Insurance Code of the Republic of Bulgaria

INSURANCE CODE Pub. - State Gazette, No. 102 of 29.12.2015, effective from 01.01.2016; amended, No. 62 of 09.08.2016, effective 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, effective 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, effective from 01.01.2018; amended, No. 103 of 28.12.2017, effective from 01.01.2018; amended, No. 7 of 19.01.2018; amended and supplemented, No. 15 of 16.02.2018, effective 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, effective from 01.01.2019; amended and supplemented, No. 101 of 07.12.2018, effective from 07.12.2018; amended and supplemented, No. 17 of 26.02.2019; supplemented, No. 42 of 28.05.2019, effective from 28.05.2019; amended, No. 83 of 22.10.2019, effective 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, effective from 13.03.2020; supplemented, No. 34 of 09.04.2020, effective from 09.04.2020; affected by the Additional Amendment to the Health Act, No. 44 of 13.05.2020, effective from 14.05.2020; amended, No. 64 of 18.07.2020, effective 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, effective 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, effective from 19.09.2023; amended, No. 84 of 06.10.2023, as the amendments under the Civil Procedure Code enter into force from 06.10.2023; amended and supplemented, No. 85 of 10.10.2023, effective from 10.10.2023; amended, No. 70 of 20.08.2024, effective from the date determined in the Decision of the Council of the European Union on the adoption of the euro by the Republic of Bulgaria, adopted in accordance with Article 140(2) TFEU, and the Council Regulation of the European Union, adopted in accordance with Article 140(3) TFEU; 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, effective from 01.08.2025; amended and supplemented, No. 64 of 05.08.2025, effective 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, effective from 05.06.2026; amended and supplemented, No. 67 of 24.07.2026

PART ONE GENERAL PROVISIONS Chapter One SUBJECT MATTER. OBJECTIVES. BASIC PRINCIPLES Subject matter and scope Art. 1. (Amend. - State Gazette, No. 101 of 2018, effective from 07.12.2018.) (1) This Code regulates:

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

Objectives Art. 2. (Suppl. - State Gazette, No. 101 of 2018, effective from 07.12.2018.) (1) The objectives of this Code are:

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

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

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

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

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

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

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

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

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

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

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

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

Chapter Two PERSONS WHO MAY CARRY OUT THE ACTIVITIES UNDER THIS CODE, AND BASIC REQUIREMENTS FOR THEM Section I Insurers and Reinsurers Insurers and Reinsurers Art. 12. (1) An insurer is:

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

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

Captive Insurer. Captive Reinsurer Art. 14. (1) A captive insurer is an insurance joint-stock company that 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 coverage exclusively for the risks of the person or persons who are its owners, or of the person or persons from the group in which the captive insurer participates. (2) A captive reinsurer is a reinsurer that 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 coverage exclusively for the risks of the person or persons who are its owners, or of the person or persons from the group in which the captive reinsurer participates. (3) The fact that an insurance, respectively reinsurance, joint-stock company is captive is entered in its statutes. (4) For a captive insurer, respectively captive reinsurer, the provisions for the insurance joint-stock company, respectively for the reinsurer, apply, unless otherwise provided in this Code.

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

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

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