Where an insurer, respectively a reinsurer, with registered office in the Republic of Bulgaria uses the reinsurance intermediation services of a trader with registered office in the Republic of Bulgaria, the insurer, respectively the reinsurer, may use only reinsurance intermediaries registered under the procedure of this Code. (5) The registration of the same person simultaneously as:
1. an insurance agent and an insurance broker;
2. an insurance agent and an intermediary offering insurance products as an ancillary activity;
3. an insurance broker and an intermediary offering insurance products as an ancillary activity,
is not permitted.
(6) In the distribution of insurance products, the insurer and the reinsurer are obliged to use the services only of intermediaries which are registered, or of such which meet the requirements of Art. 295, para. 1, including of intermediaries which carry out activity under the conditions of the right of establishment or the freedom to provide services. (7) The commission shall create and maintain an internet-based registration system for insurance intermediaries and intermediaries offering insurance products as an ancillary activity, which ensures the completion of a registration form in an easily accessible manner on the internet. (8) The procedure for registration under para. 7 shall be determined by an ordinance of the commission. Conditions for registration Art. 297. (Amended - State Gazette, No. 101 of 2018, in force from 07.12.2018; amended and supplemented, No. 67 of 2025) (1) (Amended and supplemented - State Gazette, No. 67 of 2025) Only a person which meets the requirements specified in Chapter Thirty, Chapter Thirty-One, Chapter Thirty-One "a" or Chapter Thirty-Two "a" shall be registered as an insurance intermediary or an intermediary offering insurance products as an ancillary activity, or a reinsurance intermediary. (2) The intermediaries under para. 1 are obliged at all times to meet the requirements of this Code and the deputy chair shall exercise supervision over this. Where an insurance, respectively reinsurance, intermediary or an intermediary subject to registration offering insurance products as an ancillary activity no longer meets the requirements of this Code, the commission shall delete it from the register under Art. 30, para. 1, item 12 of the Financial Supervision Commission Act and shall notify the competent authorities of the host Member States, where the insurance intermediary carries out activity in such states under the conditions of the right of establishment or the freedom to provide services. Company name

Art. 298. (Supplemented - State Gazette, No. 101 of 2018, in force from 07.12.2018) A person which is not entered in the register under Art. 30, para. 1, item 12 of the Financial Supervision Commission Act may not use in its name, advertising or other activity words in the Bulgarian or a foreign language meaning or related to the carrying out of insurance or reinsurance intermediation. The first sentence shall not apply to intermediaries carrying out activity in the Republic of Bulgaria under the conditions of the right of establishment or the freedom to provide services. Avoidance of conflicts of interest and protection of insurance secrecy Art. 299. Insurance intermediaries shall apply Art. 146, paras. 5 - 8, Art. 149 - 151. Requirements for management and control of insurance products by insurance intermediaries Art. 299a. (New - State Gazette, No. 101 of 2018, in force from 07.12.2018) (1) Every insurance intermediary which develops insurance products is obliged to create, maintain, apply and review a procedure for the development and approval of each insurance product or of substantial changes to an existing insurance product, before it is distributed or offered to users of insurance services. The product development and approval process must be proportionate and appropriate to the nature of the insurance product. (2) In the product approval process, the insurance intermediary which develops insurance products is obliged to determine a target market for each product and to assess all relevant risks for such a defined target market, as well as to ensure that the planned distribution strategy corresponds to the defined target market, and that the insurance product is distributed on the defined target market. (3) The insurance intermediary which develops insurance products is obliged periodically to review the insurance products which it offers or distributes, taking into account any event which may substantially affect the potential risk with respect to the specific target market, in order to assess at least whether the product still corresponds to the needs of the defined target market and whether the planned distribution strategy is still appropriate. (4) The insurance intermediary which develops insurance products is obliged to provide to the other distributors of the insurance products developed by it all necessary information regarding the insurance product and the product approval procedure, including the defined target market. (5) Paragraphs 1 - 4 shall not apply to insurance products constituting insurance of large risks. (6) Where an insurance intermediary provides advice or offers insurance products which are not developed by it, it must have appropriate mechanisms for obtaining all necessary information regarding the insurance product and the product approval procedure, including the defined target market, as well as for understanding the characteristics and the defined target market of each insurance product. Supervision Art. 300.
(Amended - State Gazette, No. 101 of 2018, in force from 07.12.2018) The deputy chair shall exercise supervision over the activity of distribution of insurance and reinsurance products by insurance and reinsurance intermediaries, as well as by intermediaries offering insurance products as an ancillary activity, on the territory of the Republic of Bulgaria. Testing of the operational resilience of digital technologies of insurance and reinsurance intermediaries Art. 300a. (New - State Gazette, No. 54 of 2025) (1) The commission, on a proposal of the deputy chair, in accordance with the requirements of Regulation (EU) 2022/2554 and the acts implementing it, shall adopt decisions determining the insurance intermediaries, reinsurance intermediaries and intermediaries offering insurance products as an ancillary activity which are to carry out penetration testing, confirming the scope of the testing and approving the use of internal persons conducting testing, as well as requiring a change, where necessary, in the frequency of carrying out the testing. (2) The commission, on a proposal of the deputy chair, shall adopt a decision that the testing under para. 1 has been carried out in accordance with the requirements of Regulation (EU) 2022/2554, the acts implementing it and the documentation for the testing, and shall issue a certificate confirming it or determine the carrying out of re-testing. (3) The commission shall adopt an ordinance on the implementation of this article. Personal profile in the system for secure electronic service Art. 300b. (New - State Gazette, No. 25 of 2026) (1) The insurance broker, the insurance agent and the intermediary offering insurance products as an ancillary activity, as well as the training organization under Art. 304, para. 5 are obliged at all times to have a personal profile registered in the information system for secure electronic service as a module of the e-Government Portal within the meaning of the Electronic Governance Act. (2) The persons under para. 1 shall notify the Commission of their profile through the system for secure electronic service within 7 days of the registration of the profile.
Chapter Thirty
INSURANCE BROKERS
Section I
General provisions
Definition and general requirements for the activity Art. 301. (Amended and supplemented - State Gazette, No. 101 of 2018, in force from 07.12.2018) (1) The insurance broker is a commercial company or a sole trader entered in the register under Art. 30, para. 1, item 12 of the Financial Supervision Commission Act, which, for remuneration, on assignment by a user of insurance services, carries out insurance intermediation and by

assigns insurance or reinsurance mediation.
(2) The relations between the user of insurance services, respectively the insurer or reinsurer, and the insurance broker shall be governed by a written contract, except in the case of mediation for compulsory insurances under Art. 461, items 1 and 2.
(3) When carrying out insurance mediation, the remuneration of the insurance broker shall be included in the insurance premium and shall be owed by the insurer, unless otherwise agreed in the contract under para. 2. Where it is agreed in the relations between the insurer and the insurance broker, the broker may deduct the amount of its remuneration due before transferring the insurance premium to the insurer. (4) In carrying out its activity, the insurance broker shall perform a full analysis of insurance risks, of proposals for insurance or reinsurance coverage, provide consultancy services on behalf of and upon assignment by a user of insurance services, negotiate the terms or conclude the insurance or reinsurance contract, monitor the renewal deadlines of contracts and assist the user of insurance services in settling claims upon the occurrence of an insured event. (5) (New - State Gazette No. 101 of 2018, in force from 07.12.2018) The insurance broker shall provide advice prepared on the basis of a fair and personal analysis under Art. 325a, para. 5, when this is assigned by a user of insurance services. When establishing relations with a user of insurance services, the insurance broker shall be obliged to inform him of his right to assign to the broker the preparation of advice based on a fair and personal analysis, as well as upon each renewal of the assignment for carrying out insurance mediation. The obligations under the first and second sentences shall also apply to insurance brokers and to other distributors of insurance services from other Member States which do not have a contractual obligation to carry out distribution of insurance products exclusively for one or more than one insurer, which carry out activity in the Republic of Bulgaria under the conditions of the right of establishment or the freedom to provide services, when these distributors conclude insurance contracts with users of insurance services whose habitual residence or establishment is in the Republic of Bulgaria. (6) (Previous para. 5 - State Gazette No. 101 of 2018, in force from 07.12.2018) The insurance broker shall not have the right to accept documents relating to an insurance claim on behalf of an insurer unless expressly authorized to do so. Where the insurance broker is authorized by a user of insurance services to register an insurance claim and submit documents relating thereto on his behalf, the claim and the documents shall be deemed to have been received by the insurer on the date on which they were registered in the insurer's registry system. Restrictions on activity Art. 302. (1) The insurance broker may not carry out activity as an insurance agent. (2) The restriction under para. 1 shall also apply to the members of the management and supervisory bodies of the insurance broker, to all other persons authorized to manage and represent the insurance broker, as well as to its employees directly engaged in carrying out insurance or reinsurance mediation.
(3) The insurance broker may not be a shareholder or partner, or a member of a management or supervisory body of an insurance agent.
Section II
Conditions for carrying out activity as an insurance broker Requirements for the insurance broker Art. 303. (Amended and supplemented - State Gazette No. 101 of 2018, in force from 07.12.2018; supplemented, No. 84 of 2023) (1) Each member of the management body of an insurance broker and any other person authorized to manage or represent it, as well as the insurance broker - sole trader, must meet the following requirements:
1. has not been sentenced to imprisonment for an intentional crime of a general nature, unless rehabilitated;
2. has not been deprived of the right to hold a position of material responsibility;
3. has not been, during the last three years before the initial date of insolvency determined by the court, a member of a management or supervisory body or an unlimited liability partner in a company for which insolvency proceedings have been opened, or in a company terminated due to insolvency, if creditors remain unsatisfied;
4. has not been declared insolvent, if creditors remain unsatisfied, and is not in insolvency proceedings.
5. (new - State Gazette No. 84 of 2023) on the basis of the data collected about him and his related parties, as well as the links between them, does not give rise to doubt regarding his reliability and suitability and the possibility of a conflict of interest arising.
(2) (Amended - State Gazette No. 101 of 2018, in force from 07.12.2018) Each person under para. 1 who, by decision of a competent body of the broker in accordance with the law and with the broker's constitutive act, has been designated to be responsible for and to manage the activity of distribution of insurance products, the insurance broker - sole trader, as well as each person in a managerial position in the broker responsible for carrying out the activities of distribution of insurance products, must have higher education and meet at least one of the following requirements:
1. to have professional experience in the field of insurance and to have completed training under Art. 292, para. 1 or 2 or under Art. 304, para. 4;
2. to have successfully passed an examination for assessment of knowledge and skills organized by the Commission.
(3) (Amended - State Gazette No. 101 of 2018, in force from 07.12.2018) Where the insurance broker - legal entity, has not designated under the procedure of para. 2 one or more persons from its management body to be responsible for and to manage the activity of distribution of insurance products, the requirements under para. 2 shall apply to all members of its management body. Where a member of the management body of the insurance broker is a legal entity, the requirements under paras. 1 and 2 shall apply respectively to the natural persons who represent it in these bodies. (4) (Amended and supplemented - State Gazette No. 101 of 2018, in force from 07.12.2018) Professional experience under para. 2, item 1 shall be at least two years of work in a managerial position or in a position directly related to the conclusion and performance of insurance contracts in an insurer, reinsurer, insurance broker or insurance agent, as well as experience under Art. 83. The relevant knowledge and skills under para. 2, item 2 shall be those established in Annex No. 3. (5) (Repealed - State Gazette No. 101 of 2018, in force from 07.12.2018). (6) (Repealed - State Gazette No. 101 of 2018, in force from 07.12.2018). (7) (Amended - State Gazette No. 101 of 2018, in force from 07.12.2018) The conditions and procedure for conducting the examination for assessment of knowledge and skills under para. 2, item 2, as well as for recognition of qualifications acquired in a Member State, shall be determined by the Commission by ordinance. The examination shall be conducted by a commission which shall include one representative of branch organizations of insurers and one representative of branch organizations of insurance brokers. Requirements for qualification and good repute Art. 304. (Amended - State Gazette No. 101 of 2018, in force from 07.12.2018; amended and supplemented, No. 63 of 2025, in force from 01.08.2025) (1) Each insurance broker shall be obliged to ensure that its employees directly engaged in the activities of distribution of insurance products have at least secondary education and meet the requirements of Art. 303, para. 1, and possess the relevant knowledge and skills defined in Annex No. 3 in order to perform their tasks and duties adequately. (2) Each insurance broker shall be obliged to provide continuing professional training and development to the persons under para. 1 and the persons under Art. 303, paras. 2 and 3, so that they continue to perform their duties at an appropriate level corresponding to the role they perform, including each person completing not less than 15 hours of professional training or development annually, taking into account the nature of the products sold, the type of distributor, the role they perform and the activity carried out within the distributor of insurance or reinsurance products. (3) (In force from 01.01.2019; amended - State Gazette No. 63 of 2025, in force from 01.08.2025) Each insurance broker shall duly document
the continuing professional training or development completed by the persons within the year and the results thereof, which records shall be submitted to the Commission upon request. (4) The insurance broker shall be obliged to conduct professional training to ensure the acquisition of the knowledge and skills defined in Annex No. 3 for each person who enters employment with the insurance broker in a position providing for direct engagement in the activities of distribution of insurance products, with the exception of persons who meet the requirements of Art. 303, para. 2. The professional training shall end with an examination of the acquired knowledge and skills, the successful passing of which shall be certified by a document from the organization that conducted it. (5) (Amended and supplemented - State Gazette No. 63 of 2025, in force from 01.08.2025) The organization for conducting the training under para. 4 may be a legal entity entered in the register under Art. 30, para. 1, item 11 of the Financial Supervision Commission Act, which has developed a training program that guarantees the mastery of professional knowledge and skills under Annex No. 3, as well as a syllabus with thematic scope and procedural rules for conducting the examination and assessment rules that guarantee the accurate and impartial assessment of professional knowledge and skills under Annex No. 3. The organization for conducting the training under para. 4 may also be the insurance intermediary. The requirements for the training program, syllabus, procedural rules for conducting the examination and assessment rules shall be determined by the ordinance under Art. 303, para. 7. (6) The insurance broker shall exercise ongoing control over the constant compliance with the requirements for qualification and good repute of the employees under para. 1. Maintenance of compulsory professional liability insurance Art. 305. (Amended - State Gazette No. 101 of 2018, in force from 07.12.2018; amended and supplemented, No. 63 of 2025, in force from 01.08.2025) (1) (Amended - State Gazette No. 101 of 2018, in force from 07.12.2018; amended and supplemented, No. 63 of 2025, in force from 01.08.2025) The insurance broker shall be obliged to maintain continuously compulsory professional liability insurance, valid for the entire territory of the European Union and the European Economic Area, covering liability for damages occurring on the territory of a Member State in the course of carrying out insurance and/or reinsurance mediation activity as a result of its action or omission. The minimum insurance sum for each insured event and for all insured events for one year shall be determined by regulations of the European Commission adopted on the basis and within the deadlines under Art. 10, paragraph 7 of Directive (EU) 2016/97 of the European Parliament and of the Council of 20 January 2016 on the distribution of insurance products (OJ, L 26/19 of 2 February 2016), hereinafter referred to
as "Directive (EU) 2016/97". The insurance sum shall be the amount in force according to the relevant regulation of the European Commission as at the date of occurrence of the insured event, unless the amount of the insurance sum entered in the insurance policy is higher. (2) The insurance under para. 1 shall cover liability for damages caused by action or omission of any person authorized to manage or represent the insurance broker, a member of its management or supervisory body or its employee in or in connection with the carrying out of insurance or reinsurance mediation, including liability for non-payment to the insurer of an insurance premium received, respectively for non-payment to the user of insurance services of insurance indemnities or amounts paid by the insurer. Guarantees for the activity of the insurance broker Art. 306. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018; amended, No. 101 of 2018, in force from 07.12.2018; amended, No. 63 of 2025, in force from 01.08.2025) (1) The insurance broker shall be obliged to guarantee the performance of its obligations to transfer an insurance premium paid to it intended for the insurer, or to transfer to the user of insurance services an insurance indemnity or monetary amount paid by the insurer, in one of the following ways:
1. (amended - State Gazette No. 63 of 2025, in force from 01.08.2025) by maintaining continuously own capital in the amount of 4 per cent of the total amount of insurance premiums under insurance and/or reinsurance contracts concluded through its mediation in the previous financial year, but not less than the amount determined by regulations of the European Commission adopted on the basis and within the deadlines under Art. 10, paragraph 7 of Directive (EU) 2016/97;
2. by creating one or more special client accounts which shall serve only for transferring insurance premiums to the insurer and insurance indemnities or amounts to the user of insurance services.
(2) The funds in the client account under para. 1, item 2 shall not be part of the property of the insurance broker, shall not be subject to attachment and shall not enter the insolvency estate upon opening of insolvency proceedings against the insurance broker.
(3) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) The Commission shall appoint a liquidator of the client account of the insurance broker in the cases of:
1. death of an insurance broker - sole trader;
2. voluntary termination and liquidation of an insurance broker - legal entity, as well as upon deletion of the registration as an insurance broker on another ground under Art. 312, without liquidation;
3. insolvency of an insurance broker - sole trader or legal entity.
(4) (Amended - State Gazette No. 101 of 2018, in force from 07.12.2018) The liquidator under para. 3 shall be a natural person who is different from a liquidator or trustee respectively under Art. 266, para. 3 or Art. 655 of the Commerce Act and to whom the requirements under Art. 303, para. 1 apply and who has higher education.
(5) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) The liquidator under para. 3 shall establish the claims and make the payments on the client account, as well as submit a report to the Commission.
(6) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) The insurance broker shall notify the Commission which method for guaranteeing the performance of the obligations under para. 1 it will apply in its activity, of its subsequent change, as well as of the manner in which the rights of users of insurance services will be guaranteed in the process of its subsequent change. The Commission may give additional instructions for the protection of the interests of users of insurance services in the transition from one method of guaranteeing the performance of the obligations under para. 1 to another. (7) When notifying under para. 6, the insurance broker shall submit a financial statement as at the end of the previous financial year to prove the necessary own funds.
Section III
Registration of an insurance broker
Necessary documents for entry in the register
Art. 307. (Supplemented - State Gazette No. 101 of 2018, in force from 07.12.2018; supplemented, No. 25 of 2026) (1) For entry of an insurance broker in the register under Art. 30, para. 1, item 12 of the Financial Supervision Commission Act, an application shall be submitted to which the following shall be attached:
1. the articles of association, the constitutive act or the partnership agreement - if it is a legal entity;
2. data on the persons under Art. 303, paras. 1 - 3 - if it is a legal entity, and documents certifying compliance with the requirements of Art. 303, paras. 1 and 2 - if it is a natural person - sole trader;
3. data on the addresses of the offices or branches where the insurance mediation activity will be carried out;
4. evidence of holding own funds under Art. 306, para. 1, item 1, where the applicant has chosen this method of guaranteeing the performance of its obligations;
5. a certificate from the respective bank carrying out activity in the Republic of Bulgaria for each separate client account opened with it under Art. 306, para. 1, item 2, where the applicant has chosen this method of guaranteeing the performance of its obligations;
6. a contract for compulsory insurance under Art. 305;
7. declarations certifying the absence of circumstances under Art. 310, paras. 1 and 2.
8. (new - State Gazette No. 101 of 2018, in force from 07.12.2018) data on the names or designation and official personal identification number or other unique element for establishing the identity of the shareholders or partners - natural or legal persons, who hold a participation of or above 10 per cent in the company of the insurance broker, and the amounts of the respective participations;
9. (new - State Gazette No. 101 of 2018, in force from 07.12.2018) data on the names or designation and official personal identification number or other unique element for establishing the identity of the persons who are in close links with the insurance broker;
10. (new - State Gazette No. 101 of 2018, in force from 07.12.2018) information whether the participations or close links under items 8 and 9, including the statutory, regulatory or administrative provisions of a third country governing the activity of one or more natural or legal persons with whom the insurance broker is in close links, or the difficulties in their application, do not impede the effective exercise of supervisory functions by the Commission or the Deputy Chairperson.
11. (new - State Gazette No. 25 of 2026) information on the personal profile under Art. 300b.
(2) An application under para. 1 shall be considered after payment of a fee for consideration of documents.
Decision on the application
Art. 308. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) The Commission shall decide on the application for entry in the register within one month from its receipt. Where irregularities are established or additional information is necessary, Art. 34, paras. 2, 4 and 5 shall apply, and the period for remedying the irregularities or for providing the additional information shall be not less than 15 days. Where no irregularities have been established or they have been remedied and/or the additional information has been provided and there are no obstacles to the entry, the Commission shall notify the applicant thereof. The entry shall be made after payment of the respective fee according to the tariff under Art. 27, para. 1 of the Financial Supervision Commission Act. Certificate of registration Art. 309. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) (1) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) After the entry of the insurance broker in the register, the Commission shall issue to it a certificate of registration in a form determined by the Commission, which shall contain the name, seat and registered address of the insurance broker, the register in which it is entered and the registration number, the ways in which the entry can be certified, as well as the names of the persons authorized to manage and represent the insurance broker. (2) The broker shall be obliged to place a copy of the certificate under para. 1 in a visible place in its offices. Grounds for refusal Art. 310. (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018; supplemented, No. 101 of 2018, in force from 07.12.2018) (1) (Amended - State Gazette No. 95 of 2017, in force from 01.01.2018) The Commission shall refuse entry in the register where:
1. the requirements of this Code have not been met;
2. the applicant has submitted false data or documents with false content;
3. (supplemented - State Gazette No. 101 of 2018, in force from 07.12.2018) the applicant or its beneficial owner (beneficial owner) under Art. 68, para. 5, or a person controlled by its beneficial owner (beneficial owner), has been deleted from the register under Art. 30, para. 1 of the Financial Supervision Commission Act on the ground of Art. 312, para. 1, item 1 or items 7 - 9 or from another register of insurance intermediaries or financial institutions on similar grounds, including in another Member State or third country;
4. (supplemented - State Gazette No. 101 of 2018, in force from 07.12.2018) the applicant or its beneficial owner (beneficial owner) under Art. 68, para. 5, or a person controlled by its beneficial owner (beneficial owner), has been deleted from the register under Art. 30, para. 1 of the Financial Supervision Commission Act on the ground of Art. 312, para. 1, items 2 - 4 or item 11 or from another register of insurance intermediaries or financial institutions on similar grounds, including in another Member State or in a third country, unless three years have elapsed from the date of deletion of the registration;
5. (supplemented - State Gazette No. 101 of 2018, in force from 07.12.2018) the applicant or its beneficial owner (beneficial owner) under Art. 68, para. 5, or a person controlled by its beneficial owner (beneficial owner), has been deleted from the register under Art. 30, para. 1 of the Financial Supervision Commission Act on the ground of Art. 312, para. 1, item 5 or from another register of insurance intermediaries or financial institutions on similar grounds, including in another Member State or in a third country, unless restored in rights under the established procedure.

6. (new - State Gazette, No. 101 of 2018, in force from 07.12.2018) the information under Art. 307, para. 1, items 8 - 10 has not been provided;
7. (new - State Gazette, No. 101 of 2018, in force from 07.12.2018) the participations or close links under Art. 307, para. 1, items 8 and 9, including the statutory, regulatory or administrative provisions of a third country governing the activity of one or more natural or legal persons with whom the insurance broker has close links, or difficulties in applying those statutory, regulatory or administrative provisions, prevent the effective exercise of the supervisory functions of the Commission or of the Deputy Chairperson.
(2) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) The Commission shall also refuse registration where a member of the management body of the applicant has been a member of the management body of a person under para. 1, items 3 - 5.
(3) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) The Commission's refusal of registration shall be reasoned in writing.
(4) In the event of refusal, the applicant may submit a new application for registration not earlier than 6 months from the entry into force of the decision under para. 1.
Notifications
Art. 311. (Amended and supplemented - State Gazette, No. 101 of 2018, in force from 07.12.2018) (1) The insurance broker shall be obliged to notify the Commission of:
1. all newly arising facts and circumstances that are subject to entry in the Commission's register;
2. (amended - State Gazette, No. 101 of 2018, in force from 07.12.2018) changes to the circumstances entered in the Commercial Register and in the Register of Non-Profit Legal Entities;
3. (new - State Gazette, No. 101 of 2018, in force from 07.12.2018) any change in the circumstances under Art. 307, para. 1, items 8 - 10;
4. (new - State Gazette, No. 101 of 2018, in force from 07.12.2018) any change in circumstances declared by persons under Art. 303, para. 1 or 3.
(2) (Supplemented - State Gazette, No. 101 of 2018, in force from 07.12.2018) The obligation under para. 1 shall be performed within 7 days of the occurrence or becoming aware of the relevant fact or circumstance, and where it is subject to entry in the Commercial Register and the Register of Non-Profit Legal Entities - within 7 days of the entry. The documents certifying the change made shall be attached to the notification. (3) The insurance broker shall submit to the Commission:
1. annual statements and reports - by 31 January of the year following the year to which they relate;
2. semi-annual statements and reports - by 31 July of the respective year;
3. annual financial statements - by 31 March of the year following the year to which the statement relates, where the insurance broker guarantees the performance of the obligation to transfer insurance premiums, respectively insurance payments, with own capital.
(4) The annual and semi-annual statements and reports shall be submitted in the form of an electronic document signed with a qualified electronic signature, according to a template approved by order of the Deputy Chairperson.
(5) The information under para. 3 shall be processed and disclosed by the Commission in an appropriate manner.

Grounds for deletion from the register
Art. 312. (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018; amended, No. 101 of 2018, in force from 07.12.2018; supplemented, No. 25 of 2026) (1) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018) The Commission may delete an insurance broker from the register by decision:

where it has submitted false data or documents with false content which served as grounds for its registration;
where it has not commenced insurance mediation activity within one year of its registration;
where it has ceased its activity for more than 6 months;
(amended - State Gazette, No. 101 of 2018, in force from 07.12.2018; supplemented, No. 25 of 2026) where it has ceased to meet the conditions for carrying on activity as an insurance broker under Art. 300b, Arts. 303, 304, 305 or 306;
where insolvency or liquidation proceedings are opened against it;
where at its registered address of management the persons authorized to manage and represent the insurance broker, or persons authorized by them to whom documents and notices may be served, cannot be found systematically, and this impedes insurance supervision;
where it has committed gross or systematic violations of this Code or of the acts implementing it, or other substantial violations of the law established by an act in force;
where it fails to pay, pays more than 10 working days late after the deadlines provided by law or contract, or pays partially due and liquid monetary obligations in connection with its activity as an insurance broker;
where by its actions it violates the voluntariness of insurance;
upon the death of the natural person - sole trader;
at the request of the insurance broker.
(2) To the request for deletion under para. 1, item 11 the insurance broker shall attach a certified copy of the decision of the competent body under the law, the articles of association, the partnership agreement or the founding act for the deletion.
(3) After deletion from the register, the insurance broker may not carry out insurance and reinsurance mediation.

Chapter Thirty-One
INSURANCE AGENTS
Section I
General provisions
Definition
Art. 313. (Amended - State Gazette, No. 101 of 2018, in force from 07.12.2018) (1) An insurance agent is a natural person or a trader entered in the register under Art. 30, para. 1, item 12 of the Financial Supervision Commission Act, who, for remuneration, on assignment from an insurer, carries out insurance mediation in the name and on behalf of an insurer. (2) The insurance agent may collect premiums and make payments to users of insurance services where this has been assigned to it by the insurer. In such cases the insurance agent shall be obliged to explicitly notify the user of insurance services that it has the right to collect insurance premiums in the name and on behalf of the insurer. (3) The relations between the insurer and the insurance agent shall be governed by a written insurance agency contract. Restrictions on activity Art. 314. (1) The insurance agent may not work for an insurance broker. (2) The pursuit of activity as an insurance agent by a natural person is a free profession. (3) The insurance agent - natural person, may not be in an employment relationship with an insurer. Special restrictions Art. 315. (Supplemented - State Gazette, No. 101 of 2018, in force from 07.12.2018) (1) (Supplemented - State Gazette, No. 101 of 2018, in force from 07.12.2018) The insurance agent may mediate for one insurer licensed to carry on insurance activity covering classes of insurance under Section I of Annex No. 1, and for one insurer licensed to carry on insurance activity covering classes of insurance under Section II of Annex No. 1. This restriction shall not apply where the insurance agent works for insurers that are part of a group. (2) With the consent of the insurers under para. 1, the insurance agent may carry out insurance mediation also for other insurers, if it mediates for insurance other than the class of insurance for which it is authorized by the insurers under para. 1. (3) In cases where the insurance agent mediates for an insurer under Section I of Annex No. 1 which is also licensed under item 1 and/or item 2, letter "A", Section II of Annex No. 1, it may mediate for another insurer licensed under Section II of Annex No. 1, with the exception of mediation for insurance under item 1 and item 2, letter "A", Section II of Annex No. 1. (4) Where two or more persons who are related persons or who carry on activity in common premises, through common means or in another manner from which a reasonable conclusion may be drawn that they act in concert, each separately carry on activity as an insurance agent for different insurers, they shall be deemed to carry on together activity as an insurance broker without the registration required by law, except in the following cases:

where all persons are employees of the same agent which complies with the restrictions under paras. 1 and 2, or
where all persons are agents and by their activity together do not violate the restriction under para. 1.
(5) (New - State Gazette, No. 101 of 2018, in force from 07.12.2018) The insurance agent shall be obliged to notify the user of insurance services of the insurers and insurance products for which it has the right to mediate. The obligation under the first sentence shall be performed sufficiently in advance before the start of the activity of offering insurance products, and in cases of lasting relationships with the user of insurance services - also upon a change in the circumstances previously disclosed.

Section II
Conditions for carrying on activity as an insurance agent Guarantees for the activity of the insurance agent Art. 316. (Amended and supplemented - State Gazette, No. 101 of 2018, in force from 07.12.2018; amended, No. 63 of 2025, in force from 01.08.2025) (1) (Amended - State Gazette, No. 101 of 2018, in force from 07.12.2018) The insurance agent - natural person or sole trader, respectively each member of the management body of an insurance agent - legal person, and any other person authorized to manage or represent it, must have at least secondary education and meet the requirements of Art. 303, para. 1. The insurance agent - natural person or sole trader, as well as any person who by decision of a competent body of the insurance agent - legal person, in accordance with the law and the founding act of the agent, is designated to be responsible for and manage the activity of distribution of insurance products, as well as any person in a managerial position in the insurance agent responsible for carrying out the activities of distribution of insurance products, must have successfully completed the training under Art. 317, para. 1 or meet one of the requirements under Art. 303, para. 2, items 1 or 2. The relevant knowledge and skills are those defined in Annex No. 3. Art. 303, para. 3 shall apply accordingly. The employees of the insurance agent directly engaged in the activity of distribution of insurance products must meet the requirements of Art. 303, para. 1, have completed the training under Art. 317, para. 1 and have passed the examination under Art. 317, para. 2. (2) (Amended - State Gazette, No. 101 of 2018, in force from 07.12.2018; amended, No. 63 of 2025, in force from 01.08.2025) The insurance agent shall be obliged to maintain compulsory professional liability insurance, valid for the entire territory of the European Union and the European Economic Area, covering liability for damage occurring on the territory of a Member State in the course of carrying out insurance mediation activity as a result of its action or omission. The minimum insurance sum of the insurance for each insurance event and for all insurance events for one year, including liability for non-payment to the insurer of a received insurance premium, respectively for non-payment to the user of insurance services of insurance compensations or sums paid by the insurer, shall be determined by regulations of the European Commission adopted on the basis and within the deadlines under Art. 10, paragraph 7 of Directive (EU) 2016/97. The insurance sum is the sum in force according to the respective regulation of the European Commission at the date of occurrence of the insurance event, unless the amount of the insurance sum entered in the insurance policy is higher. (3) The insurance under para. 2 must cover liability for damage caused by an action or omission of any person authorized to manage or represent the insurance agent, a member of its management or supervisory body or
its employee in or in connection with the carrying out of insurance or reinsurance mediation. (4) The obligation under paras. 2 and 3 shall be deemed fulfilled if the insurance agent presents a declaration from the insurer or insurers which have authorized it to carry out insurance mediation, assuming full liability for its actions as an intermediary. (5) The provisions of Art. 306 shall apply to the insurance agent - legal person or sole trader. The insurance agent - legal person, shall declare the circumstances under Art. 306, para. 6 to the insurer. (6) The provisions of Art. 306, para. 1, item 2 shall apply to the insurance agent - natural person, unless there is a declaration under para. 4. Art. 306, paras. 3 - 5 shall apply accordingly. (7) The requirement for opening a client account by the insurance agent shall not apply where the insurer has authorized the agent to operate on its account, to which insurance premiums intended for the insurer and insurance compensations or monetary sums intended for the user of insurance services are transferred directly. (8) (Supplemented - State Gazette, No. 101 of 2018, in force from 07.12.2018) Monetary funds paid to the insurance agent by users of insurance services shall be deemed paid to the insurer, and monetary funds paid to the insurance agent by the insurer shall not be deemed paid to the user of insurance services until the latter receives them. The first sentence shall also apply in cases where the collection of premiums has not been assigned to the insurance agent by the insurer. Training of insurance agents Art. 317. (Amended - State Gazette, No. 101 of 2018, in force from 07.12.2018) (1) Insurers shall be obliged to provide training to insurance agents - natural persons, for the activity of distribution of insurance products which they carry out on their behalf, as well as to the persons under Art. 316, para. 1, second sentence, of insurance agents - legal persons, and to the employees of insurance agents - legal persons or sole traders, directly engaged in the activities of distribution of insurance products. (2) The insurer shall be obliged to conduct an examination at the end of the training under para. 1 and to issue a certificate to the insurance agents and their employees who have successfully passed the examination, certifying the training conducted and the acquisition of the relevant knowledge and skills defined in Annex No. 3, as well as the right to offer the classes of insurance specified in the certificate. (3) Each insurer shall be obliged to provide continuing professional training and development of the persons under para. 1, which shall meet the requirements under Art. 292, para. 2 and shall be documented and reported in accordance with Art. 292, para. 3. Verification of compliance with requirements Art. 318. (Amended and supplemented - State Gazette, No. 101 of 2018, in force from 07.12.2018; supplemented, No. 25 of 2026) (1) (Amended - State Gazette, No. 101 of 2018, in
force from 07.12.2018; supplemented, No. 25 of 2026) Before submitting an application for entry of an insurance agent in the register under Art. 30, para. 1, item 12 of the Financial Supervision Commission Act, the insurer shall establish whether the person meets the requirements laid down in this chapter and Art. 300b, and whether the information under Art. 307, para. 1, items 8 - 10 has been provided for it. The insurer may not submit for entry in the register under Art. 30, para. 1, item 12 of the Financial Supervision Commission Act a person where the grounds for refusal under Art. 310, paras. 1 and 2 exist. (2) In the event that the person under para. 1 does not have professional liability insurance, the insurer which has concluded a contract with it shall bear full liability for its actions in connection with the carrying out of insurance mediation under the contract. (3) (New - State Gazette, No. 101 of 2018, in force from 07.12.2018) The insurer shall carry out ongoing control over the continuous compliance with the requirements for qualification and good repute of its insurance agents and their employees. The insurer shall also carry out ongoing control over the compliance with the obligations under Art. 316, paras. 2, 3, 5 and 6 by its insurance agents. Entry in the register Art. 319. (Amended - State Gazette, No. 101 of 2018, in force from 07.12.2018) (1) (Amended - State Gazette, No. 101 of 2018, in force from 07.12.2018) The insurer shall keep a list of the persons with whom it has concluded insurance agency contracts. The relevant documents under Art. 307 on the basis of which compliance with the requirements under Art. 318, para. 1 has been established shall be kept with the list. (2) (Amended - State Gazette, No. 101 of 2018, in force from 07.12.2018) The insurer shall submit an application to the Commission for entry in the register under Art. 30, para. 1, item 12 of the Financial Supervision Commission Act of the persons which it wishes to carry out insurance agency activity for it, and the submission of the application for entry shall be deemed certification that the verification under Art. 318, para. 1 has been carried out and that the respective person meets the requirements under Art. 318, para. 1. The insurance agent shall be obliged to independently submit an application for entry in the Commission's register where it mediates for an insurer from another Member State which carries out activity in the Republic of Bulgaria under the conditions of freedom to provide services, attaching the relevant documents under Art. 307 within 14 days of the signing of the insurance agency contract. (3) The insurer shall reflect every change in the facts and circumstances in the list under para. 1 and notify the Commission thereof. In the cases under para. 2, second sentence, the notification of a change in the facts and circumstances shall be made by the insurance agent. (4) The obligation under para. 3 shall be performed within 7 days of
becoming aware of the relevant fact or circumstance. Certificate of legitimation Art. 320. (Amended - State Gazette, No. 101 of 2018, in force from 07.12.2018) (1) (Amended - State Gazette, No. 101 of 2018, in force from 07.12.2018) After the registration of the insurance agent in the register under Art. 30, para. 1, item 12 of the Financial Supervision Commission Act, the insurer shall issue to it a certificate of legitimation according to a template approved by the Deputy Chairperson, containing at least the following data:

the name and address of the natural person, respectively the company name, registered office and address of management of the insurance agent - sole trader;
the address of the office or branch where the activity is carried out;
the classes of insurance which it may offer and the maximum amount of the insurance sum up to which it may conclude such insurance;
the names of the persons authorized to manage and represent the insurance agent - legal person;
the register in which it is entered and the ways in which the entry may be certified.
(2) The insurance agent shall be obliged to place a copy of the certificate in a visible place in every premises where it carries out its activity.
Grounds for deletion from the register
Art. 321. (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018; supplemented, No. 101 of 2018, in force from 07.12.2018) (1) (Amended - State Gazette, No. 95 of 2017, in force from 01.01.2018; supplemented, No. 101 of 2018, in force from 07.12.2018) Art. 312, para. 1 shall apply accordingly to the deletion of the insurance agent from the register under Art. 30, para. 1, item 12 of the Financial Supervision Commission Act. The Commission shall also delete the insurance agent from the register upon termination of the insurance agency contract, and the request for deletion may be submitted by both the insurer and the agent. Where the request for deletion is submitted by the agent, it shall be accompanied by evidence of the termination of the insurance agency contract. (2) After deletion from the register, the insurance agent may not carry out insurance mediation. The insurance agent shall be obliged to return the issued certificate of legitimation.

Chapter Thirty-One "a"
(New - State Gazette, No. 101 of 2018, in force from 07.12.2018) INTERMEDIARIES OFFERING INSURANCE PRODUCTS AS ANCILLARY ACTIVITY Definition Art. 321a. (New - State Gazette, No. 101 of 2018, in force from 07.12.2018) (1) The intermediary offering insurance products as an ancillary activity is a natural person or a trader entered in the register under Art. 30, para. 1, item 12 of the Financial Supervision Commission Act, who, for remuneration, on assignment from an insurer, carries out distribution of insurance products in the name and on behalf of an insurer. (2) A credit institution or an investment intermediary may not be registered as an intermediary offering insurance products as an ancillary activity. Requirements for the activity. Registration Art. 321b. (New - State Gazette, No. 101 of 2018, in force from 07.12.2018) (1) The requirements under Art. 313, paras. 2 and 3, Art. 314 and Art. 315 shall apply to the intermediary offering insurance products as an ancillary activity. (2) Arts. 316 and 317 shall apply to the conditions for carrying out activity by the intermediary offering insurance products as an ancillary activity, and Annex No. 3 on the minimum requirements for professional knowledge and skills shall not apply. The persons under Art. 316, para. 1, second sentence, of the intermediary offering insurance products as an ancillary activity, as well as its employees directly engaged in the activity of distribution of insurance products, must know the terms of the insurance products which they distribute, as well as the rules for settling claims under those products, and also the rules for processing