CRITERIA FOR REINSURANCE AGREEMENTS ARE SET
The Financial Supervision Commission defined the criteria which reinsurance agreements as well as documents certifying their implementation must meet. The recently adopted Law on Amendment and Supplement to the Insurance Code (published by the Official Gazette on July 7) stipulates that each insurer applying for mandatory Third-Party Liability present a reinsurance agreement that covers his liability on this insurance. The agreement must provide unlimited liability of the reinsurers for each event. A limit of the liability is allowed for all events in aggregate (accumulated in the term of coverage). The National Bureau of Bulgarian Motorists (in the case of Green Card insurance) must be indicated as reinsured under the same agreement - as a whole for all companies taking part in it, for a few of them, or for each of them. The condition is that reinsurance is 100% placed with reinsurers whose rating is not lower than A- on the rating scale of Standard Poors as of the initial day of its coverage.
Moreover, the supervising commission defined the criteria that should be met by the coverage of liabilities of the Insurance Fund, acquired on the international reinsurance market. The Law on Amendment and Supplement of the Insurance Code obliged the fund to have its own reinsurance program in order to be able to pay the high European compensations, including when they are unlimited as it is in France, for example. In case that a car with Bulgarian registration commits a road accident on the territory of united Europe or causes property or non-property damages to a European staying in Bulgaria while the driver of the car is not insured by the mandatory Third-Party Liability, the Insurance Fund has to pay the compensation to the injured person. Since its assets accumulate from revenues of insurance companies licensed in Bulgaria, they will not always be sufficient for the extremely high limits of liability awarded by the foreign court. According to the regulations of the Insurance Code, the Insurance Fund will insure its operations with a reinsurance agreement valid from the day the country joins the EU. Since then, the mandatory Third-Party Liability will be united with the Green Card that will be valid on the territory of the European Union. The Green Card certificate will remain valid for countries that are not members of the EU. The condition for placing the reinsurance agreement as of the day on which the coverage starts is the same as it is for insurers licensed for Third-Party Liability. The aim is to guarantee the right of injured people to get compensation even when damages are caused by uninsured motorist.