Rules on the Organization and Activities of the Guarantee Fund

RULES on the organization and activities of the Guarantee Fund Pub. - State Gazette, No. 71 of 27.08.2021; amended, No. 18 of 04.03.2025, effective from the date of introduction of the euro in the Republic of Bulgaria; amended, No. 23 of 27.02.2026 Adopted by Decision No. 229-P of 12.08.2021 of the Commission for Financial Supervision

Chapter One
GENERAL PROVISIONS

Art. 1. (Amend. - SG, No. 23 of 2026) These Rules regulate:

1. the bodies and management system of the Guarantee Fund;
2. the budget and annual financial statement of the Guarantee Fund;
3. the collection and investment of funds in the Fund for Uninsured Motor Vehicles and the Security Fund;
4. the settlement of claims for compensation to the Fund for Uninsured Motor Vehicles;
5. the structure and activities of the Information Center;
6. the activities of the Guarantee Fund as a trustee or liquidator of an insurer and the payment of guaranteed claims from the Security Fund.

Art. 2. The Guarantee Fund is a legal entity with its seat in Sofia, which performs the functions assigned to it by the Insurance Code.

Art. 3. (1) Insurers under Art. 520 of the Insurance Code are obliged to make contributions to the Guarantee Fund.
(2) Insurers under Art. 520 of the Insurance Code participate in the financing and management of the Guarantee Fund after the commencement of activities on the territory of the Republic of Bulgaria. Activities commence with the conclusion of the first insurance contract for compulsory "Motor Third Party Liability" insurance for motorists, compulsory "Accident" insurance for passengers, or insurance under Section I of Appendix No. 1 to the Insurance Code. (3) Within 7 days from the occurrence of the grounds under para. 2, the insurer notifies the Management Board of the Guarantee Fund, except in cases of conclusion of compulsory "Motor Third Party Liability" insurance for motorists and compulsory "Accident" insurance for passengers, in which case the Guarantee Fund is deemed to be officially notified.

Chapter Two
BODIES AND MANAGEMENT SYSTEM OF THE GUARANTEE FUND

Section I
General Provisions

Art. 4. (Amend. - SG, No. 23 of 2026) (1) The Guarantee Fund is obliged to have an effective management system to ensure reliable and prudent management of its activities. The management system includes an adequate and transparent organizational structure with clear and appropriate division of responsibilities, as well as an effective system ensuring the transmission of information. (2) The Guarantee Fund is obliged to review its management system once a year and make changes when necessary to achieve the objectives under para. 1. (3) (Amend. - SG, No. 23 of 2026) With regard to the management system of the Guarantee Fund, the requirements under Ordinance No. 71 of 22.07.2021 on the requirements for the management system of insurers and reinsurers (SG, No. 64 of 2021), hereinafter referred to as "Ordinance No. 71", apply mutatis mutandis to insurers without access to the single market of the European Union.

Art. 5. Bodies of the Guarantee Fund according to Art. 533 of the Insurance Code are:

1. the Council of the Guarantee Fund;
2. the Management Board;
3. two Executive Directors.

Art. 6. (Amend. - SG, No. 23 of 2026) (1) Within the management system, the Guarantee Fund establishes the following key functions:

1. risk management function;
2. compliance function;
3. internal audit function;
4. actuarial function;
5. "Information Systems and Information Security" function;
6. other functions established by decision of the Management Board of the Guarantee Fund.
   (2) (Amend. - SG, No. 23 of 2026) The Guarantee Fund chooses the organizational form of the functions under para. 1, except in cases where the Insurance Code or Ordinance No. 71 provides otherwise.
   (3) The key functions specified in para. 1 are performed by employees of the Guarantee Fund.
   (4) (Amend. - SG, No. 23 of 2026) Transfer of key functions to external service providers is permissible under the conditions and procedures of Art. 110 and 111 of the Insurance Code and Ordinance No. 71.

Art. 7. (1) Members of the Management Board and persons representing insurers who are members of the Management Board are subject to approval by the Commission for Financial Supervision, hereinafter referred to as "the Commission".
(2) When a change is made during the mandate of the Management Board to the person representing an insurer who is a member of the Management Board, the person representing the insurer is subject to approval before beginning to exercise the powers of the insurer in the Management Board. The application for approval is submitted to the Commission by the Guarantee Fund. (3) The person who heads the compliance function and the person who heads the internal audit function are subject to approval by the Commission before their appointment to the respective positions. (4) The Guarantee Fund notifies the Commission of any change in the members of the Management Board and the persons performing the key functions under Art. 6, para. 1, providing the full information necessary to assess the compliance with the qualification and reliability requirements of the new persons. (5) The Guarantee Fund notifies the Commission upon the release of a person under para. 1 or a person performing a key function under Art. 6, para. 1, stating the reasons for this, within a period not exceeding 7 days from the date of release. (6) Persons holding managerial positions according to the organizational structure of the Guarantee Fund must meet the requirements of Art. 80, para. 1, items 3 and 4 of the Insurance Code and possess suitable qualification and professional experience.

Section II
Council of the Guarantee Fund

Art. 8. (Amend. and Suppl. - SG, No. 23 of 2026) (1) (Amend. - SG, No. 23 of 2026) On the basis of Art. 535, item 13 of the Insurance Code, the Council of the Guarantee Fund decides on the additional issues under paras. 2 and 5-9.
(2) (Amend. - SG, No. 23 of 2026) The Council of the Guarantee Fund annually elects an external auditor according to Art. 535, item 12 of the Insurance Code, determines its remuneration, and approves its annual report.
(3) (Repealed - SG, No. 23 of 2026).
(4) (Repealed - SG, No. 23 of 2026).
(5) The Council of the Guarantee Fund makes the proposal under Art. 535, item 8 of the Insurance Code in written form in an electronically processable format, which includes:
1. (Suppl. - SG, No. 23 of 2026) reasons for making additional contributions under Art. 554, item 2 or Art. 563, para. 1, item 2 of the Insurance Code;
2. the total amount of funds to be collected with the additional contributions;
3. the share of each insurer in the collection of additional contributions;
4. additional conditions under which the contributions are to be made in accordance with the specific need for financing, at the discretion of the Council of the Guarantee Fund;
5. (Amend. - SG, No. 23 of 2026) expected amount of funds in the Fund for Uninsured Motor Vehicles, respectively in the Security Fund after making the additional contributions by insurers.
(6) (Amend. and Suppl. - SG, No. 23 of 2026) For the purposes of distributing additional contributions under Art. 554, item 2 of the Insurance Code among insurers under Art. 520, para. 2 of the same Code, the following calculations are made:
1. (Amend. - SG, No. 23 of 2026) the ratio of gross premium income from compulsory "Motor Third Party Liability" insurance for motorists and gross premium income from compulsory "Accident" insurance for passengers in public transport vehicles, by policies issued through the electronic information system for risk assessment, management and control under Art. 575 of the Insurance Code, to the total gross premium income from these insurances for the last three financial years is calculated, and the amount of additional contributions for the respective insurance class is determined accordingly;
2. (Suppl. - SG, No. 23 of 2026) to determine the specific share of each insurer in the amount of additional contributions for the respective insurance class, their average market share in compulsory "Motor Third Party Liability" insurance for motorists and "Accident" insurance for passengers in public transport vehicles, by policies issued through the electronic information system for risk assessment, management and control under Art. 575 of the Insurance Code, for the last three financial years is calculated;
3. (Amend. - SG, No. 23 of 2026) the average market share for "Motor Third Party Liability" insurance is calculated as the ratio of premiums accrued for this insurance for a specific insurer to the total amount of premiums accrued for this insurance, realized by all insurers on the market for the last three financial years;
4. the average market share for "Accident" insurance for passengers by policies issued through the electronic information system for risk assessment, management and control under Art. 575 of the Insurance Code is calculated as the arithmetic mean of the number of seats under active contracts at the beginning and middle of each month and at the end of the three-year period.
(7) (New - SG, No. 23 of 2026) For the purposes of distributing additional contributions under Art. 563, para. 1, item 2 of the Insurance Code among insurers under Art. 520, para. 3 of the same Code, the following calculations are made:
1. the ratio of gross premium income, including written premiums under the conditions of freedom to provide services or right of establishment, from compulsory "Motor Third Party Liability" insurance for motorists, compulsory "Accident" insurance for passengers in public transport vehicles, and insurances under Section I to Appendix No. 1 of the Insurance Code, to the total gross premium income from these insurances for the last three financial years is calculated, and the amount of additional contributions for the respective insurance class is determined accordingly;
2. to determine the specific share of each insurer in the amount of additional contributions for the respective insurance class, their average market share in compulsory "Motor Third Party Liability" insurance for motorists, compulsory "Accident" insurance for passengers in public transport vehicles, and insurances under Section I to Appendix No. 1 of the Insurance Code for the last three financial years is calculated;
3. the average market share for "Motor Third Party Liability" insurance for motorists is calculated as the ratio of premiums accrued for this insurance for a specific insurer to the total amount of premiums accrued for this insurance, realized by all insurers on the market for the last three financial years;
4. the average market share for "Accident" insurance for passengers in public transport vehicles is calculated as the arithmetic mean of the number of seats under active contracts at the beginning and middle of each month and at the end of the three-year period;
5. the average market share for insurances under Section I to Appendix No. 1 of the Insurance Code is calculated as the arithmetic mean of the number of insured persons under each active contract at the beginning and middle of each month and at the end of the three-year period.
(8) (Previous para. 7 - SG, No. 23 of 2026) The Council of the Guarantee Fund provides the Commission with the rules under Art. 535, item 9 of the Insurance Code, as well as subsequent amendments and additions thereto, within 7 days from their adoption.
(9) (Previous para. 8, Amend. - SG, No. 23 of 2026) The Council of the Guarantee Fund reviews the methodologies under Art. 535, items 10 and 11 of the Insurance Code annually by 31 December.

Art. 9. (Amend. - SG, No. 23 of 2026) In the cases under Art. 536, para. 2 of the Insurance Code, as well as when it establishes another need for additional financing of the activities of the Fund for Uninsured Motor Vehicles or the Security Fund, the Management Board of the Guarantee Fund is obliged to immediately inform the Commission and convene the Council of the Guarantee Fund.

Art. 10. (Amend. - SG, No. 23 of 2026) (1) By exception and upon proposal of the Management Board, the Council of the Guarantee Fund may hold meetings remotely or allow remote participation of persons in its meetings.
(2) In the cases under para. 1, direct and virtual participation of the persons under Art. 540, para. 1 of the Insurance Code is ensured, observing the quorum requirements, as well as of other persons who are allowed to attend the meeting.
(3) When the agenda of the meeting of the Council of the Guarantee Fund includes the election of members of the Management Board, the materials include documents certifying compliance with the requirements of the Insurance Code regarding the qualification and reliability of the persons, as well as data that the candidates meet the requirements of the Insurance Code and the policy on qualification and reliability adopted by the Guarantee Fund. (4) (Repealed - SG, No. 23 of 2026). (5) A protocol under Art. 543, para. 1 of the Insurance Code is prepared within five working days after the end of the meeting. A protocol is also prepared in the case of a meeting held remotely.

Section III
Management Board

Art. 11. (Amend. - SG, No. 23 of 2026) (1) In addition to its powers under Art. 546 of the Insurance Code, the Management Board of the Guarantee Fund:

1. exercises the powers of a management body within the meaning of Part Two of the Insurance Code for the purposes of the management system of the Guarantee Fund;
2. (Amend. - SG, No. 23 of 2026) informs the Commission and convenes the Council of the Guarantee Fund in the cases under Art. 9;
3. provides the Commission with an opinion under Art. 560, para. 1 of the Insurance Code, takes decisions on concluding the contracts under Art. 560, para. 3 of the Insurance Code and on the gratuitous transfer of the acquired assets to the bodies responsible for road safety, and notifies the Commission, the Minister of Internal Affairs, and other interested persons in the cases under Art. 560, para. 6 of the Insurance Code.
   (2) With regard to the organization of the management system, the Management Board performs the obligations under Art. 77, paras. 1-3 of the Insurance Code, with the exception of the obligations to adopt a program for activities under Art. 77, para. 1, item 2 of the Insurance Code and to adopt policies under Art. 77, para. 1, item 3, letters "z" and "m" - "p" of the Insurance Code. (3) The policy under Art. 77, para. 1, item 3, letter "a", sub-letter "aa" of the Insurance Code is adopted only regarding the management of risk related to the allocation of technical reserves. (4) The policy under Art. 77, para. 1, item 3, letter "l" of the Insurance Code is adopted only regarding the procedures for monitoring the sufficiency of funds in the funds managed by the Guarantee Fund and regarding the realization of its operational independence in applying methods for covering a shortage of funds in these funds, whereby the Fund may provide for a higher amount than the minimum amount under Art. 556, para. 2 of the Insurance Code, in case of non-compliance with which measures are taken to guarantee the possibility of the Guarantee Fund to perform its obligations. (5) The policy under Art. 77, para. 1, item 4 of the Insurance Code is adopted in accordance with the requirements for insurers under Ordinance No. 48 of 20.03.2013 on the requirements for remuneration (SG, No. 32 of 2013).

Art. 12. (Amend. - SG, No. 18 of 2025, effective from the date of introduction of the euro in the Republic of Bulgaria; Amend., No. 23 of 2026) (1) Each member of the Management Board is obliged within 7 days from their election to deposit a guarantee for their management under Art. 551, para. 1 of the Insurance Code. (2) The guarantee under para. 1 is deposited in euros. The amount of the guarantee is determined by the Council of the Guarantee Fund and cannot be less than the 3-month gross remuneration of the persons under para. 1. When the Council has not determined the amount of the guarantee for management, the amount is deemed equal to the three-month gross remuneration of the persons under para. 1. (3) The guarantee is blocked in favor of the Guarantee Fund at a credit institution on the territory of the country. Interest from the blocked guarantees at a credit institution is free and can be withdrawn upon request by the depositor of the guarantee. (4) Within 7 days from the deposit of the guarantee for their management, the persons under para. 1 are obliged to present to the Commission a document issued by the credit institution under para. 3, certifying that the blocking of the guarantees has been carried out in accordance with paras. 2 and 3. The credit institution under para. 3 issues the document upon request by the depositor of the guarantee. (5) In case of failure to deposit the guarantee within the specified period, the respective person does not receive remuneration as a member of the management body until the full amount is deposited. (6) In case of a change in the amount of remuneration of the persons under para. 1, the guarantee is updated, and paras. 2-5 apply mutatis mutandis. (7) The guarantee is released:

1. in favor of the person who deposited it under para. 1 - after the date of the decision of the Council of the Guarantee Fund to release them from liability and after their release from office;
2. in favor of the Guarantee Fund - in case the Council of the Guarantee Fund has taken a decision to this effect upon establishing damage caused to the Fund.
   (8) The Council of the Guarantee Fund may release a member of the Management Board from liability upon the presence of an audited annual financial statement for the previous year, approved by the Council of the Guarantee Fund, and in the cases of release from liability of a member of the Management Board for the current year - upon the presence of an audited by a registered auditor and interim financial statement for the period from the beginning of the current year to the last day of the month preceding the month in which the invitation to the Council of the Guarantee Fund was announced.

Art. 13. (1) A member of the Management Board - a natural person, is released prematurely by decision of the Council of the Guarantee Fund:
1. upon their written request submitted to the Council of the Guarantee Fund;
2. in case of permanent factual impossibility to perform their duties for more than three months;
3. if they cease to meet the requirements under Art. 80, paras. 1 and 3 of the Insurance Code;
4. in case of non-participation without valid reasons in three or more consecutive meetings of the Management Board of the Guarantee Fund;
5. upon death;
6. upon being placed under interdiction.
(2) An insurer - a member of the Management Board, is released prematurely by decision of the Council of the Guarantee Fund:
1. upon written request submitted to the Council of the Guarantee Fund;
2. upon the occurrence of the grounds under para. 2, items 2-5 or 6 with regard to the person representing the insurer, when the insurer has not changed this person for more than three months from the occurrence of the respective ground;
3. upon revocation of the license of the insurer for the insurance classes under Art. 3, para. 2.
(3) In case of a change in the person representing an insurer - a member of the Management Board of the Guarantee Fund, the membership of the insurer in the Management Board is not terminated. The insurer cannot exercise its powers as a member of the Management Board until the person representing it in the Management Board of the Guarantee Fund is approved by the Commission. (4) In case of premature release of a member of the Management Board, the Council of the Guarantee Fund elects a new member for the remainder of the mandate.

Art. 14. The Rules of Procedure of the Management Board under Art. 546, item 2 of the Insurance Code also determine the rules for replacing the Chairman of the Management Board in their absence or in case of conflict of interest.

Art. 15. (1) The Management Board of the Guarantee Fund considers and decides on issues within its competence at meetings.
(2) Meetings of the Management Board are chaired by the Chairman, and in their absence or in case of conflict of interest - according to the rules under Art. 14.
(3) By decision of the Management Board, employees from the administration of the Guarantee Fund may attend the meetings.
(4) By decision of the Management Board of the Guarantee Fund, other persons may also attend when considering specific issues on the agenda of the meeting.

Art. 16. (1) The draft agenda and materials for a meeting are provided to the members of the Management Board no later than two working days before the meeting, and in the case of extraordinary meetings - no later than the day before the meeting.
(2) The materials under para. 1 include a draft decision on each item of the agenda.
(3) The agenda under para. 1 may be supplemented or amended as necessary by decision of all attending members of the Management Board.

Art. 17. (1) By exception and upon proposal of the Chairman, the Management Board may hold meetings remotely or allow remote participation of persons in meetings of the Management Board.
(2) In the cases under para. 1, direct and virtual participation of the members of the Management Board is ensured, observing the quorum requirements, as well as of the persons under Art. 15, paras. 3 and 4.

Art. 18. (1) Each member of the Management Board of the Fund has the right to one vote. Abstention from voting is not allowed, nor is representation in participation in meetings and voting.
(2) Each member of the Management Board who voted against the adopted decision states their reasons for this at the meeting or presents them in writing within 3 days from the holding of the meeting.
(3) By exception and upon proposal of the Chairman, the Management Board may also take decisions non-attendingly. The proposal is made simultaneously with the sending of the draft agenda and the materials thereon, and a date for an attending meeting is specified, in case the proposed decision is not adopted unanimously in the non-attending procedure. (4) Members of the Management Board send a written response to the proposal for taking a non-attending decision with a copy to the other members of the Management Board, and in case they support it, express written consent to the proposed decision. In this case, the decision is taken unanimously. (5) When unanimity has not been reached, the proposed decision is discussed at an attending meeting on the date specified in the proposal under para. 3.

Art. 19. (1) A protocol is kept for every attending and remote meeting of the Management Board of the Guarantee Fund, which is signed by all attending members.
(2) The names of those attending the meeting, the issues discussed from the agenda, the statements of those attending, and the adopted decisions are entered in the protocol. The protocol explicitly indicates how each member attending the meeting voted on each of the issues considered.
(3) Protocols from meetings of the Management Board are prepared within two working days after the end of the meeting.
(4) If necessary, a copy-excerpt from the protocol is prepared, which is signed by the Chairman and by an employee from the administration of the Guarantee Fund designated by the Management Board.
(5) For non-attending decisions taken under Art. 18, paras. 3 and 4, the written statements of the members of the Management Board on the adopted decision are attached to the draft agenda.

Section IV
Executive Directors

Art. 20. (Amend. and Suppl. - SG, No. 23 of 2026) (1) (Suppl. - SG, No. 23 of 2026) In addition to their powers under Art. 553, para. 1 of the Insurance Code, the Executive Directors together:

1. approve the job descriptions of the employees from the administration of the Guarantee Fund;