INSURANCE LAW("Official Herald of the Republic of Serbia", Nos. 55/2004, 70/2004 - correction, 61/2005, 85/2005 - other law, 101/2007, 63/2009 - Decision of the Constitutional Court, 107/2009, 99/2011, 119/2012 and 116/2013) |
Article 1
The present Law shall govern insurance conditions and methods and supervision of insurance activities.
Article 2
Insurance activities shall include insurance, coinsurance and reinsurance as well as activities directly related to insurance.
Insurance activities are considered to be concluding insurance contracts, executing insurance contract obligations and undertaking the measures for prevention and control of the risks jeopardizing the insured property and persons.
Coinsurance activities are considered to be concluding and executing insurance contracts with several insurers who have agreed upon joint coverage and risk sharing.
Reinsurance activities are considered to be concluding and executing reinsurance contract obligations on reinsurance of the insured surplus risks exceeding the self retention insurance amount of one insurance company with the other insurance company licensed to conduct reinsurance activities (hereinafter referred to as: reinsurance company).
Activities directly connected to the insurance business are insurance brokerage and representation, processing and assessment of claims, brokerage in sale of the salvaged insured damaged property and rendering other intellectual and technical services referring to insurance activities.
Companies Engaged in Insurance Activities
Article 3***
An insurance company licensed for such activities by the competent authority shall engage in insurance activities, as well as a foreign insurance company branch which has been given the license by the competent authority to be engaged in that activities
An insurance company shall be established as a joint stock or mutual insurance company.
An insurance company shall only engage in insurance activities.
Persons Engaged in Insurance Brokerage and Representation
Article 4
Brokerage companies licensed for such activities by the competent authority shall engage in brokerage activities.
Insurance agencies or agents licensed to perform such activities by the competent authority shall perform representation activities.
Insurance brokerage companies and agencies shall be established in the form of joint stock or limited liability companies.
Companies Engaged in other Activities Directly Connected to Insurance
Article 5
Activities directly connected to insurance, except the activities mentioned in the Article 4 of the present Law, shall be conducted by agencies specialized in the provision of other insurance services, other companies and legal entities with a special purpose department specialized in engaging in such activities, licensed by the competent authority.
Insurance on a Voluntary Basis
Article 6
Property and personal insurance are voluntary.
Except for the provision mentioned in paragraph 1 of the present Article, the insurance of property and persons shall be compulsory in cases regulated by the law.
Article 7
Property and persons in the Republic of Serbia (hereinafter referred to as: Republic) can only be insured with the insurance companies established in compliance with the present Law.
Insurance contracts opposed to the terms defined in paragraph 1 of the present Article shall be considered null.
Except for paragraph 1 of the present Article, property and persons can be insured against risk with a foreign insurance company if insurance against that kind of risk is not conducted in the Republic, as well as other property and persons defined by the Government of the Republic of Serbia (hereinafter referred to as: Government).
Article 8
The insurance operations, pursuant to the present Law, are life and non-life insurance activities.
Article 9
classes of life insurance are:
1) Life insurance;
2) Annuity insurance;
3) Additional insurance besides life insurance;
4) Voluntary pension insurance;
5) Other classes of life insurance.
Article 10
classes of non-life insurance are:
1) Accident insurance including workers’ compensation and professional illness insurance, covering:
(1) Payment of the agreed insured amounts, partial payments of the insured amounts, and/or settlement of agreed expenses,
(2) Payment for injuries or impairment of health or death of passengers;
2) Voluntary health insurance, covering:
(1) A single payment for working disability,
(2) A settlement of the agreed medical costs,
(3) A combination of settlements of (1) and (2) of the present item;
3) Motor liability insurance covering the damage to vehicles propelled by their own mechanical power, except rail vehicles and vehicles not propelled by their own power, and/or loss of such vehicles;
4) Rail vehicles insurance covering the damage to rail vehicles and/or loss of such vehicles;
5) Aircraft insurance covering the damage and/or loss of aircraft;
6) Marine insurance covering the damage and/or loss of marine vessels (sea, river and lake);
7) Insurance of goods in transport covering the damages and/or loss of goods, regardless of the kind of transportation;
8) Property fire insurance or for other perils, covering the damage to property caused by fire, explosion, storm or other natural disasters, (nuclear) power, earth slides, except for the damages covered by the insurance as defined in items 3) to 7) of the present Article;
9) Other property insurance, covering the damage to property caused by machine breakdown, burglary, glass breakdown, hail, frost or other perils, except for the damages covered by the insurance as defined in items 3) to 8) of the present Article;
10) Motor liability insurance covering all kinds of liabilities using land vehicles propelled by their own mechanical power, including the liability during transport;
11) Aircraft liability insurance covering the liability when using aircraft including the liability during transport;
12) Marine liability insurance covering all kinds of liabilities when using marine vessels, including liability during transport;
13) General damage liability covering other kinds of liability except the liabilities in items 10) to 12) of the present Article;
14) Credit insurance, covering:
(1) Risk of no and/or delayed payment due to insolvency or other events or activities,
(2) Export credits and other risks connected to export, trade and investment both in domestic and foreign markets,
(3) Instalment credits,
(4) Mortgage and lombard credits,
(5) Agricultural credits,
(6) Other credits and loans;
15) Guarantee insurance, guaranteeing the direct or indirect fulfilment of the debtor’s obligations;
16) Financial loss insurance covering the financial losses due to:
(1) Unemployment,
(2) Insufficient income,
(3) Adverse period,
(4) Loss of profit,
(5) Unplanned general expenses,
(6) Unplanned business expenses,
(7) Loss of market value,
(8) Loss of rent and/or income,
(9) Indirect business loss except for losses covered in (1) to (8) of this item,
(10) Other non-business losses,
(11) Other financial losses;
17) Legal protection losses, covering court expenses, legal expenses and other court proceeding expenses;
18) Road assistance insurance covering persons in need of road assistance and/or other cases when not in the country of residence;
19) Other classes of non-life insurance.
Article 11
A special law shall govern traffic compulsory insurance.
Article 12
Voluntary pension insurance is the insurance which can, on the basis of a contract, provide entitlements in case of old age, disability, death or other insurance risks within the limits determined by the law which governs the compulsory pension and disability insurance or to a greater extent.
Article 13
Voluntary health insurance is the insurance which can, on the basis of a contract, provide health insurance entitlements to individuals not insured under the law which governs compulsory health insurance. It also covers individuals insured by that law, who are provided with the extent of entitlements greater than the one set by the law, and other types of entitlements from the health insurance not provided by the law.
Impossibility of Simultaneous Engagement in Life and Non-Life Insurance Activities
Article 14
Insurance companies cannot engage in life and non-life insurance simultaneously, except in the cases mentioned in the Article 25 of the present Law.
Article 15***
Insurance companies shall be obliged to reinsure contractual obligations exceeding the amount of self-insured retention.
The self-insured retention of the insurance company is the amount of the risks undertaken by the contract, which the company retains at all times, and which it can cover by its own means.
Insurance companies shall be obliged to retain a part of the risk in retention.
Insurance companies shall be obliged to reinsure the risk exceeding the self-insured retention. with a reinsurance company.
Reinsurance companies shall be obliged to reinsure with a foreign reinsurer the portion of the risk they are not able to cover from their own means or with a reinsurance company within the country.
Notwithstanding paragraphs 3 and 4 of this Article, the entire risk insurance against weather disasters, such as hail, frost, and other dangers and natural disasters, such as earthquakes, floods and droughts, as well as insurance against financial losses due to extreme weather, may be directly reinsured abroad by an insurance company.
Pecuniary Portion of the Initial Capital
Article 16
Founders of insurance companies or other legal entities engaging in activities directly related to insurance shall provide the initial capital in the amount defined by the present Law.
Article 17
An Insurance company as defined in the Articles 3 and 4 of the present Law guarantees for its obligations with its whole estate.
Supervision over the Insurance Business
Article 18
The National Bank of Serbia conducts the supervision over the insurance business and conducts other businesses regulated by the present Law.
The Forbidden Use of the Term "Insurance"
Article 19
The word "insurance" or words derived from the word "insurance" cannot be used by a legal entity or a contractor to indicate their company or the name and/or the name of a product or service, except in cases where such words are used according to the provisions of the present Law or special law.
Application of the Law which Governs the Legal Status of Companies and Contractors
Article 20
Insurance companies and insurance brokerage agencies and agencies providing other insurance services shall be governed by the provisions of the law which governs the legal status of companies, if not otherwise provided by the present Law for certain issues.
Persons engaged in insurance representation activities are subject to the law which governs the legal status of contractors, if not otherwise provided by the present Law for certain issues.
Article 21
Insurance contracts and insurance brokerage contracts and agency contracts are governed by the provisions of the Law on Contracts and Torts and other laws determining contracts on certain types of insurance.
Application of the Rules of the Insurance Profession, Sound Business Practices and Business Ethics
Article 22
Insurance companies and other persons conducting activities directly connected to insurance are obliged to exercise their activities in compliance with the rules of the insurance profession, respecting sound business practices and business ethics.
Engagement in Insurance Activities
Article 23
Insurance companies located in the territory of the Republic can engage in insurance activities.
Insurance companies defined in paragraph 1 of the present Article can only conduct those insurance activities the National Bank of Serbia has licensed them for.
No other entity except for the insurance companies specified in paragraph 1 of the present Article shall be entitled to engage in insurance operations.
Prohibition on Concluding Contracts for Insurance Brokerages and Agencies
Article 24
Insurance companies can conclude brokerage or agency contracts solely with entities licensed to engage in such activities according to the provisions of the present Law.
Except for the provision of paragraph 1 of the present Article, insurance companies can conclude brokerage or agency contracts with a legal entity engaged in brokerage activities according to a special law and the approval of the National Bank of Serbia that such entity meets the requirements regarding personnel and technical equipment prescribed for the performance of such activities by the present Law and registered according to Article 147 paragraph 2 of the present Law.
The legal entities specified in paragraph 2 of the present Article are subject to the provisions of the present Law which regulate reporting to the National Bank of Serbia and supervision over their conduct of business.
Additional Clause for Life Insurance Activities
Article 25
Insurance companies operating in life insurance can exceptionally perform accident insurance activities and voluntary health insurance covering the costs of medical treatment, provided they already cover the individuals who have signed life insurance contracts.
The National Bank of Serbia keeps a separate file on the contracts specified in paragraph 1 of the present Article.
Insurance company operating in activities referred to in Article 10, item 10) of the present Law may, by way of exception, perform driver and passenger accident insurance activities, provided that such insurance applies both to the driver and to persons in the insured vehicle.
2. Joint Stock Insurance Company
Incorporation of a Joint Stock Insurance Company
Article 26***
A joint stock insurance company is established by at least two legal entities and/or persons (hereinafter referred to as: founders).
Foreign legal entities or persons may, based on the reciprocity principle, establish a joint stock insurance company, or invest funds in a joint stock insurance company.
Foreign investments defined in paragraph 2 of the present Article shall be governed by the law which governs foreign investments, if not otherwise provided herein for certain issues.
Joint Stock Insurance Company Activities
Article 27
A joint stock insurance company may engage only in activities in one or more classes of insurance within the same insurance group or only in reinsurance activities.
Joint stock insurance companies may engage in activities directly connected with insurance activities subject to the present Law.
Reinsurance activities may only be performed by insurance companies licensed for reinsurance activities.
Pecuniary Portion of the Initial Capital
Article 28
The pecuniary portion of the initial capital of joint stock insurance companies cannot amount to less than the equivalent value in CSD of the following amounts, calculated by the middle rate on the day of payment:
1. Life insurance |
Amount in Euros |
|
|
1) Life insurance, except voluntary pension insurance |
2,000,000 |
|
2) Voluntary pension insurance |
3,000,000 |
|
3) All classes of life insurance |
4,000,000 |
2. Non-life insurance |
|
|
|
1) Accident insurance and voluntary health insurance |
1,000,000 |
|
2) Motor comprehensive insurance, rail vehicle – comprehensive and traffic liability insurance |
2,500,000 |
|
3) Other property insurance, other liability insurance and other classes of non-life insurance |
2,000,000 |
|
4) All classes of non-life insurance |
4,500,000 |
3. Reinsurance |
4,500,000 |
|
Joint stock insurance companies are obliged to guarantee the initial capital at all times in an amount not lower than the amount specified in paragraph 1 of the present Article.
Shares
Article 29
Shares of a joint stock insurance company may only be registered shares.
Shares and Qualified Shares
Article 30
According to the present Law, an entity shall be deemed to have a share in another entity, provided it is a direct or indirect holder of the shares and/or other rights under which it has acquired up to 10% of the shares in the capital of the other entity or of the participation in the voting rights of the other entity.
According to the present Law, an entity shall be deemed to have a qualified share in another entity, provided it is a direct or indirect holder of the shares and/or other rights under which it has reached or exceeded the limit of 10% of the shares in the capital of the other entity or of the participation in the voting rights.
Prohibited Cross-Ownership of Shares in Capital and/or Voting Rights
Article 31
Joint stock insurance and reinsurance companies, brokers and agency companies, agencies for other insurance services, and companies and other legal entities with special purpose departments cannot have cross-ownership of shares in capital and/or voting rights.
Qualified Share Approval
Article 32
For acquiring shares in an insurance company on the basis of which an entity becomes a direct or indirect holder of qualified shares (hereinafter referred to as: qualified shareholder) in the insurance company, the approval of the National Bank of Serbia is required.
An entity which acquired the approval defined in paragraph 1 of the present Article is obliged to obtain the approval of the National Bank of Serbia for each subsequent acquisition of shares in the insurance company when the new acquisition exceeds the amount of 20%, 33%, 50% and 66% of participation in capital and voting rights of another entity.
When the ownership in capital of an insurance company decreases by 10%, the company is obliged to inform the National Bank of Serbia about it.
Related Entities
Article 33
According to the present Law, related entities are considered to be the legal entities mutually inter-connected through joint management, capital or in any other way to achieve mutual business goals, so that the business activities or results of one entity may significantly affect the business activities and/or results of the other entity.
According to the present Law, the term "related entities" shall also include individuals and entities mutually inter-connected as follows:
1) Family members;
2) In such a way that an entity, and/or entities considered to be related according to this Article, together, directly or indirectly participate in the other entity;
3) In such a way that the same entity holds shares in both entities, and/or entities deemed to be related according to the present Article;
4) If the entities are related according to the law regulating the legal status of companies;
5) As members of management or members of the supervisory board, or their family members.
According to the present Law, family members are considered to be:
1) Spouse, and/or a person he/she has been living with in a relationship which has the same legal capacity as marriage;
2) Children and/or foster children;
3) Other relatives up to the third kinship level including the in-laws;
4) Other persons who do not have full working ability and have been awarded custody of that individual.
Provided the present Law determines that the insurance company is not entitled to invest in a certain legal entity and/or a legal entity in the insurance company, the prohibition relates both to direct and indirect investments.
An insurance company may not enter into legal transactions with related legal entities whereby such entities are indirectly or directly provided with funds in the form of loans, warranties, pledge, special purpose deposits etc.
On the occasion of assessing the participation in the capital, and/or obtaining the qualified share, as well as during the evaluation of participating in management, related legal entities are considered to be one entity.
Application for Obtaining the Qualified Share Approval
Article 34
Documents attached to the application for obtaining approval for qualified shares are defined in Article 39, paragraph 2 of the present Law.
The National Bank of Serbia provides its approval defined in paragraph 1 of the present Article by a resolution adopted within a period of 30 days from the receipt of the application.
Provided an entity has submitted the application for the license to engage in insurance activities, the decision on granting the approval defined in paragraph 1 of the present Article shall be rendered within the procedure of rendering a decision on the application for obtaining approval for engaging in insurance activities.
Rejection of the Application for Obtaining the Qualified Share Approval
Article 35
The National Bank of Serbia shall reject the application for obtaining the qualified share approval if the documents and available information indicate:
1) That due to the activities currently or already conducted by the applicant and/or by the related entity the activities of the joint stock insurance company might be jeopardized;
2) That due to the activities conducted by the applicant and/or by the related entity or due to the nature of their relationship, the supervision over the joint stock insurance company might be impossible to perform and/or difficult to perform;
3) If the applicant and/or the related entity has, over the past three years, been a management member or member of the supervisory board, or key functionary within a legal entity which is under procedure or has undergone liquidation and/or bankruptcy proceedings;
4) If the acquisition of the qualifying holdings would be against the provisions of the law regulating the bond market;
5) That the applicant manages the company in such a way that the financial standing of the company is deteriorating or that the company is operating in breach of regulations.
Voting Rights Loss
Article 36
An entity that holds shares in a joint stock company providing him/her with the qualified share and has not been given the approval by the National Bank of Serbia, does not have any voting rights in the management of a joint stock insurance company, for the obtained in such a way.
Withdrawal of the Qualified Share Approval
Article 37
The National Bank of Serbia shall withdraw the granted qualified share approval, by adopting a resolution, in the following cases:
1) If the approval has been granted on grounds of false and inaccurate information;
2) If the business activities of the joint stock insurance company are jeopardized due to the activities conducted by the qualified shareholder and/or related entity;
3) If due to the activities conducted by a qualified shareholder and/or related entity, or due to the nature of their relationship, the supervision over the joint stock insurance company is impossible and/or difficult;
4) If the qualified shareholder violates the obligation to obtain the approval for qualified shares and/or for the increase of the share, or disturbs in any other way the supervision over the joint stock insurance company.
On the grounds of the resolution specified in paragraph 1 of the present Article, the qualified shareholder shall lose the voting rights arising from the shares on the basis of which its participation in voting rights exceeds 10%.
Null and Void Decisions
Article 38
Decisions rendered by the corporate bodies of the joint stock insurance company with participation of the votes of the qualified shareholders, whose qualified share approval has been rejected or withdrawn, shall be null and void.
Application for a License to Engage in Insurance Activities and Reinsurance Activities
Article 39
The application for obtaining a license to engage in insurance activities and reinsurance activities shall be submitted by the founders of the joint stock insurance company, or by the persons they so authorize.
The following documents shall be attached to the application as defined in paragraph 1 of the present Article:
1) Memorandum of Incorporation;
2) Draft Articles of Association;
3) Evidence that the pecuniary portion of the initial capital as defined in Article 28 of the present Law has been deposited in the temporary account;
4) Joint stock insurance company Business Plan;
5) Draft of the business policy regulations as defined in Article 58, paragraph 2, items 1) – 12) of the present Law, with the opinion of the certified actuary;
6) List of shareholders with their family name, name and address, and/or name of the company and its head office address, total nominal value of the shares and percentages of participation in the initial capital of the joint stock insurance company;
7) For shareholders – the legal entities which are qualified shareholders:
(1) Register,
(2) Shareholders register and/or the evidence from any other appropriate public register provided the shareholder is the joint stock insurance company,
(3) Financial reports with the certified auditor’s opinion, for the last three years,
(4) Evidence from the certified administrative authority on the payment of the taxes, not more than six months old,
(5) Certified photocopy of the resolution of the competent administrative authority on verification of the amount and payment of the tax for the current and/or previous year,
(6) And other evidence relevant for an assessment of the credit worthiness of the shareholders;
8) For shareholders – the persons who are qualified shareholders:
(1) Evidence that the person has not been a member of management or of the supervisory board, or an individual endowed with special authority in a legal entity which is under procedure or has undergone liquidation and/or bankruptcy proceedings, for the past three years,
(2) Evidence that the person has not been unconditionally sentenced to imprisonment for more than three months due to criminal offenses involving damage to the economy, property or malpractice and corruption,
(3) Evidence from the certified administrative authority on the payment of the taxes, not more than six months old,
(4) Certified photocopy of the resolution of the competent authority on verification of the amount and payment of the tax for the current and/or previous year;
9) List of entities related to the qualified shareholders with the evidence of the nature of such relationships as defined in Article 33 of the present Law;
10) For the persons proposed to be nominated members of management (members of the board of directors and general manager) and supervisory board:
(1) Evidence they meet the requirements in terms of their education, skills and professional experience,
(2) Evidence that the person has not been a member of management or of the supervisory board, or key functionary in a legal entity which is under procedure or has undergone liquidation and/or bankruptcy proceedings, for the past three years,
(3) Evidence that the person is not limited, according to the present Law, regarding elections of the members of the management and supervisory board of a joint stock insurance company,
(4) Evidence that the person has not been unconditionally sentenced to imprisonment for more than three months,
(5) Evidence, not more than 6 months old, from the certified authority on the amount of paid property and income taxes,
(6) Certified photocopy of the resolution of the competent authority on establishing and payment of the tax for the current and/or previous year;
11) Name and family name of the person nominated as the certified actuary with the information as defined in item 10) of the present paragraph, or a pre-contract with a legal entity licensed for engagement in actuarial activities, and the evidence of the insurance against liability for the damage a certified actuary can cause by the given opinion;
12) Evidence that the joint stock insurance company has the prescribed organization, personnel and technical equipment allowing it to fulfil the Memorandum of Incorporation and business policy regulations.
For the foreign founders, the documents defined in paragraph 2 of the present Article shall be submitted in a certified translation into Serbian.
The National Bank of Serbia prescribes the detailed requirements to prove that certain conditions are fulfilled as defined in paragraph 2 of the present Article as well as the necessary organization, personnel and technical equipment for the joint stock insurance company.
Business Plan of the Company
Article 40
The business plan of the joint stock insurance company as defined in Article 39, paragraph 2, item 4) of the present Law, consists of:
1) Business policy basics;
2) Insurance group or types for which it is licensed;
3) Reinsurance programme;
4) Amount of the expected solvency margin as defined by the provisions of the present Law;
5) Projected amount of incorporation costs and methods of coverage of these costs;
6) Company’s liquidity plan;
7) A report on the expected business results with the certified actuary’s opinion for a three year period, and specifically the expected profits from premiums, expected claim settlement expenditures and the amount of technical reserves and the reserves as defined by the present Law, expected value of assets and their sources and a preliminary estimate of the costs of insurance activity, with a valuation of the economic justification for the establishment of the company in view of the structure and scope of the market.
Granting of a License to Engage in Insurance Activities
Article 41
A license is granted to a joint stock insurance company to engage in one or several types of insurance.
The National Bank of Serbia decides on the application to engage in insurance activities by a resolution based on an assessment of the fulfilment of legal conditions and justifiability of establishment of the joint stock insurance company, in the course of 60 days from the date of receipt.
In enacting the terms of the resolution, the National Bank of Serbia explicitly states the types of insurance for which the license is granted. If the resolution is granted for all types of insurance within one group, only the group of insurance activities is stated in the enacting terms of the resolution.
Register
Article 42
The founders of a joint stock insurance company must submit the application for the registration with the competent authority within 30 days from the date of obtaining the license to engage in insurance activities.
The license to engage in insurance activities is submitted with the application for registration.
Insurance companies must submit the registration to the National Bank of Serbia within 7 days from the receipt date.
Change of a License to Engage in Insurance Activities
Article 43
For the purpose of engaging in certain types of insurance not listed in the license, and/or for the purpose of terminating engagement in certain types of insurance for which it is licensed, the joint stock insurance company shall submit the application to the National Bank of Serbia to change the license to engage in insurance activities.
Granting the license as defined in paragraph 1 of the present Article shall be governed according to Articles 39 to 42 of the present Law.
Rejection of an Application for a License to Engage in Insurance Activities
Article 44
The National Bank of Serbia shall reject an application for obtaining a license to engage in insurance activities in the following cases:
1) If the joint stock insurance company does not submit the evidence for fulfilment of the requirements as defined in the Article 39 of the present Law;
2) If qualified shareholders do not possess the approval as defined in the Article 32 of the present Law;
3) If the provisions of the Memorandum of Incorporation and/or Articles of Association of the joint stock insurance company are against the law;
4) If the members of management or of the supervisory board fail to submit the required evidence that they are capable of acting as members of management or of the supervisory board, and/or if they do not fulfil the requirements;
5) If, on the basis of the Articles of Association of the joint stock insurance company and other submitted documents, it is evident that the joint stock insurance company does not fulfill the prescribed requirements for insurance activities;
6) If on the basis of the Articles of Association of the joint stock insurance company and other submitted documents it is evident that the joint stock insurance company does not have the capacity, in terms of organization, personnel and technical equipment to engage in insurance activities as specified in the submitted business plan;
7) If incorporation of the joint stock insurance company is not justified;
8) If the joint stock insurance company does not fulfil other requirements according to the law.
Should the National Bank of Serbia reject the application to grant a license to engage in insurance activities, it shall be obliged to state the reasons for so doing.
The founder, to whom the application for the insurance activities license has been discarded or denied, cannot submit the same application in a period of one year from the day of discarding or denying of that application.
Termination of the Validity of a License to Engage in Insurance Activities
Article 45
A license to engage in insurance activities shall be terminated in the following cases:
1) If the company does not apply for the court registration within 30 days from the day of obtaining a license;
2) If the company fails to commence its business activities within six months from the date of registration;
3) If the company ceases to engage in insurance activities for an uninterrupted period of one year;
4) If the insurance portfolio has been transferred to another insurance company;
5) If liquidation proceedings have been initiated;
6) If bankruptcy proceedings have been initiated.
In the cases as defined in paragraph 1 of the present Article, the National Bank of Serbia shall render a resolution on termination of the license to engage in insurance activities.
The joint stock insurance company whose license to engage in insurance activities has been terminated can no longer conclude new insurance contracts in cases:
1) Defined in paragraph 1 items 2) and 3) of the present Article from the date of receipt of the resolution mentioned in paragraph 2 of the present Article;
2) Defined in paragraph 1 item 4) of the present Article from the date of receiving the approval of the National Bank of Serbia for the portfolio transfer;
3) Defined in paragraph 1 item 5) of the present Article from the opening of liquidation proceedings;
4) Defined in paragraph 1 item 6) of the present Article from the opening of bankruptcy proceedings.
Granting a License to Engage in Reinsurance Activities
Article 46
A license to engage in reinsurance activities is granted according to the provisions of the present Law applicable to granting a license to engage in insurance activities.
The Bodies of the Company
Article 47
The law on legal position of business companies is applied upon the bodies of the joint stock insurance company, if some issues are not otherwise settled.
Director of a joint stock insurance company must be an employee of that company, and if the company does not have a director, the president of the management board must be an employee of that company.
Approval for Acting in the Capacity of Management Member or Member of the Supervisory Board
Article 48
The joint stock insurance company shall be obliged to submit a request to the National Bank of Serbia for the approval for the proposed nomination of management members and/or members of the supervisory board.
If a management member and/or member of the supervisory board of the joint stock insurance company has been nominated without the approval of the National Bank of Serbia, the nomination is considered null and void.
The applications for the approval as defined in paragraph 1 of the present Article are submitted with the evidence defined in Article 39 paragraph 2 item 10) of the present Law.
Besides the evidence defined in paragraph 3 of the present Article, persons applying for the position of general manager of the joint stock insurance company have to submit their programme for managing the company.
The National Bank of Serbia decides on the application as defined in paragraph 1 of the present Article within 30 days from the date of receipt of the application.
The National Bank of Serbia shall reject the application for the approval for the position of management member and/or supervisory board member of the joint stock insurance company if the candidate does not fulfil conditions determined by the present Law or if from the given information it is evident that due to the activities the candidate is and/or has been engaged in, the activities of the insurance company can be jeopardized, according to the rules on risk management.
If the application for the license to engage in insurance activities was submitted, the decision on the application as defined in paragraph 1 of the present Article shall be rendered within the procedure of deciding on a license to engage in insurance activities.
Withdrawal of the Approval for the Position of Member of Management or Member of the Supervisory Board
Article 49
The National Bank of Serbia shall withdraw the given approval for the position of member of management and/or member of the supervisory board of the joint stock insurance company by resolution, in the following cases:
1) If the approval has been granted based on untrue and inaccurate information;
2) If a management member and/or a member of the supervisory board ceases to fulfil the conditions as defined in Article 39 of the present Law;
3) If a member of management and/or a member of the supervisory board violates the obligations as defined by the present Law.
The National Bank of Serbia can order the joint stock insurance company to dismiss a member and/or members of management or the supervisory board and to nominate a new member and/or members:
1) If the company does not obey an order to eliminate ascertained irregularities and illegalities;
2) If the company’s management does not implement the special measures determined by the present Law;
3) If the company repeatedly violates the duty to provide accurate and timely reporting to the National Bank of Serbia after being given a written warning by the National Bank of Serbia, or in any other way disturbs the supervision over its business activities.
If a proceeding was opened to withdraw the license of a joint stock insurance company, the National Bank of Serbia in such case shall decide on the withdrawal of the approval for the position of member of management and/or member of the supervisory board.
The Nomination Limitation
Article 50
The following persons cannot be nominated as members of management, in addition to those determined by the law defining the legal status of companies:
1) A person related to the legal entity where the insurance company holds more than 5% of participation in capital or participation in voting rights;
2) A person who is a management member or member of the supervisory board in another joint stock insurance company.
The Obligations and Responsibilities of Management Members
Article 51
Management members in a joint stock insurance company are obliged to ensure, apart from the obligations so determined by the law defining the legal status of companies, the following:
1) That the business activities of the company are in compliance with the risk management rules determined by the present Law and the regulations rendered on the basis of the present Law;
2) That risk is monitored and that appropriate measures are taken to ensure proper risk management;
3) That company books and other books, business documents, accounting documents, financial and other reports are kept and written according to the law;
4) That the reports and other documents submitted to the National Bank of Serbia are written according to the Law;
5) That internal auditing is performed according to the Law;
6) That legal transactions entered into with shareholders, related entities and other entities that have obligations towards the company shall be no less favourable for the company than the same transactions entered into at market conditions.
Management members of the joint stock insurance company are jointly liable to the company for any damage caused by the failure to fulfil the determined obligations.
Providing Information to the Supervisory Board and the National Bank of Serbia
Article 52
The management of a joint stock insurance company must inform the supervisory board in writing, in the following cases:
1) If the liquidity and/or solvency of the joint stock insurance company is jeopardized;
2) If conditions occur causing the termination or withdrawal of the license to engage in insurance activities, and/or if reasons exist for prohibiting engagement in certain types of insurance activities;
3) If the guarantee reserves of the company decrease to a level below the solvency margin.
The general manager of the joint stock insurance company shall inform the National Bank of Serbia when the conditions as defined in paragraph 1 of the present Article occur.
A member of the management of the joint stock insurance company must immediately inform the supervisory board and the National Bank of Serbia in writing of the following:
1) Of his/her nomination to and/or termination from the position in management and/or supervisory board of other legal entities;
2) Of all legal transactions on the grounds of which he/she, and/or a member of his/her immediate family, has directly or indirectly acquired shares and/or equity in a legal entity, based on which the management member, solely or with the members of his/her immediate family, has acquired the qualified share, and/or if their share has been reduced below the minimum level of qualified share according to the present Law.
The Scope of Competence of the Supervisory Board
Article 53
The supervisory board of a joint stock insurance company, besides the activities determined by the law on the legal status of companies, has the following authorities:
1) Follows the activities of the internal auditing:
2) Discusses the report from the company’s management as defined in article 52 of the present Law and informs the company’s management and the National Bank of Serbia of its stance;
3) Discusses the findings of the National Bank of Serbia and other supervisory and investigative bodies in the course of supervision and control over the conduct of insurance activities;
4) Discusses the financial report and annual business report with the opinion of a certified actuary and gives an opinion with explanation to the general assembly of the company and the National Bank of Serbia;
5) Discusses the report on enforcement of coinsurance and reinsurance policies, with the opinion of a certified actuary;
6) Gives comments on the report on the completed audit to the general assembly of the company.
The Obligations and Responsibilities of the Supervisory Board Members
Article 54
A member of the joint stock insurance company’s supervisory board is obliged to immediately and in writing inform the National Bank of Serbia of the following:
1) His/her nomination and/or termination from his/her position in the management bodies, and/or the supervisory board of other legal entities;
2) Legal transactions on the grounds of which he, and/or a member of his immediate family, has directly or indirectly acquired the shares and/or equity in a legal entity, based on which the management member, solely or with the members of his immediate family, has acquired the qualified share, and/or if their share has been reduced below the minimum level of qualified share according to the present Law.
Supervisory board members of a joint stock insurance company are jointly liable to the company for the damage caused by failure to fulfil the determined obligations.
Nomination Limitation
Article 55
The nomination of the joint stock insurance company’s supervisory board members is conducted according to the provisions of Article 50 of the present Law.
Name of the Company
Article 56
The name of the joint stock insurance company shall contain the letters "a.d.o.".
Approval for Change of Name and Address
Article 57
The joint stock insurance company must apply to the National Bank of Serbia for approval regarding a proposed decision to change its name and address.
The National Bank of Serbia renders the decision on the application as defined in paragraph 1 of the present Article within 30 days from the date of receipt.
Acts and/or actions as defined in paragraph 1 of the present Article, rendered and/or performed without prior approval of the National Bank of Serbia are considered null and void.
General and Business Policy Regulations and Annual Business Plan
Article 58
A joint stock insurance company will adopt the Articles of Association, other general and business policy regulations and an annual business plan.
The business policy regulations of a joint stock insurance company as defined in paragraph 1 of the present Article are considered to be:
1) General and special conditions for insurance and premium tariffs;
2) Decision on the technical basis of insurance;
3) Decision on the criteria, methods of establishing and the table of maximum self-insured retention in the total amount of self-insured retention;
4) Regulations on the conditions and methods of placing deposits and investing the assets of the company;
5) Regulations on the maximum rates for overhead allowances;
6) Regulations on the formation and methods of calculating and amount of unearned premiums;
7) Regulations on formation and methods of calculating mathematical reserves;
8) Regulations on formation and usage of profit sharing reserves (only for life insurance);
9) Regulations on methods of establishing the part of technical reserves used for payment of incurred but unpaid claims (outstanding claims);
10) Regulations on formation and usage of risk adjustment reserves (only for non-life insurance);
11) Regulations on conditions and methods of coinsurance and reinsurance;
12) Regulations on conditions and methods of realizing recourse claims;
12a) Regulations on the procedure for policy record forms;
13) Other business policy regulations.
Approval of Investment in other Legal Entities
Article 59
A joint stock insurance company is obliged to apply to the National Bank of Serbia for approval for all investments where the company directly or indirectly acquires the qualified shares in another legal entity, as well as in the case of each subsequent investment into the legal entity.
The National Bank of Serbia shall render the decision on the application as defined in paragraph 1 of the present Article within 30 days from the date of receipt, by applying relevant provisions hereof related to the granting and/or revocation of approval of investment in a joint-stock insurance company.
Regulations and/or actions as defined in paragraph 1 of the present Article, rendered and/or performed without prior approval of the National Bank of Serbia, shall be considered null and void.
Company Activities
Article 60
A mutual insurance company is a legal entity engaging in insurance activities in the interest of its members (the policyholders), abiding with the principles of reciprocity and solidarity.
A mutual insurance company can engage in all insurance activities, except reinsurance activities.
Founders of the Company
Article 61
A mutual insurance company may be founded by both legal entities and individuals.
Name of the Company
Article 62
The name of the mutual insurance company shall contain the letters "d.u.o.".
Types of Companies
Article 63
A mutual insurance company is established as an unlimited contribution company or as a limited contribution company.
A mutual insurance company established as an unlimited contribution company is entitled to require from each member (policyholder), payment of additional contributions for settlement of unpaid claims and other expenditures without any limitation.
A mutual insurance company established as a limited contribution company is entitled to require from each member (policyholder), payment of additional contributions that do not exceed the total amount of his previous contribution, in case the claims and other expenditures exceed the previous contributions and other revenues of the company.
If a mutual insurance company is engaged in several types of insurance, its Articles of Association may provide for payment of additional contributions for each type of insurance separately.
Pecuniary Portion of the Initial Capital
Article 64
The amount of the pecuniary portion of the initial capital of a mutual insurance company cannot be less than the amount defined in Article 28 of the present Law.
Application for a License to Engage in Insurance Activities
Article 65
An application for a license to engage in insurance activities shall be submitted by the founders of the mutual insurance company or by the person they so authorize.
The following documents are attached to the application as defined in paragraph 1 of the present Article:
1) Memorandum of Establishment;
2) Draft Articles of Association;
3) Evidence that the pecuniary portion of the initial capital as defined in Article 28 of the present Law has been placed in the temporary bank account;
4) Draft business policy regulations as defined in Article 58, paragraph 2 of the present Article with the opinion of the certified actuary;
5) Evidence of contribution (premium) payment by the members (policyholders) and a list of the members;
6) Evidence that the founders fulfil the conditions as defined in Article 39 of the present Law;
7) Business plan of the company.
The list of the members as defined in paragraph 2 item 5), of the present Article must contain a minimum of 250 persons, if the mutual insurance company is founded to engage in life insurance, and/or a minimum of 300 persons or legal entities, if the company is founded to engage in non-life insurance.
Memorandum of Establishment of a Company
Article 66
The Memorandum of Establishment of a mutual insurance company contains the following provisions:
1) Name and address;
2) Name and address of the founder;
3) Insurance activities, i.e. types of insurance and number of the same risks;
4) Amount of the pecuniary portion of the initial capital and other funds;
5) Number of founders and the amount of the deposit for each founder;
6) Conditions, terms and methods of refund of the founders’ investments, with interest from surplus profit over the expenditures (hereinafter referred to as: surplus);
7) Consequences the amendments to the Articles of Association, the general conditions of insurance and the resolution on the termination of the company have regarding concluded insurance contracts;
8) Consequences of failure to effect payments, make minimum contributions and regulating the relationship in case of failure to satisfy the specified conditions in terms of minimum number of members (policyholders), and/or the same risks.
The Memorandum of Establishment of a mutual insurance company may also include other provisions significant to the establishment and business activities of the company.
Articles of Association of the Company
Article 67
The Articles of Association of a mutual insurance company shall contain the following provisions:
1) Name and address;
2) Licensed insurance activities and types of insurance the company shall engage in;
3) The amount of the pecuniary portion of the initial capital and other means and contributions paid by members (policyholders);
4) Number and amount of the initial capital contributed by certain members (policyholders);
5) The method of calculating the members’ (policyholders’) contributions and the conditions and deadlines for payments of the contributions;
6) Members’ (policyholders’) compensation rights;
7) Limited and/or unlimited contributions;
8) The obligation of payment of an additional contribution in order to cover the losses, or the alternative to cover the company’s loss by proportionately reducing the compensation to all members (policyholders);
9) The commencement and termination of membership in a company;
10) The rights and obligations of members (policyholders) that leave the company;
11) The method of signing and representing the company;
12) Company’s bodies and their structure, nominations, dismissals, scope and method of work and decision making;
13) Funds and reserves;
14) Conditions and methods of using the surplus and/or covering losses;
15) The method of amending the Articles of Association;
16) The method of changing the form of the company;
17) The termination of the company;
18) Other issues significant to the company’s activities.
Surplus Reserves
Article 68
The Articles of Association of a mutual insurance company shall define the method of forming the reserves for covering the deficit in the business operations of the company, as well as which contributions (premiums) within the year shall be used for the formation of the reserves and the minimum amount of the reserves.
Rights and Obligations of Members of a Company
Article 69
Policyholders gain the right to be members of the mutual insurance company upon signing an insurance contract.
A member of a mutual insurance company is not liable for the company’s obligations.
A member of a mutual insurance company is not entitled to offset his/her obligations to the company in terms of the payment of contributions and additional payments against his/her claims from the company.
The payment of contributions and allocation of surplus shall be made under equal conditions for all members of the mutual insurance company.
General Assembly of the Company
Article 70
The general assembly of the mutual insurance company consists of founders and members (policyholders).
Founders and members (policyholders) participate in the management of the mutual insurance company in proportion to their respective investments and contributions.
Founders participate in the management of the company until the total repayment of their respective investment.
Application of the Provisions for a Joint Stock Insurance Company
Article 71
Provisions of Articles 26, 39-55 and 57-59 of the present Law also apply to a mutual insurance company.
III INSURANCE BROKERS AND AGENTS
Insurance Brokerage Activities
Article 72
Insurance brokerage activities include activities related to connecting the policyholder and/or the insured with an insurance company in order to negotiate the conclusion of an insurance contract, based on the order of the insurance company established according to the present Law or by the order of the policyholder, and/or the insured.
Insurance Brokerage Company
Article 73
Insurance brokerage activities are conducted by an insurance brokerage company whose sole activity is so licensed by the National Bank of Serbia.
Except for the brokerage activities as defined in Article 72 of the present Law, an insurance brokerage company can conduct the activities of consulting and assisting when handling claims and assessing risk and damage.
Brokers in insurance shall not be entitled to engage in insurance agency activities.
Except for paragraph 3 of the present Article, the brokerage company can engage in insurance agency activities for certain types of risk provided that it meets the conditions as defined in Article 93 paragraph 2 items 5), 7) and 8) of the present Law and is licensed by the National Bank of Serbia to engage in the activities with the limitation that it cannot, on the same legal issue, represent one and broker the other contracting party.
The Prohibition of Insurance Brokerage
Article 74
The brokerage company cannot act as a broker in concluding an insurance contract if the conclusion of the insurance contract is against the provisions of Article 23 of the present Law.
Name of the Company
Article 75
The name of the brokerage company in insurance must include "insurance brokerage".
Incorporation of the Company
Article 76
An insurance brokerage company is established as a joint stock company or a limited liability company, subject to the law determining the legal status of companies, unless the present Law does not otherwise provide regarding certain issues.
If the insurance brokerage company is established as a joint stock company, the pecuniary portion of the initial capital cannot be less than the equivalent value of 25,000 Euros in CSD, calculated by the middle rate of the National Bank of Serbia on the day of the payment.
If the insurance brokerage company is incorporated as a limited liability company, the pecuniary portion of the initial capital cannot be less than the equivalent value of 12,500 Euros in CSD, calculated by the middle rate of the National Bank of Serbia on the day of the payment.
If the brokerage company is engaged in agency activities, then the amount of initial capital as defined in paragraphs 2 and 3 of the present Article is increased by 30%.
The company is obliged to ensure that its initial capital at all times remains at a level not lower than the amount defined in paragraphs 2 and 3 of the present Article, with at least 50% of the total amount of the pecuniary portion of the initial capital in short-term securities and short-term investments.
Shares
Article 77
The shares of a joint stock insurance brokerage company are registered shares solely.
Application for a License to Engage in Insurance Brokerage Activities
Article 78
The founders, or the persons they so authorize, submit the application for a license to conduct insurance brokerage activities.
The following documents are submitted with the application as defined in paragraph 1 of the present Article:
1) Establishment Act;
2) (Deleted);
3) Evidence of payment into the temporary bank account of the pecuniary portion of the initial capital defined in Article 76 of the present Law;
4) List of shareholders and/or owners, together with the information as defined in Article 39, paragraph 2 items 7) and 8) of the present Law;
5) Business plan of the company;
6) Evidence that persons, candidates for management members and members of the supervisory board meet the conditions as defined in Article 39 of the present Law;
7) Evidence of adequate personnel and technical equipment for the company;
8) Insurance pre-contract or contract against liability for the damages arising from activities or unconditional financial bank guarantees accepted by the National Bank of Serbia for the insured sum and/or the sum not less than the equivalent value of 100,000 Euros in CSD, calculated by the middle rate of the National Bank of Serbia on the day of payment;
9) Evidence of relationship based on capital or other shares with the insurance companies or insurance agencies or insurance brokerage companies.
The National Bank of Serbia specifies the conditions and methods of proving the fulfilment of the conditions for the persons as defined in paragraph 2 item 6 of the present Article and the necessary personnel and technical equipment of the company.
Granting a License to Engage in Insurance Brokerage Activities
Article 79
The National Bank of Serbia decides on the application to issue a license to engage in insurance brokerage activities within 60 days from the date of receipt.
Register
Article 80
The founders of insurance brokerage companies must submit the registration with the competent authority within 30 days from the date of obtaining the license to engage in insurance brokerage activities.
The license to engage in insurance brokerage activities is submitted with the application for the registration.
The insurance brokerage company must submit the registration to the National Bank of Serbia in the course of seven days from the date of receipt of the registration.
Withdrawing a License for Engagement in Insurance Brokerage Activities
Article 81
The National Bank of Serbia shall withdraw the license to engage in insurance brokerage activities in the following cases:
1) If the insurance brokerage company no longer meets one of the requirements defined in Article 78 of the present Law;
2) If the business activities of the insurance brokerage company jeopardize the interest of the policyholders, or it is discovered that the company failed to abide by the law and other regulations;
3) If the insurance brokerage company renders brokerage services to an insurance company not licensed to engage in insurance activities.
Authorization to Engage in Insurance Brokerage Activities
Article 82***
Insurance brokerage operations in the insurance brokerage company shall be conducted only by their employees authorized by the National Bank of Serbia (hereinafter referred to as: authorized brokers).
The National Bank of Serbia shall issue an authorization for an individual to engage in insurance brokerage provided he/she fulfils the following conditions:
1) He/she resides in the territory of the Republic;
2) He/she is an adult and a fully capable person;
3) He/she passed the examination for engaging in insurance brokerage activities;
4) No valid court award has been rendered against him/her in regards to safety measures or a protective measure in terms of prohibition of engagement in the activities;
5) (Deleted).
The National Bank of Serbia prescribes the content and method of passing the examination defined in paragraph 2 item 3) of the present Article.
A foreigner who meets the requirements of the law of his country of residence to engage in insurance brokerage activities can engage in such activities under the condition of reciprocity.
Withdrawing the Authorization
Article 83
The National Bank of Serbia shall withdraw the authorization to engage in insurance brokerage activities from the person who:
1) Has obtained the authorization on grounds of false and inaccurate information;
2) Ceases to fulfil the conditions as defined in Article 82 paragraph 2 of the present Law;
3) Violates the provisions of the present Law.
Special Obligations of an Insurance Brokerage Company
Article 84
Insurance brokerage companies engaging in conducting insurance brokerage activities on behalf of the policyholder must explain to and advise the policyholder of the circumstances relevant to the conclusion of the insurance contract.
Acting according to paragraph 1 of the present Article, the insurance brokerage company is specifically obliged to:
1) Perform an appropriate assessment of risks and suggest appropriate coverage;
2) Perform a solvency assessment of the insurance company based on information from the company’s business activities;
3) Mediate in the execution of insurance contracts with the insurance company, which, in terms of the circumstances in certain cases, offer the best protection to the policyholder;
4) Inform the insurance company that the policyholder wants to conclude the insurance contract, offer the policyholder the insurance conditions and provide him/her with information on the method for calculating the premium;
5) Check the wording of the insurance policy;
6) Offer assistance to the policyholder during the term of the insurance contract, both prior and after the occurrence of the insured case, and specifically ensure that the policyholder undertakes all relevant actions to maintain and/or exercise the rights specified in the insurance contract;
7) Monitor the execution of the insurance contract by the policyholder concluded through his/her brokerage;
8) Draft proposals to amend the insurance contract for the purpose of ensuring a high level of safety to the policyholder.
Conflict of Interest
Article 85
The insurance brokerage company must inform the policyholder of all legal and economic relationships with the insurance company affecting the impartiality of the insurance brokerage company while fulfilling its obligations to the policyholder.
Legal and economic relationships defined in paragraph 1 of the present Article specifically cover the provisions of the brokerage contract concluded between the insurance brokerage company and the insurance company according to which the insurance brokerage company:
1) Is obliged to mediate solely for the conclusion of the insurance contract with the particular insurance company;
2) Has contracted the right to higher than regular commission for mediating in certain types of insurance.
Application of the Provisions for a Joint Stock Insurance Company
Article 86
The provisions of the present Law regarding joint stock insurance companies shall apply to the issues relating to licensing and approval granted to the insurance brokerage company by the National Bank of Serbia, that are not defined by this section of the present Law.
Insurance Agency Activities
Article 87
Insurance agency activities are conducted by a legal entity or individual engaged in insurance agency activities according to a contract on representation, on behalf and for an insurance company which is established according to the provisions of the present Law.
Insurance Agencies and Agents
Article 88
Insurance representation activities, as the sole activity, are conducted by an insurance agency and person – contractor (hereinafter referred to as: insurance agent) licensed to engage in insurance representation activities according to the present Law.
In addition to the agency activities, the insurance agency and/or agent can engage in the activities of providing advice and assistance when handling claims and assessing risk and damages.
The insurance company keeps a list of insurance agencies and insurance agents that provide insurance representation services for the insurance companies.
The National Bank of Serbia is entitled to inspect the list defined in paragraph 3 Of the present Article.
Limitation to Insurance Representation
Article 89
Insurance agencies and/or agents can only engage in representation activities for one insurance company.
Except for paragraph 1 of the present Article, insurance agencies and/or agents can represent more than one insurance company based on their written consent.
Insurance agencies and/or agent are obliged to have the name of the insurance company they represent in a prominent place in their office.
Name of the Insurance Agencies and Agents
Article 90
The name of the activity – "Representation in insurance" must be included in the name of the insurance agencies and agent.
Incorporation of Insurance Agencies
Article 91
The insurance agency is established as a joint stock company or a limited liability company, subject to the law determining the legal status of companies, unless the present Law otherwise regulates certain issues.
If the insurance agency is established as a joint stock company, the pecuniary portion of the initial capital cannot be less than the equivalent value of 25,000 Euros in CSD, calculated by the middle rate of the National Bank of Serbia on the day of payment.
If the insurance agency is established as a limited liability company the pecuniary portion of the initial capital cannot be less than the equivalent value of 12,500 Euros in CSD, calculated by the middle rate of the National Bank of Serbia on the day of payment.
The agency shall ensure that its initial capital at all times is kept at a level not less than the amount defined in paragraphs 2 and 3 of the present Article, with at least 50% of the total amount of the pecuniary portion of the initial capital, in short-term securities and short-term investments.
The insurance agent must have at least the equivalent value of 1,500 Euros in CSD, calculated by the middle rate of the National Bank of Serbia on the day of payment.
Shares
Article 92
Shares of the joint stock insurance agency are solely registered shares.
Application for a License to Engage in Insurance Representation Company Activities
Article 93
The founders or the persons they so authorize submit an application for a license to engage in insurance agency activities.
The following documents are submitted with the application as defined in paragraph 1 of the present Article:
1) Establishment Act;
2) (Deleted);
3) Evidence of payment of the pecuniary portion of the initial capital defined in Article 91 of the present Law to the temporary account;
4) List of shareholders and/or owners with the information as defined in Article 39 paragraph 2 items 7) and 8) of the present Law;
5) Business plan of the company;
6) Evidence that persons, candidates for management members and members of the supervisory board meet the conditions as defined in Article 39 of the present Law;
7) Evidence of personnel and technical equipment of the insurance agency;
8) Insurance pre-contract or contract on representing the insurance company with the provision of the company’s right to consistent monitoring of the execution of the contract;
9) Evidence of relationship based on capital or other shares with the insurance companies or insurance agencies or brokerage companies.
The National Bank of Serbia specifies the conditions and methods of proving the fulfilment of the conditions for the persons as defined in paragraph 2 item 6) of the present Article and the needed personnel and technical equipment for the company.
Request for Granting a License to an Insurance Agent
Article 94
An insurance agent registers with the competent authority based on a license to engage in insurance agency activities granted by the National Bank of Serbia and at his/her own request and/or at the request of an individual so authorized by him/her.
The following documents are submitted with the request as defined in paragraph 1 of the present Article:
1) Establishment Act;
2) Evidence of the identity of the insurance representative (name, identification number and social security number);
3) Evidence of the residency of the representative;
4) Evidence of the bank account with paid in amounts as defined in Article 91 paragraph 5 of the present Law;
5) Evidence of agent’s qualifications;
6) Evidence that an agent has not been a management member, member of the supervisory board or key functionary in a legal entity that is under procedure or has undergone bankruptcy proceedings for the past three years;
7) Evidence that an agent has not been unconditionally sentenced to imprisonment for more than three months;
8) Evidence from the competent administrative authority on the amount of paid taxes not more than 6 months old;
9) Certified photocopy of the resolution of the competent administrative authority on establishing and payment of taxes for the current and/or previous year;
10) Evidence that the insurance agent is authorized for insurance representation;
11) Business plan;
12) Pre-contract or contract on representing the insurance company with the provision of the company’s right to consistently monitor the execution of the contract;
13) Evidence of personnel and technical equipment;
14) Evidence of relationship, based on capital or other shares, with the insurance companies or insurance agencies or brokerage companies.
The insurance agent must submit the registration with the competent authority to the National Bank of Serbia in the course of seven days from the date of receipt of the registration.
Authorization to Conduct Insurance Representation Activities
Article 95***
Insurance representation activities with insurance agencies and insurance agents can conduct only their employees authorized by the National Bank of Serbia (hereinafter referred to as: authorized agents).
The National Bank of Serbia authorizes an individual to engage in insurance agency activities provided he/she fulfils the following conditions:
1) He/she resides in the territory of the Republic;
2) He/she is an adult and fully capable person;
3) He/she passed the examination for engaging in insurance agency activities;
4) No valid court award has been rendered against him/her regarding safety measures or protective measures in terms of prohibition of engagement in the activities;
5) (Deleted).
The National Bank of Serbia prescribes the content and method of passing the examination defined in paragraph 2 item 3) of the present Article.
A foreigner who meets the requirements of the law of his/her country of residence to engage in insurance agency activities can engage in such activities under the condition of reciprocity.
The Right to Inspect the Insurance Agency Contract
Article 96
The agency contract is kept in the offices of the contracting parties.
The National Bank of Serbia is entitled to inspect the contract defined in paragraph 1 of the present Article.
Monies and Payment Instruments
Article 97
The insurance agency and/or agent must remit to the insurance company monies and other payment instruments and collateral collected and/or taken over from the policyholder and/or the insurance contractor on behalf of the insurance company, at the latest by the following working day from the date of collecting or taking over, and/or to do so with other instruments of payment or collateral within the same deadline.
The insurance agency and/or agent collect insurance premiums according to the rules and regulations of the insurance company.
The insurance agency and/or agent are obliged to keep safe the monies and payment instruments and collateral defined in paragraph 1 of the present Article until the day of payment and/or remittance to the insurance company.
Responsibility of the Insurance Agency or Agent
Article 98
The insurer shall be liable for the acts performed by the insurance agent.
The insurance agency and/or agent is liable to the policyholder for any damage caused by false impersonation or malpractice of the insurance agency and/or agent, and/or due to the fact that the insurance agency and/or agent did not inform the policyholder of their acting as the representation for a company or insurance representative.
The general manager of the insurance company and/or the key functionary that signed the contract on agency is liable to the insurance company for the damage caused by such contract.
Application of the Provisions for an Insurance Agency
Article 99
The provisions of the present Law applicable to an insurance brokerage company are appropriately applicable to the licensing and withdrawing of the license and consent for conducting insurance agency activities as well as the evidence of registration.
IV AGENCY FOR OTHER INSURANCE SERVICES
Activities of the Agency
Article 100
An agency for other insurance services (hereinafter referred to as: agency) is a legal entity conducting activities of loss and risk adjustment, brokerage in the sale and the selling of the salvage of the insured damaged object and offers other intellectual or technical services regarding insurance activities.
The agency is established as a joint stock company or company with limited liability according to the law governing the legal status of enterprises unless otherwise defined by the present Law for certain issues.
Prohibition of conducting insurance brokerage and agency activities
Article 101
An agency cannot engage in insurance activities or brokerage or representation activities.
Incorporation of the Agency
Article 102
If an agency is incorporated as a joint stock company, the pecuniary portion of the initial capital cannot be less than the equivalent value of 25,000 Euros in CSD, calculated by the middle rate of the National Bank of Serbia on the day of payment.
Provided that the insurance agency is established as a limited liability company the pecuniary portion of the initial capital cannot be less than the equivalent value of 12,500 Euros in CSD, calculated by the middle rate of the National Bank of Serbia on the day of payment.
The agency shall ensure that its initial capital at all times remains at a level not less than the amount as defined in paragraphs 1 and 2 of the present Article, with at least 50% of the total amount of the pecuniary portion of the initial capital in short-term securities and short-term investments.
Application for a License to Engage in Insurance Agency Services
Article 103
The founders submit the application for a license to engage in other insurance agency activities or the person so authorized by them.
The following documents are submitted with the application as defined in paragraph 1 of the present Article:
1) Establishment Act;
2) (Deleted);
3) Evidence of payment of the pecuniary portion of the initial capital defined in Article 102 of the present Law to the temporary bank account;
4) Business plan of the agency;
5) List of shareholders and/or owners with the information as defined in Article 39 paragraph 2 items 7) and 8) of the present Law;
6) Evidence that persons, candidates for management membership and members of the supervisory board meet the conditions as defined in Article 39 of the present Law;
7) Evidence of the personnel and technical equipment of the company;
8) Evidence that it is not related to other insurance companies or other brokerage or agency companies according to the provisions of the present Law and the law governing the legal status of enterprises.
Special Purpose Department
Article 104
The activities as defined in Article 100 of the present Law can be conducted by the companies or other legal entities on the condition that they have a department with the special purpose to conduct such activities and which is endowed with personnel and technical equipment to provide other insurance services, and to place in a special account the amount of the equivalent value of 12,500 Euros in CSD, calculated by the middle rate of the National Bank of Serbia on the day of payment.
Application of Provisions for an Insurance Brokerage Company
Article 105
Issues of licensing, withdrawal of the license, approval and evidence of registration for an agency, company or other legal entity as defined in Article 104 of the present Law which are not defined by this section shall be regulated by the provisions of the present Law regarding the issues of insurance brokerage companies.
V ASSETS AND BUSINESS ACTIVITIES OF AN INSURANCE COMPANY
Insurance Premium
Article 106
An insurance premium consists of a functional premium plus administrative costs.
The functional premium consists of a technical premium and it can also contain the prevention fund if it is calculated for the insurance premium.
Types of Technical Reserves
Article 107
An insurance company must define technical reserves for the purpose of settling obligations arising from insurance activities at the end of the accounting period.
An insurance company engaged in one or more types of life insurance determines technical reserves for the following:
1) Unearned premiums;
2) Claims outstanding;
3) Profit sharing;
4) Mathematical reserves.
An insurance company engaging in one or more types of non-life insurance determines technical reserves for the following:
1) Unearned premiums;
2) Claims outstanding;
3) Equalization of risks.
Technical reserves defined in paragraphs 2 and 3 of the present Article are provided by the usage of actuarial mathematics, insurance business practices and appropriate statistical data.
The National Bank of Serbia determines the criteria and methods for calculating the technical reserves as defined in paragraph 4 of the present Article.
Unearned Premiums
Article 108
Unearned premiums are formed from the insurance premium total at the end of the current business year separately for each class of insurance in proportion to the period of insurance.
Unearned premiums are a part of the premium used to cover the insurance obligations that arise during the following business year.
Claims Outstanding
Article 109
Claims outstanding are calculated on the estimated amount for incurred and reported but not paid claims and incurred but not reported claims in the current period.
Provided that claims for certain types of insurance are paid in monthly annuities, the claims outstanding are calculated on the capitalized amount of all future payments.
Profit Sharing Reserves
Article 110
Profit participation reserves are calculated in the amount the policyholders are entitled to, based on participation arising from a life insurance contract provided that the policyholders have agreed to participate in the risk of the depositing and the investing of the technical reserve resources.
Mathematical Reserve
Article 111
The mathematical reserve is the technical reserve of the insurance company for payment of future obligations regarding life insurance.
The mathematical reserve is calculated for each life insurance contract by determining the obligation values at the time of calculating the mathematical reserve.
Equalization Reserve
Article 112
Equalization reserves are calculated on the expenditures of the insurance company separately for each class of non-life insurance and are used for the balancing of the course of the damage in certain types of insurance.
The reserves as defined in paragraph 1 of the present Article are calculated on the basis of the standard deviation of realized technical results during the current business year from the average realized technical results for all types of non-life insurance conducted by the insurance company during the observed period.
Maintaining Liquidity
Article 113
An insurance company must provide the liquidity and promptly settle claims and other company obligations.
An insurance company can deposit and invest its free capital provided it maintains the permanent liquidity and provides timely settlement of claims and other company obligations.
The insurance company must take the necessary measures while conducting financial activities to ensure the prudent deposit and/or investment of funds and not to jeopardize the market value and liquidity of the company and to fulfil its insurance contract and other obligations.
The National Bank of Serbia specifically determines the method of monitoring the company’s liquidity.
Deposit and Investment of Technical Reserves
Article 114
The technical reserves can be deposited and invested in:
1) Securities issued by a state, the central bank, international financial organizations, and/or securities guaranteed for by one of such entities;
2) Bonds and/or other debt securities traded on the organized stock market of the country;
3) Bonds and/or other debt securities not traded on the organized stock market in the country, provided that they are issued by a legal entity established in the country;
4) Stocks traded on the organized stock market of the country;
5) Stocks not traded on the organized stock market in the country provided that they are issued by a domestic legal entity, and provided that they are issued according to the law regulating the stock market;
6) Deposits and investments in banks in the country;
7) Real estate and other real legal rights to real estate if they are registered in deed books and/or in any other public books provided they bring income and/or an income can be expected from them, and provided their purchase price is calculated according to the valuation given by a certified assessor.
Technical reserves can be kept in cash at the company’s cashier or in a bank account.
Except for paragraphs 1 and 2 of the present Article, the National Bank of Serbia can determine other methods of deposits and investments, which are, as far as the safety, income and market value are concerned, appropriate for deposits and investments.
Technical Reserves Investment and Deposit Limits
Article 115
The National Bank of Serbia shall prescribe limitations on certain forms of depositing and investing as defined in Article 114 of the present Law.
The insurance company must report on a quarterly basis to the National Bank of Serbia on the deposits and investments as defined in paragraph 1 of the present Article.
Guarantee Reserve
Article 116
An insurance company must have a guarantee reserve in order to ensure the constant fulfilment of its obligations.
The guarantee reserve includes:
1) Initial capital;
2) Profit reserves and reserves established by the Acts of the company;
3) Unallocated profit from previous years up to 50%;
4) A portion of unallocated profit from the current year, maximum 50% provided that the determined amount does not exceed the average value of the gross profit over the past three years and provided it does not exceed 25% of the guarantee reserves;
5) Revaluation reserve.
The National Bank of Serbia may also prescribe other forms of funds constituting the guarantee reserve, as well as the level of participation of such funds in the guarantee reserve.
Reserves as defined in paragraph 2 items 2) and 5) of the present Article cannot exceed 20% of the guarantee reserves.
Guarantee reserves are reduced for share repurchase, for loss from the previous years and loss from the current year.
The total amount of the guarantee reserve cannot be below the amount defined in Article 28 of the present Law.
Deposit and Investments of the Guarantee Reserve
Article 117
(Deleted)
Limits to Certain Deposits and Investments of the Guarantee Reserves
Article 118
The insurance company may deposit and invest guarantee reserve funds as defined in Article 114 of the present Law or otherwise as defined by the company’s business policy.
The National Bank of Serbia may prescribe maximum amounts of certain deposits and investments referred to in paragraph 1 of the present Article.
The insurance company is obliged to report on a quarterly basis to the National Bank of Serbia on the deposits and investments as defined in paragraph 1 of the present Article.
Deposits and Investments of Insurance Funds
Article 119
Assets of the insurance company are deposited and invested within the Republic.
An insurance company can deposit and invest the assets defined in paragraph 1 of the present Article in the amount up to 20% of the initial capital abroad, following the consent of the National Bank of Serbia.
The Solvency Margin
Article 120
The solvency margin of the insurance company is equivalent to the total assets reduced for non-material investments, variable maturities, loss, obligations (including life insurance mathematical reserves) and unearned positions (unearned premiums and claims outstanding).
An insurance company calculates the solvency margin separately for life insurance and non-life insurance.
Application of Premium Basis
Article 121
For the first year of operations, an insurance company shall calculate the solvency margin by application of the premium basis.
Guarantee of the Solvency Margin
Article 122
An insurance company is obliged to ensure that the solvency margin is constantly at the level calculated by the method specified by the National Bank of Serbia.
Amount of the Guarantee Reserve
Article 123
The guarantee reserve of an insurance company must always exceed the calculated solvency margin.
Measures for Ensuring Solvency
Article 124
If the guarantee reserve of an insurance company does not reach the calculated solvency margin, the insurance company must render a programme of measures to equalize the guarantee reserve and the solvency margin within 30 days from the date of discovering the divergence between the guarantee reserve and the solvency margin and deliver it to the National Bank of Serbia.
The Rules on Risk Management
Article 125
An insurance company is deemed to operate according to the rules of risk management determined by the present Law if it provides:
1) Coinsurance and reinsurance of the excess of risk over the maximum self insured retention as defined in Article 15 of the present Law;
2) The settlement of claims, contracted insured sums and fulfilment of other obligations from the basis of insurance as defined in Articles 21 and 22 of the present Law;
3) Initial capital is not less that the amount defined in Article 28 of the present Law;
4) Technical reserves as defined in Article 107 of the present Law;
5) Liquidity of the company as defined in Article 113 of the present Law;
6) Deposits and investments of the technical reserves as defined in Articles 114 and 115 of the present Law;
7) Guarantee reserves as defined in Article 116 of the present Law;
8) Deposits and investments of the guarantee reserves as defined in Article 118 of the present Law;
9) Solvency margin as defined in Articles 120 and 122 of the present Law;
10) Other activities to fulfil the obligations as defined in items 1) to 9) of the present Article as well as other obligations determined by the present Law regarding the risk management.
Revenues
Article 126
Insurance company revenues include insurance premiums, active reinsurance premiums and other revenues from insurance activities, revenues from financing, nonbusiness revenues and extraordinary revenues.
Expenditures
Article 127
Insurance company expenditures are expenditures for damages and contracted insured sums, expenditures for the damages on the grounds of active reinsurance activities, expenditures for premiums on the grounds of passive reinsurance activities and other expenditures arising from insurance activities, expenditures for insurance and reinsurance activities (expenditures for conducting the insurance and reinsurance activities) as well as the expenditures of financing, non-business expenditures and extraordinary expenditures.
Expenditures for damages defined in paragraph 1 of the present Article include the costs of assessing the damage, the costs of realizing recourse claims, the costs of court fees and taxes in proceedings related to the obligations arising from insurance, expertise costs and other costs related to claim settlement.
Insurance company expenditures are also:
1) Reserves for insurance, coinsurance and reinsurance claims;
2) Setting aside from the life insurance premium for the mathematical reserve;
3) Setting aside for policyholders’ contribution in order to increase the insured sums and similar life insurance portions, according to life insurance terms and conditions;
4) Setting aside for equalization reserves.
Separation of Insurance Acquisitions Costs
Article 128
The costs of activities of insurance procurement can be separated in proportion with the unearned premium and premium total in compliance with the law.
Business Results
Article 129
The business result of a joint stock insurance company is the realized profit or loss.
The mutual insurance company identifies the realized surplus or deficit as its result.
Disposition of the Realized Profit and/or Surplus
Article 130
An insurance company pays income taxes from the realized profit and/or surplus, and the remaining profit and/or excess is deemed unallocated profit and/or surplus.
An insurance company allocates the unallocated profit and/or excess from the previous years in the following sequence:
1) For covering the loss and/or deficit from previous years;
2) For setting aside for the reserves;
3) For other purposes as defined by the company’s Articles of Association.
Loss and/or Deficit Coverage Sequence
Article 131
An insurance company covers the loss and/or deficit from the previous years in the following order from:
1) Unallocated profit and/or excess;
2) Reserves;
3) The initial capital.
A mutual insurance company shall, prior to using the initial capital, cover the deficit from the additional contribution of the members (policyholders) or by the proportional reduction of claim compensation to all members (policyholders), and/or simultaneously from the additional contribution and proportional reduction of claim compensation.
Programme of Measures for Loss and/or Deficit Coverage
Article 132
An insurance company is obliged to cover the previous year’s uncovered loss and/or deficit in the current business year, as well as to ensure the initial capital in the amount used to cover the loss and/or deficit if the initial capital has been reduced below the amount as defined in Article 28 of the present Law.
The insurance company informs the National Bank of Serbia on the accrued loss and/or deficit and submits the programme of measures to cover the loss and/or deficit on the date of establishing the loss and/or deficit, and at the latest within 15 days from the date fixed for submission of the financial report to the legal entity certified to keep the register of financial status of the legal entities according to the law.
Except for paragraph 2 of the present Article the insurance company covering the loss and/or deficit from the unallocated profit and/or excess or from the initial capital exceeding the amount as defined in Article 28 of the present Law, is not obliged to make and submit the programme for measures to cover the accrued loss and/or deficit.
The National Bank of Serbia shall nominate an expert who shall, at the expense of the insurance company, control the implementation of the programme of measures to cover the loss and/or deficit and inform the company thereon.
The National Bank of Serbia may, upon the expert’s proposal, order undertaking of special measures to cover the loss and/or deficit.
Defining Profit and/or Loss per Type of Insurance
Article 133
An insurance company engaged in life insurance activities shall separately define the profit and/or surplus and loss and/or deficit for the voluntary pension insurance, separately for other types of life insurance and separately for reinsurance activities.
An insurance company conducting non-life insurance is obliged to separately define the profit and/or surplus and loss and/or deficit for types of insurance referred to in Article 28, paragraph 1, item 2), sub-items (1) to (3) of the present Law and separately for reinsurance activities.
The Obligation of the Financial Report and Annual Business Report
Article 134
An insurance company is obliged to prepare the financial and annual business reports according to the law.
The chart of accounts and contents of certain accounts in the chart of accounts for the insurance company is prescribed by the National Bank of Serbia.
The forms for financial reports needed for unique information and statistical processing, and/or minimum contents and the form of the included information are prescribed by the National Bank of Serbia.
Internal Audit
Article 135
An insurance company must organize an independent internal audit.
A special purpose department within the company specified in the Articles of Association conducts the internal audit of the insurance company.
The internal audit unit of the insurance company reports directly to the supervisory board of the insurance company.
Insurance company authorities and the employees in the insurance company must not prevent, limit or impede the reporting on the findings and assessments of the persons in charge of internal auditing activities in the insurance company.
Manual on Internal Audit
Article 136
Internal audit activities of an insurance company are defined by the manual on internal audit rendered by the management board of the company.
Internal Auditors Tasks
Article 137
Internal audit of the insurance company shall continuously and comprehensively control all activities of the company and devote special attention to:
1) Continuous monitoring, checking and improvement of the operation mode of the company;
2) Identification of the risks the company is exposed to or could be exposed to;
3) Appraisal and evaluation of the established internal control system;
4) Issuing the appropriate recommendations for elimination of the established irregularities and defects and for improving the applied procedures and modes of operation.
The system of internal business control defined in paragraph 1 item 3) of the present Article applies to certain procedures, conducts and measures which the insurance company’s management is obliged to organize in a method that suits the nature, complexity and risk of the business as well as changes in the conditions of insurance company’s activities that can be predicted with the objective of preventing irregularities and illegalities in the company’s activities.
Internal audit controls and assessment:
1) Adequacy and application of regulated policies and procedures for risk control;
2) Accounting procedures and organization of conducting accounting activities;
3) Reliability and updating of financial and management information.
An insurance company is obliged to regulate the internal audit function according to the regulations on internal audit and the internal audit business programme, according to the professional principles and internal audit practices, international standards for internal audit and ethical principles of internal audit.
Internal Auditors
Article 138
For internal audit activities the insurance company must have at least one person employed.
An insurance company shall define the conditions for the nomination and dismissal of an internal auditor as well as the position of all the other persons employed in the internal audit department of the organization.
The persons in charge of internal audit cannot conduct any other activity in the insurance company, are not authorized nor liable for preparing acts or other documentation which can be a subject of the internal audit, nor can they be members of the management or the supervisory board of the company.
The internal auditor reports on each completed internal audit.
The internal auditor is in charge of the internal audit in the manner prescribed by the present Law.
Business Programme and Annual Plan for the Internal Audit
Article 139
The supervisory board of the insurance company adopts the business programme and annual plan for the internal audit of an insurance company.
The business plan for the internal audit specifically regulates: clearly and with great detail specified risks and business areas in which risks could arise, the targets and tasks of the internal audit, as well as the priorities in performing the function of internal audit, frequency of the internal audit activities, methods of conducting the programme of internal audit and the liability of the internal auditor along with the realization of the programme and the degree of comprehensiveness and detail of the internal audit in certain fields of the insurance company’s activities.
The annual business plan for the internal audit determines the planned activities for the internal audit, and specifically the business activities in which the internal auditor will perform business control and the deadlines for executing the planned activities.
Apart from the internal audit as defined by the programme and plan in paragraph 1 of the present Article, the internal auditor performs a single audit upon the request of the supervisory board and/or the company’s management.
Report on Internal Audit
Article 140
The internal audit of the insurance company shall issue semi-annual and annual reports on internal audit.
Semi annual reports on the internal audit include:
1) A description of the conducted control of business activities (audit subject);
2) An evaluation of the method of processing documents and the procedure for concluding the insurance contracts and issuing insurance policies and claim settlements;
3) Illegal actions or other irregularities determined by the internal audit with an explanation and the consequences of identified irregularities and designation of accountable persons;
4) Proposed measures and deadlines for the elimination of the determined irregularities;
5) Other findings, assessments and proposals related to the elimination of the irregularities identified by the internal audit.
The annual internal audit report in addition to the above also includes:
1) A report on realization of the business programme and annual business plan for internal audit activities;
2) A summary of significant findings of the conducted control;
3) An evaluation of measures taken to eliminate the defined irregularities.
The internal audit simultaneously submits the reports defined in paragraph 1 of the present Article to the supervisory board and to the management of the insurance company.
The management board of the insurance company reviews the annual report on the internal audit with the supervisory board opinion, together with the financial statements of the company.
The management board of the insurance company is obliged to deliver to the general assembly the annual report on internal audit with the opinion of the supervisory board together with a report on the measures taken to eliminate the irregularities identified by the internal audit and supervisory board.
Providing Information to a Company’s Management and Supervisory Board
Article 141
Except for Article 140 of the present Law, if the internal auditor determines that the insurance company violates the rules on risk management and this could result in the company’s illiquidity or insolvency or determines that the safety of business activities and/or the interests of the policyholders are jeopardized, then the internal auditor is obliged to immediately, within 24 hours at the latest from the determination, inform the company’s management and supervisory board of the insurance company.
If the internal audit determines that the management and/or key functionaries of the insurance company violate the rules on risk management, then the it shall immediately, within 24 hours at the latest from determination, inform the supervisory board of the company.
VII SUPERVISION OVER INSURANCE ACTIVITIES
1. Competence of the National Bank of Serbia
Scope of Activities of the National Bank of Serbia
Article 142
The National Bank of Serbia supervises insurance activities to protect the interests of policyholders and other insurance product consumers.
Besides the supervision defined in paragraph 1 of the present Article, the National Bank of Serbia licenses insurance, reinsurance, brokerage, representation (agency) and other activities directly related to insurance, approves the regulations and activities regulated by the present Law, renders regulations regulated by the present Law, processes statistical data and other information, keeps records determined by the present Law and examines complaints of policyholders, insurance product consumers and third parties that suffered damage, for the business operation of insurance companies and other entities conducting insurance business.
The National Bank of Serbia cooperates with other supervisory bodies in the country and abroad and conducts other activities determined by the present and other laws.
Regulations on Enforcement of the Law
Article 143
The National Bank of Serbia renders regulations to enforce the provisions of the present Law.
Protection of the Rights of Policyholders, Insurance Product Consumers and Third Parties that Suffered Damage
Article 144
The National Bank of Serbia mediates in settling claims for damages in order to prevent insurance disputes, discusses complaints of policyholders, insurance product consumers and third parties that suffered damage and protects the rights and interests of these entities.
The National Bank of Serbia regulates the method of protection of the rights and interests of the entities defined in paragraph 1 of the present Article.
Report on the Insurance Market
Article 145
The National Bank of Serbia shall submit a report on the insurance market to the Parliament of Serbia at least once a year, specifically including the following information: the scope of activities of the insurance companies according to the types of insurance, level of efficiency in claim settlement, amount and capital structure, trends in realized liquidity and solvency, realized efficiency in activities (productivity, economic aspects and profitability) and other issues relevant to the evaluation of the insurance market.
Resolution of the National Bank of Serbia
Article 146
By resolution the National Bank of Serbia renders decisions on issuing, changing and/or withdrawing the license, issuing and/or withdrawal of approvals, measures ordered while supervising, and on other issues within the competence of the National Bank of Serbia.
Resolutions are in writing.
Resolutions are final and not subject to complaint, but they are subject to the initiation of administrative proceedings.
The resolutions on issuing and withdrawing licenses as defined in paragraph 1 of the present Article, are published in the "Official Herald of the Republic of Serbia".
Data Records
Article 147
The National Bank of Serbia keeps the data records of the insurance companies it licensed to engage in insurance activities, including the information about the founders, qualified shareholders, management members and members of the supervisory board of the company as well as the business activities and measures taken while supervising the companies’ activities.
In addition to the records defined in paragraph 1 of the present Article, the National Bank of Serbia keeps data records on insurance brokerage companies and insurance agencies and agents it has licensed for engagement in insurance brokerage and agency, records of licenses granted to certified brokers and certified agents, records of licenses granted to provide other insurance services, records of legal entities which perform the activities of brokerage and agency according to a separate law, as well as records of licenses granted and licenses withdrawn for certified actuaries.
Records defined in paragraphs 1 and 2 of the present Article shall be continuously updated to reflect all additional changes in information.
The National Bank of Serbia specifically defines the method of records defined in paragraphs 1 and 2 of the present Article.
Subjects of Supervision
Article 148
The National Bank of Serbia shall supervise the activities of the insurance companies as well as the activities of the insurance brokerage companies and insurance agencies and/or agents, companies providing other services in insurance, companies and other legal entities which have a department with the special purpose of providing other services in insurance and legal entities which perform the activities of insurance brokerage and agency in accordance with a separate law.
Except for paragraph 1 of the present Article, the National Bank of Serbia is entitled to supervise the activities of the legal entities related to entities and persons as defined in paragraph 1 of the present Article, or to inspect the books of all participants in the supervised activity, should this be necessary for the purpose of supervising the insurance companies.
If another supervisory authority is in charge of supervising the legal entities defined in paragraph 2 of the present Article, the National Bank of Serbia supervises the activities of the entity in cooperation with that authority.
While conducting the supervision defined in paragraph 1 of the present Article, the National Bank of Serbia cooperates with local and international supervisory and other competent authorities and with international organizations.
Scope of Supervision
Article 149
The supervision that the National Bank of Serbia conducts over business activities of insurance companies includes:
1) Conducting insurance activities in compliance with the granted license;
2) The conformity of the general regulations and business policy acts with the law and other regulations;
3) Supervision over proper implementation of the law in the company;
4) The liquidity and solvency in engaging in insurance activities;
5) The method of defining technical reserves;
6) The execution of the obligations arising from the insurance contracts;
7) The deposits and investments of insurance funds according to the law;
8) The maintenance of accounting books and other documents and the maintenance of business books and financial reports according to the law, other regulations, general acts and business policy acts of the company;
9) The implementation of the measures ordered by the National Bank of Serbia;
10) The internal audit methodology;
11) The fulfilment of the requirements the founders, qualified shareholders, management members and supervisory board members have to meet according to the present Law;
12) The personnel and technical equipment;
13) The commissions for brokerages and agencies in insurance;
14) The management and supervisory board costs;
15) The uncollected premiums and company claims;
16) The coinsurance and reinsurance business policy;
17) Other issues defined by the law.
Method of Supervision
Article 150
The supervision over insurance companies is performed:
1) By off site control and/or by gathering and checking the reports and information of the insurance companies they must submit to the National Bank of Serbia according to the provisions of the law;
2) By on site control over the insurance companies’ business activities.
Based on the conducted supervision defined in paragraph 1 of the present Article, the National Bank of Serbia orders measures of supervision according to the provisions of the present Law and files complaints to the competent authorities in the case of reasonable doubt that the determined irregularities and illegalities have characteristics of criminal acts, economic offences or violations.
The National Bank of Serbia shall closely prescribe the manner of conducting the supervision referred to in paragraph 1 of the present Article.
Insurance Inspectors
Article 151
The National Bank of Serbia’s authorized person - insurance inspector - carries out supervision over the activities of insurance companies.
An insurance inspector can be a person who, besides the general requirements specified in the law, satisfies the following requirements:
1) He/she has a university degree in economics, or law;
2) He/she is an insurance expert;
3) He/she has at least three years working experience in financial-accounting, actuarial or other appropriate insurance activities;
4) He/she has not been sentenced unconditionally to imprisonment for more than six months;
5) No criminal charges are filed against him/her.
Official Identification
Article 152
When conducting the activities defined in Article 151 paragraph 1 of the present Law, the insurance inspector must have an official identification identifying his/her capacity.
The National Bank of Serbia defines the form of the insurance inspector’s official ID, the method of issuance and usage of the identification.
Authorization of the Insurance Inspector
Article 153
While conducting supervision over the insurance company’s business activities, the insurance inspector is authorized:
1) To have access to general acts, acts of business policy and the business books of the insurance company and all the other acts, documentation and information regarding the company’s activities in the Republic and abroad;
2) To request management members, and members of the supervisory board, internal auditor, certified actuary and key functionaries in the company to provide information and explanations within the scope of their activities related to the business operations of the company;
3) To temporarily confiscate papers and objects provided it is established they have been used and/or planned to be used to commit a criminal act, economic offence or violation.
Tasks of the Insurance Inspector
Article 154
While supervising the activities of insurance companies the insurance inspector must, by a comprehensive examination, as defined in Article 149 of the present Law, specifically ascertain:
1) The appropriateness of calculation of the technical reserves funds (Articles 107 to 112 of the present Law);
2) The appropriateness of deposits and investments of technical reserves (Articles 114 and 115 of the present Law);
3) The provision of the guarantee reserve in the company (Article 116 of the present Law);
4) The appropriateness of depositing and investing of the guarantee reserves funds (Article 118 of the present Law);
5) The provision of the calculation of the solvency margin (Article 122 of the present Law);
6) The appropriateness of damage estimates and timely claim settlement;
7) The appropriateness of the implementation of the insurance terms and premium tariffs and other business policy acts;
8) The accuracy of financial and other reports composed by the insurance company according to the law.
The insurance inspector performs the supervision as defined in paragraph 1 of the present Article as ordered by the Governor of the National Bank of Serbia or the person employed at the National Bank of Serbia, authorized by him/her.
While performing the supervision, the insurance inspector:
1) Keeps minutes of the completed examination process;
2) Proposes measures to be taken in order to eliminate determined illegalities and irregularities.
The minutes defined in paragraph 3 item 1) of the present Article are submitted to the insurance company undergoing supervision not later than 8 days from the day of the performed supervision.
An insurance company can object to the minutes in the course of 8 days from the date of receipt. The insurance inspector answers to the objections in writing and if the objections are justified, amends the minutes and/or makes the official note.
Obligations of the Insurance Company
Article 155
The Insurance company, upon request from the insurance inspector shall:
1) Ensure his/her ability to supervise the business activities in the head office and in any other premises where the insurance company and/or other entity, upon its authorization, conducts the activities being supervised by the National Bank of Serbia;
2) Ensure his/her ability to supervise the business and other documentation, the efficiency and accuracy of the business and other books and other records, the accuracy and preciseness of financial statements and annual reports of the company as well as reports and information submitted to the National Bank of Serbia;
3) Present the accounting and other documents, business books or certain parts of business books and other records;
4) Provide the excerpt of the information via the media requested by the insurance inspector as well as provide comprehensive access to the electronic system of accounting information media.
The insurance inspector must make all efforts to cause as little disturbance of the company’s regular activities as possible while performing the supervision.
3. Information Provided by the Insurance Company to the National Bank of Serbia
Regular Reporting by the Insurance Company
Article 156
The insurance company submits to the National Bank of Serbia:
1) The financial report and annual report, with the opinion of the certified actuary and supervisory board with explanation;
2) Copy of the report on performed audit, with comments on the report by the company’s general assembly and supervisory board;
3) Report on implementation of coinsurance and reinsurance policy, with the opinion of the certified actuary;
4) Business policy plan;
5) Articles of Association and other general acts and their amendments;
6) Business policy acts and their amendments with the opinion of the certified actuary;
7) Information on changes in the insurance company capital structure;
8) Information on change of certified actuary;
9) Evidence of changes of the information entered into records;
10) Information on general assembly meetings and minutes from the sessions;
11) Other information, reports and data defined by the law.
The insurance company shall submit the documents and information defined in paragraph 1 items 1) to 3) of the present Article, within 15 days from the date of adoption and no later than April 30th of the current year for the previous year, and documents defined in paragraph 1 items 4) to 9) of the present Article within 15 days from the date of rendering and/or changing, and other documents, data and information - within the prescribed deadlines.
Quarterly Report to the National Bank of Serbia
Article 157
The insurance company must report to the National Bank of Serbia quarterly on the following items:
1) Capital structure with changes of shareholders;
2) Coinsurance and reinsurance of the excess of risk over maximum self-retention with the opinion of the certified actuary;
3) Amount and structure of the collected premiums, by the types of insurance;
4) Number and amount of reported and settled claims and court claims with the opinion of the certified actuary;
5) Technical reserves, depositing and investing of the technical reserves with the opinion of the certified actuary;
6) Condition and changes on other property;
7) Company liquidity with the opinion of the certified actuary;
8) Guarantee reserves, depositing and investing of the guarantee reserves with the opinion of the certified actuary;
9) Solvency margin with the opinion of the certified actuary;
10) Internal audit report with the evaluation of the supervisory board;
11) other prescribed information.
Reporting Upon the Request of the National Bank of Serbia
Article 158
Insurance companies shall, upon the request of the National Bank of Serbia, submit other reports, information and data significant for the supervision by the National Bank of Serbia.
Contents of the Reports and Information
Article 159
The National Bank of Serbia specifically defines the contents of reports as defined in Articles 156 to 158 of the present Law and the method of the submission.
Statistical Data
Article 160
The insurance company provides the National Bank of Serbia with statistical and other data within groups and types of insurance according to the terms and methods defined by the National Bank of Serbia.
Processed information defined in paragraph 1 of the present Article is used for calculating the technical bases and premium tariffs and for conducting actuarial activities.
The National Bank of Serbia makes the information defined in paragraph 2 of the present Article public.
Article 161
While performing the supervision over an insurance company the National Bank of Serbia may:
1) Order measures to eliminate illegalities and irregularities;
2) Order measures for violating the rules on risk management;
3) Order the transfer of the insurance portfolio to another insurance company;
4) Take over control of the insurance company;
5) Withdraw the license to engage in certain or all licensed insurance activities;
6) Order temporary measures;
7) Propose measures for the management members, members of the supervisory board, key functionaries and qualified shareholders.
If it is determined by the present Law that the National Bank of Serbia can render more than one measure it shall first render the measure which is least adverse for the company.
Except for paragraph 2 of the present Article and if, due to the behaviour of the supervised entity, irreparable damage can be inflicted, the National Bank of Serbia shall undertake other appropriate measure.
4.2. Measures for the Elimination of Irregularities and Illegalities
Conditions for Prescribing Measures
Article 162
The National Bank of Serbia shall order an insurance company to eliminate the illegalities and irregularities if it establishes that:
1) It ceases to fulfil one of the requirements for engagement in insurance activities;
2) It engages in activities not permitted according to the present Law;
3) It acts contrary to the rules on keeping business books and business reports, internal audits and/or financial report audits;
4) It violates the obligation of providing the information and reporting to the National Bank of Serbia;
5) A management member or a member of the supervisory board does not meet the requirements determined by the present Law;
6) It acts against the law, other regulations and general acts governing the insurance company’s business activities;
7) It acts contrary to insurance professional standards, sound business practices and business ethics towards its policyholders and other consumers of insurance products;
8) It does not meet other obligations regulated by the law.
The National Bank of Serbia prescribes the measures defined in paragraph 1 of the present Article by a resolution, and sets the deadline within which the determined illegalities and irregularities must be eliminated.
Report on the Implementation of Measures
Article 163
An insurance company is obliged to, within the deadline defined in Article 162 paragraph 2 of the present Law, eliminate the determined illegalities and irregularities and submit to the National Bank of Serbia a report on the implementation of the prescribed measures.
The report as defined in paragraph 1 of the present Article is submitted with the documents and other evidence that illegalities and irregularities have been eliminated.
The National Bank of Serbia may, based on the report from paragraph 1 of the present Article, perform another examination of the insurance company’s business activities to the extent necessary to establish if the illegalities and irregularities have been eliminated.
Should the report on the implementation of the measures for eliminating illegalities and irregularities be incomplete, the National Bank of Serbia may order the insurance company to supplement the report and define the deadline for submitting.
If, based on the report defined in paragraphs 1 and 4 of the present Article, it is established that the illegalities and irregularities have not been eliminated, then the National Bank of Serbia should prescribe other measures according to the law.
4.3. Measures for Breaching the Rules on Risk Management
Article 164
If the National Bank of Serbia establishes that an insurance company is in violation of the risk management rules defined in Article 125 of the present Law, it shall order special measures for the insurance company to provide:
1) Coinsurance and reinsurance for the excess of risk over the maximum self-insured retention;
2) Claim settlement and contracted sums and the fulfilment of other insurance obligations;
3) Prescribed amount of the initial capital;
4) Prescribed technical reserves;
5) Company’s liquidity;
6) Depositing and investing of technical reserves in the prescribed structure and amount;
7) Guarantee reserve;
8) Depositing and investing of guarantee reserves according to the prescribed structure and amount;
9) Solvency margin;
10) Other activities in order to fulfil the obligations as defined in items 1) to 9) of the present paragraph as well as other obligations determined by the present Law regarding risk management;
Regarding the insurance company, the National Bank of Serbia, in addition to the measures defined in paragraph 1 of the present Article, may:
1) Prohibit concluding new insurance contracts for certain or all types of insurance or expanding the obligations undertaken;
2) Order the insurance company to cancel insurance, insurance brokerage and/or agency contracts if their further validity may cause damage to the company;
3) Limit the risk which it can take over in insurance;
4) Prohibit certain payments;
5) Prohibit transactions with certain shareholders, management members, members of the supervisory board, related entities or other legal entities;
6) Order the nomination of an advisor for the activities where the illegalities and irregularities have been determined;
7) Order changes in organization of the business activities;
8) Order collecting of the receivables;
9) Temporarily prohibit and/or limit the disposal of property;
10) Order the updating of the business books, list of property and obligations, adjustment of claims and obligations, evaluations of the balance and off-balance positions;
11) Order the improvement of the electronic data processing system;
12) Order the improvement of the organization and the method of internal audit;
13) Order other measures according to the law.
The National Bank of Serbia prescribes the measures defined in paragraphs 1 and 2 of the present Article by a resolution, and determines the deadline within which the irregularities related to risk management must be eliminated.
The insurance company is obliged to eliminate the established irregularities within the prescribed time limit defined in paragraph 3 of the present Article and submit to the National Bank of Serbia a report on implementing the prescribed measures.
The report defined in paragraph 4 of the present Article is subject to Article 163 of the present Law.
4.4. Transfer of the Insurance Portfolio
Article 165
When the National Bank of Serbia ascertains illegalities and irregularities in the activities of an insurance company that might jeopardize, or already have jeopardized its ability to meet the obligations arising from insurance activities, the National Bank of Serbia may order the company to transfer its insurance portfolio to another insurance company.
The transfer of the insurance portfolio is conducted according to the provisions of Articles 209 to 213 of the present Law.
4.5. Assuming Control of the Business Activities of an Insurance Company
Article 166
The National Bank of Serbia may assume the control of the business activities of an insurance company in the following cases:
1) The insurance company has failed to settle its obligations from the contracts on insurance or will not be able to settle the due obligations;
2) The funds of the insurance company are not sufficient to ensure adequate protection for the policyholders or creditors;
3) A portion of the assets on the books or records of the insurance company or a portion of the assets managed by the insurance company are not appropriately evaluated or presented;
4) The insurance company’s capital is at such a level or has been decreasing to such an extent that this might affect policyholders or creditors;
5) The insurance company presents false or illegal business results;
5a) The operations of the company’s bodies have been suspended due to the pronouncement of the measure referred to in Article 37, paragraph 2 of the present Law;
6) The insurance company fails to operate according to the directives of the National Bank of Serbia.
Assuming the control of business activities of an insurance company cannot exceed one year.
Resolution on Assuming Control of Business Activities of the Insurance Company
Article 167
The resolution of the National Bank of Serbia on assuming the control of business activities of an insurance company defines the assumption of the control over business activities of the company and includes name, family name and the social security number of the receiver as well as the period of the control over the business activities of the company.
By the resolution defined in paragraph 1 of the present Article, two or more administrative managers may be nominated and will be deemed to be the receivers of the insurance company (hereinafter referred to as: receivers).
Authorities and Responsibilities of the Receivers
Article 168
Upon rendering the resolution of the National Bank of Serbia on assuming control of business activities of an insurance company, the authorities of the company’s management shall pass onto the receivers and the authorities of the other bodies shall be suspended.
The decisions within the authorities of the insurance company’s management are rendered by the receivers, upon the consent of the National Bank of Serbia.
The receiver shall undertake measures to ensure the re-achievement of the stability and liquidity of the insurance company.
Receiver’s Reports
Article 169
The receiver shall, at least quarterly, report to the National Bank of Serbia on the financial status and business condition of the insurance company.
The receiver shall, within nine months from the nomination, submit to the National Bank of Serbia a report with an assessment of the economic stability of the insurance company and its future potential. The report shall include:
1) An estimate and a description of the consequences of undertaking the loss coverage of the insurance company by its shareholders;
2) The possibility of eliminating the uncovered loss of the insurance company;
3) The unreported expenditures that might affect the obligations of the insurance company;
4) An estimate of possible measures to eliminate the company’s illiquidity, with an assessment of the costs of its implementation;
5) An estimate of the reasons for initiating the liquidation and/or bankruptcy proceedings against the insurance company.
Initial Capital Increase in Order to Ensure the Economic Stability of an Insurance Company
Article 170
Should the National Bank of Serbia, based on the receiver’s report, estimate that, in order to ensure the solvency margin of the insurance company, and/or to eliminate the reasons for the company’s illiquidity or insolvency, it is necessary to appropriately increase the initial capital through new investments in monies, it may then order the receiver to summon a meeting of the shareholders’ general assembly and propose a rendering of the decision on initial capital increase.
The receiver shall announce the general assembly meeting to decide on the initial capital increase defined in paragraph 1 of the present Article no later than eight days from the receipt of the order of the National Bank of Serbia.
When summoning the general assembly meeting, shareholders must be warned about the legal consequences defined in Article 169, paragraph 2, item 1) of the present Law.
Assessment of the Receiver’s Results
Article 171
The National Bank of Serbia assesses the results of the receiver’s activities at least quarterly.
The National Bank of Serbia provides the final assessment of the results of the receiver’s activities no later than 60 days after receiving the report defined in Article 169 paragraph 2 of the present Law.
Should the National Bank of Serbia estimate that the economic position of the insurance company has improved during the receivership, in such a way as to allow the company to reach the solvency margin defined in Article 122 of the present Law and that the company regularly settles its due obligations, then it shall render a resolution on the termination of the receivership and the dismissal of the receiver.
Should the National Bank of Serbia estimate that during the receivership the economic position of the insurance company has not improved, in such a way as to allow the company to reach the solvency margin defined in Article 122 of the present Law and/or that the company does is not able to regularly settle its due obligations, then it shall render a resolution on withdrawal of the license to engage in insurance activities and initiate liquidation and/or bankruptcy proceedings against the insurance company.
Termination of Receivership
Article 172
The receivership of an insurance company shall terminate on the date:
1) When the insurance company receives the resolution on the termination of the receivership by the National Bank of Serbia;
2) After 12 months from the introduction of the receivership;
3) When the resolution on initiation of the liquidation and/or bankruptcy proceedings is rendered.
Registration of the Receiver
Article 173
The receiver is recorded in the register of the competent authority, according to the law.
Information about the receiver recorded in the register defined in paragraph 1 of the present Article shall include information on the receiver, his/her dismissal and the termination of the receivership.
Possible Cases of Withdrawal of the License to Engage in Insurance Activities
Article 174****
The National Bank of Serbia is entitled to withdraw from an insurance company the license to engage in certain types or all insurance activities if:
1) Irregularities and illegalities are ascertained and further engagement in insurance activities would jeopardize the interest of the policyholders and other consumers of insurance products;
2) The company concludes an insurance brokerage and agency contract with an insurance brokerage and/or agency company or insurance agent not licensed by the National Bank of Serbia;
3) The insurance company does not engage in its activities according to the rules of the insurance profession, sound business standards and business ethics;
4) Reasons for withdrawal of the approval of company acts and operations take place;
5) The company is engaged in its activities in such a way as to violate the policyholders’ and insurance consumers’ rights or the rights of the third parties that suffered damage and/or it does not pay claims or fulfil other obligations;
6) The company has presented false business information or information that might deceive policyholders, insurance product consumers and/or third parties that suffered damage;
7) The company is insolvent based on the report by the certified actuary and/or certified Auditor or the findings of the National Bank of Serbia;
8) The company adopts the financial statements and annual report and/or adopts the business policy acts without a prior discussion over the opinion of the certified actuary;
9) The insurance company did not enable supervision in an appropriate manner;
10) The insurance company did not enable the certified auditor to perform the audit in an appropriate manner;
11) The insurance company did not provide the conduct of certified actuary activities in an appropriate manner;
12) The insurance company did not submit the reports, documents and other information in the manner and within the deadlines determined by the present Law;
13) The insurance portfolio was transferred without the approval of the National Bank of Serbia;
14) The insurance company did not, within the prescribed deadline, implement the measures prescribed by the National Bank of Serbia and/or it did not eliminate the reasons for undertaking such measures;
15)**** (ceased to exist by the Decision of the Constitutional Court)
The withdrawal of the license defined in paragraph 1 of the present Article does not relieve the insurance company from settling its obligations under the concluded insurance contracts.
Withdrawal of a License for Engaging in Insurance Activities
Article 175
The National Bank of Serbia shall withdraw the license for engaging in insurance activities:
1) If the license has been obtained on the grounds of false and inaccurate information;
2) If the insurance company ceases to meet the requirements for obtaining the license to engage in insurance activities;
3) If the number of shareholders of the joint stock insurance company and/or the number of members (policyholders) of the mutual insurance company has decreased below the number defined in Articles 26 and/or 65 of the present Law and has not, within six months, increased up to the prescribed number;
4) If the insurance company engages in activities not licensed by the National Bank of Serbia except for the Article 25 of the present Law;
5) If the insurance company does not maintain the initial capital at the prescribed amount, as defined in Article 28 of the present Law;
6) If the insurance company has failed to set aside, accumulate and maintain technical reserves prescribed by the law;
7) If the insurance company does not ensure the safety of depositing and investment of the insurance assets and/or did not maintain their real value in accordance with Article 113 of the present Law;
8) If the insurance company has failed to adopt or does not enforce the programme of measures to cover the loss and/or deficit according to Article 132 of the present Law;
9) If the insurance company has failed to implement the measures as defined in Article 164 paragraph 1 of the present Law in due time;
10) If the insurance company has failed to pay its contribution to the guarantee fund or does not fulfil the obligations based on the international insurance card or does not fulfil other obligations determined by the law or international contracts;
11) If the receivers have failed to provide the stability and liquidity of the company.
The withdrawal of the license as defined in paragraph 1 of the present Article does not relieve the insurance company from its obligations based on the concluded insurance contracts.
Proposal to Initiate Liquidation and/or Bankruptcy Proceedings
Article 176
The National Bank of Serbia simultaneously with rendering the resolution on withdrawing the license to engage in insurance activities initiates the liquidation or bankruptcy proceedings of the insurance company.
The National Bank of Serbia shall specify the measure to prohibit the company to manage its assets until the bankruptcy and/or liquidation proceedings start, by a resolution on withdrawal of the license to engage in insurance activities.
Article 177*
(Ceased to exist)
Article 178
Provided that the National Bank of Serbia during the supervision over an insurance company determines that it is necessary to declare the temporary measure guaranteeing the protection of the policyholders’ or other insurance consumers’ interests or execution of the resolution on withdrawing the license it shall prescribe the measure.
The temporary measure defined in paragraph 1 of the present Article can order the insurance company to do the following:
1) Not to conclude new insurance contracts or to expand the obligations under the concluded insurance contracts;
2) Not to manage its property without the approval of the National Bank of Serbia;
3) Not to implement the decisions of the management board and general assembly of the company without the approval of the National Bank of Serbia.
The temporary measure lasts until the reasons for its implementation expire but no longer than six months from the date of rendering therein.
4.8. Measures Prescribed to Management Members, Members of the Supervisory Board, Key Functionaries and Qualified Shareholders
Article 179
If the National Bank of Serbia, while engaging in supervision, discovers that a member of management or a member of the supervisory board, key functionary and qualified shareholder violates the provisions of the law and other regulations and general acts and thus causes material damage to the company or illegally gains property or undertakes an operation which is deemed to be bad business practice, the National Bank of Serbia can propose to the insurance company to undertake appropriate measures against that person.
In the cases defined in paragraph 1 of the present Article the National Bank of Serbia may propose:
1) Dismissal and/or termination of employment for the person in the insurance company;
2) Temporal prohibition to engage in insurance activities, until rendering the decision by the competent authority;
3) (Deleted);
4) The person to compensate the insurance company for the damage caused by such illegal actions.
If there are ongoing criminal proceedings for activities defined in paragraph 1 of the present Article against a member of management or the supervisory board, key functionary and qualified shareholder of the insurance company, the National Bank of Serbia may propose the suspension of such a person from the position in the insurance company and the suspension of voting rights on the grounds of shares in the company’s capital, until the criminal proceedings are over.
If a person is suspended or if his/her employment in the insurance company is terminated subject to the measure of the National Bank of Serbia defined in paragraphs 1 and 2 of the present Article, such person shall not be entitled to be a member of management and/or of the supervisory board nor be entitled to participate in the activities of an entity related to the insurance company, in the course of five years from the date of prescribing the measure.
4.9. Application of the Provisions for Conducting the Supervision
Article 180
The provisions of the present Law regarding the procedure and supervision conducted by the National Bank of Serbia shall also apply to the insurance brokerage companies, insurance agencies and/or agents, and agencies for providing other insurance services, companies and other legal entities which have a department with the special purpose of providing other services in insurance as well as to the legal entities which conduct brokerage and agency activities according to the separate law.
4.10. Responsibility for the loss resulting from the execution of the duties established by this Law
Article 180a
National Bank of Serbia and its employees, as well as a person who, by the order of the National Bank of Serbia, executes the duty established by this Law, are not responsible for the loss resulting from the execution of that duty, except if it is proved that the loss was caused intentionally or by extreme carelessness.
The persons from the paragraph 1 of this Article cannot be summoned to responsibility for the loss from this paragraph even after the cessation of their employment in the National Bank of Serbia and/or cessation of executing their duties.
The National Bank of Serbia shall compensate the expenses for representing the employees from the National Bank of Serbia, in court and administrative procedures, started in connection with the duties which are executed or has been executed by these employees based on this Law.
The National Bank of Serbia shall also compensate the expenses from the paragraph 3 of this Article to the persons who are not employed any more in the National Bank of Serbia.
VIII ACTUARY ACTIVITIES AND AUDITING
Certified Actuary
Article 181
According to the present Law, certified actuaries perform actuary activities.
A certified actuary is a person licensed by the National Bank of Serbia to conduct actuarial activities.
The National Bank of Serbia determines terms and conditions for acquiring the title of certified actuary.
The general manager of the insurance company nominates the certified actuary.
Tasks of the Certified Actuary
Article 182
A certified actuary gives opinions on:
1) The method of calculation of premium tariffs;
2) Whether the technical reserves are formed in accordance with the present Law;
3) The business policy acts in the process of their rendering, and/or in the process of amending and implementation of the business policy acts;
4) Financial statements and annual report of the company;
5) Report on carrying out the policy of coinsurance and reinsurance;
6) Whether the mathematical reserve is calculated according to the law;
7) Insurance portfolio transfer.
The certified actuary calculates the solvency margin, and/or gives opinion on the solvency margin, and conducts other actuarial activities according to the law.
The insurance company’s competent authorities are obliged to discuss the opinion of the certified actuary when rendering and/or establishing the regulations as defined in paragraph 1 of the present Article.
The opinion of the certified actuary is submitted to the internal audit and the supervisory board of the company.
The content of the authorized actuary’s opinion is determined by the National Bank of Serbia.
Independence of the Certified Actuary
Article 183
The certified actuary is independent in conducting his/her activities.
The certified actuary conducts his/her activities according to the law, the actuarial profession, sound business practices and business ethics.
Measures to Eliminate Irregularities
Article 184
If the authorized actuary ascertains irregularities in insurance activities, he/she is obliged to propose to the management and supervisory board of the company measures to eliminate the established irregularities.
Obligations of the Insurance Company
Article 185
The insurance company is obliged to ensure that the certified actuary has permanent and undisturbed access to the information on business activities, which are necessary to him/her and which the certified actuary may request in compliance with the conduct of actuarial activities defined in Article 182 of the present Law.
Principle of Incompatibility
Article 186
An individual acting in the capacity of a member of management and/or of the supervisory board and internal auditor in the insurance company, is not entitled to be nominated as the certified actuary.
Supervision over the Certified Actuary’s Activities
Article 187
The National Bank of Serbia supervises the certified actuary’s activities.
If the certified actuary conducting the activities within his/her scope of competence fails to meet the obligations provided herein, the National Bank of Serbia is entitled to announce the following measures:
1) Warning measure;
2) Withdrawal of the certificate.
Warning Measure
Article 188
The National Bank of Serbia may announce the warning measure to the certified actuary if he/she violates the provisions in Article 183, paragraph 2 of the present Law.
Withdrawal of the Certification
Article 189
The National Bank of Serbia may withdraw the certification for engagement in activities of a certified actuary in the following cases:
1) If the certificate has been granted on the grounds of false and inaccurate information;
2) If the certified actuary has been unconditionally sentenced for criminal acts unworthy of the conduct of actuarial activities;
3) If the certified actuary has severely violated, despite the warning measure, the provisions defined in Article 183 paragraph 2 of the present Law.
Nomination of a New Certified Actuary
Article 190
If, following the nomination of a certified actuary, the National Bank of Serbia withdraws the certificate from the nominated person, and/or if circumstances defined in Article 186 of the present Law occur regarding the nominated person, the general manager of the insurance company shall nominate a new certified actuary within 30 days from the date of receipt of the resolution on cancellation of the certificate for engagement in activities of a certified actuary and/or the date of occurrence of the circumstances defined in Article 186 of the present Law.
Informing the National Bank of Serbia of the Rejection of the Certified Actuary’s Opinion
Article 191
If a competent authority of the insurance company does not accept the opinion of the certified actuary, the insurance company is then obliged to inform the National Bank of Serbia therein within 15 days, and provide the reasons for the rejection of the certified actuary’s opinion by the authority.
In the case defined in paragraph 1 of the present Article, the National Bank of Serbia may render a resolution announcing undertaking of appropriate measures.
Reconsideration of the Certified Actuary’s Opinion
Article 192
If a certified auditor establishes that the financial statements of the insurance company do not present the true and actual status of the assets as well as the results of business activities, the insurance company shall within five days submit the report to the certified actuary who provided the opinion on the insurance company financial statements.
The certified actuary shall reconsider the opinion within 30 days from the date of the submitting the report defined in paragraph 1 of the present Article and inform the competent authority of the insurance company that had endorsed the financial statement.
Reconsideration of the Certified Auditor’s Report
Article 193
If the certified actuary does not approve of the report on the performed audit, the insurance company shall, within seven days from the date of receipt of the certified actuary’s opinion, inform the National Bank of Serbia accordingly.
Measures of the National Bank of Serbia
Article 194
The National Bank of Serbia may approve the certified actuary’s opinion or the auditor’s report or have its own opinion and inform the insurance company accordingly.
The National Bank of Serbia renders a resolution ordering the insurance company to eliminate the established irregularities and the insurance company shall act accordingly and inform the National Bank of Serbia therein in writing within 30 days from the date of the rendering of the resolution.
Examination of the Certified Actuary’s Opinion
Article 195
The National Bank of Serbia may, while supervising, request an examination of the certified actuary’s opinion by the certified actuary it appoints, should there be reasons to doubt the accuracy of the certified actuary’s opinion.
The cost of the procedure defined in paragraph 1 of the present Article is covered by the insurance company except for the case when the certified actuary appointed by the National Bank of Serbia confirms the accuracy of the certified actuary’s opinion appointed by the insurance company, in which case the National Bank of Serbia shall cover the costs.
Conduct of Auditing Activities
Article 196
The audit of the financial statements of the insurance company is conducted according to the law governing auditing of financial statements, unless otherwise provided by the present Law.
The National Bank of Serbia defines the content of the audit report of the financial statements of the insurance company.
Information on the Auditor’s Nomination
Article 197
The insurance company shall inform the National Bank of Serbia of its choice of the auditor within seven days from the date of the nomination.
The National Bank of Serbia approves of the nomination of the auditor in the course of 15 days from the date of receipt of the information defined in paragraph 1 of the present Article.
The National Bank of Serbia shall base its decision on the granting of the approval referred to in paragraph 2 of the present Article on the professional qualifications of the auditor and the accuracy and objectivity of the previously submitted reports, that is, on whether the preceding reports of the auditor were produced in compliance with international auditing standards.
Additional Clarifications Provided by the Auditor
Article 198
The National Bank of Serbia may request the auditor to provide additional clarifications on the audit he/she conducted.
Examination of the Certified Audit’s Report
Article 199
The National Bank of Serbia may, while performing supervision, request an examination of the certified auditor’s opinion by a certified auditor it appoints, should there be reasons to doubt the accuracy of the certified auditor’s opinion.
The cost of the procedure defined in paragraph 1 of the present Article is covered by the insurance company except for the case when the certified auditor appointed by the National Bank of Serbia confirms the accuracy of the certified auditor appointed by the insurance company, in which case the National Bank of Serbia shall cover the costs.
Informing the Authority Competent for Supervising the Activities of an Audit Company
Article 200
The National Bank of Serbia shall inform the authority competent for supervision over audit companies of determined omissions and irregularities in the report on performed audit and in the certified auditor’s activities on the occasion of auditing within the insurance company.
The National Bank of Serbia specifically informs the authority defined in paragraph 1 of the present Article on audit companies that provided auditing services to the insurance companies deprived of their license by the National Bank of Serbia as well as of the reasons for withdrawing the license.
Financial Statement and a Short Version of the Financial Statement
Article 201
The insurance companies submit the financial statements, together with the certified audit’s opinion, to the National Bank of Serbia.
Together with the statement defined in paragraph 1 of the present Article, the insurance company shall submit the short version of the financial statement which shall be published by the National Bank of Serbia.
IX TERMINATION OF INSURANCE COMPANIES AND INSURANCE BROKERAGE AND AGENCY COMPANIES AND AGENCIES FOR PROVIDING OTHER INSURANCE SERVICES
Reasons for Termination
Article 202*
In case of the termination of an insurance company, insurance brokerage and agency companies, and agencies for providing other insurance services, the law governing the legal status of companies is applied, if not otherwise provided by the present Law.
A joint stock insurance company is terminated if the number of shareholders is reduced to one, and within six months no new shareholders are registered at the authority which keeps records, and the mutual insurance company - if the number of members (policyholders) is reduced to a number below the number defined in Article 65 of the present Law, and is not increased up to the number within six months.
An insurance company defined in paragraph 1 of ther present Article is terminated by being cancelled from the register.
The resolution on cancellation of an insurance company from the register is published in the "Official Herald of the Republic of Serbia" and in the general media.
Articles 203 - 207*
(Ceased to exist)
Application of the Law on Liquidation and Bankruptcy Proceedings
Article 208*
The liquidation and bankruptcy proceedings against the insurance companies, brokerage companies and insurance agencies and agencies for providing other services in insurance, are governed by the provisions of the law governing liquidation and bankruptcy, if not otherwise provided by the present Law.
X TRANSFER OF THE INSURANCE PORTFOLIO
Application for the Approval of the Transfer of the Insurance Portfolio
Article 209
The insurance company may, upon obtaining the approval of the National Bank of Serbia, transfer the entire insurance portfolio or a portion of it to one or more insurance companies licensed to engage in insurance activities covered by the transferred insurance portfolio, with their consent.
The following documents are attached to the application submitted to the National Bank of Serbia for the transfer of the insurance portfolio:
1) A contract on the transfer of the insurance portfolio which must contain the established type and amount of the technical reserves which are, together with the portfolio, renounced to the insurance company which takes over the portfolio, as well as the deadline for the transfer of the portfolio;
2) A list of insurance contracts to be transferred divided into the different, with general terms and conditions for the particular insurance;
3) An explanation of the reasons for the transfer of the insurance portfolio and the declaration on the expected effects of the transfer of the portfolio;
4) An amendment to the business plan of the insurance company to which the insurance portfolio is transferred which is necessary for the transfer of the portfolio;
5) A report on the financial business of the company transferring the insurance portfolio and of the insurance company to which the portfolio is transferred, together with the opinion of the certified actuary;
6) The certified actuary’s opinion on the transfer of the insurance portfolio.
No approval of the policyholders is necessary for the transfer of the insurance portfolio.
Deciding on the Application for Obtaining the Approval for Transfer of an Insurance Portfolio
Article 210
The National Bank of Serbia shall decide by a resolution on the application specified in Article 209 paragraph 2 of the present Law within 60 days from the date of receipt of the application.
The resolution from paragraph 1 of the present Article is published in the "Official Herald of the Republic of Serbia".
The transfer of the insurance portfolio is effective on the date of rendering the resolution approving the transfer of the insurance portfolio.
The insurance portfolio cannot be transferred to the insurance company taking it prior to the expiry of the terms defined in paragraph 1 of the present Article.
By the resolution on granting approval for transfer of the insurance portfolio, the National Bank of Serbia also decides on the change of the license for engaging in insurance activities for the insurance company which is transferring the portfolio.
Obligations of the Company During the Insurance Portfolio Transfer Procedure
Article 211
The insurance company which transferred the insurance portfolio shall, within 15 days from the receipt of the resolution approving the insurance portfolio transfer, inform the contracting parties whose insurance contracts are included in the insurance portfolio transfer directly in writing or by other media, of the name and address of the insurance company that took over the insurance portfolio and of the date by which the insurance portfolio transfer must be finished.
The policyholder is entitled to terminate the contract in writing, by informing the insurance company that took over the portfolio within 30 days from the date of receipt of the notice as defined in paragraph 1 of the present Article.
Non-life policyholders, in the case defined in paragraph 2 of the present Article, are entitled to the portion of the premium equivalent to the remaining period of insurance, whereas life insurance policyholders are entitled to the amount of the mathematical reserve calculated on the date of the transfer of the insurance portfolio, provided the life insurance funds are sufficient to cover the amount or up to such amount reduced in proportion to the reduction of life insurance funds.
Rejection of an Application for Approval of the Insurance Portfolio Transfer
Article 212
The National Bank of Serbia may reject the application for approval of an insurance portfolio transfer if it estimates that such transfer would jeopardize the capacity of the company taking over the insurance portfolio to meet the obligations arising from the insurance contracts being the subject of the insurance portfolio transfer, or if the liquidity and solvency of the company transferring the insurance portfolio would be jeopardized by the portfolio transfer.
Legal Consequences of the Insurance Portfolio Transfer
Article 213
On the date of the insurance portfolio transfer, the insurance company which took over the portfolio becomes a party to the insurance contracts transferred to it by the portfolio transfer and takes over all rights and obligations thereunder, and the company transferring the portfolio is relieved from its obligations towards policyholders.
A transfer of the insurance portfolio which was not approved by the National Bank of Serbia has no legal effect.
XI STATUTORY CHANGES OF AN INSURANCE COMPANY, ORGANIZATIONAL CHANGES AND INSURANCE COMPANY ASSOCIATIONS
Types of Statutory Changes
Article 214
An insurance company may merge with another insurance company, or split into two or more insurance companies solely upon the approval of the National Bank of Serbia.
Insurance brokerage companies, and/or insurance agencies or agencies providing other insurance services can merge with other brokerage companies, and/or insurance agencies or agencies providing other insurance services or split into two or more brokerage companies, and/or insurance agencies or agencies providing other insurance services, solely upon the approval of the National Bank of Serbia.
Application of the Provisions on Incorporation of an Insurance Company, Insurance Brokerage Company, Insurance Agency and Agency Providing other Insurance Services
Article 215
Statutory changes of the insurance companies specified in Article 214 are regulated by the provisions of the present Law regarding the establishment of such companies.
Organizational Changes
Article 216
Insurance companies, brokerage companies, and/or insurance agencies and agencies providing other insurance services may change their organizational form solely upon the approval of the National Bank of Serbia, in accordance to the law.
Special Regulations for Mutual Insurance Companies
Article 217
A mutual insurance company can change its organizational form to joint stock insurance company provided it meets the requirements for such incorporation, according to the law.
The organizational form change of the mutual insurance company to joint stock insurance company is regulated by the provisions of the law which regulates legal status of enterprises regarding the organizational form change unless otherwise provided by the present Law.
The general assembly of the company renders the decision on the form change of the mutual insurance company.
The decision defined in paragraph 3 of the present Article is rendered by a three-quarter-majority from the total number of the present general assembly’s members, provided no larger qualified majority is determined by the Articles of Association of the mutual insurance company.
A mutual insurance company’s management is obliged to, together with the invitation to the general assembly’s meeting, submit to all general assembly members the draft decision on the organizational form change with the explanation of their right to object to the organizational form change and the information on legal consequences of such an objection.
Each member of the mutual insurance general assembly can, at the latest three days prior to the date determined for the meeting, submit a written objection to the form change.
The National Bank of Serbia approves the decision on the change of form of the mutual insurance company.
The National Bank of Serbia rejects the approval if it determines that the organizational form change of a mutual insurance company may jeopardize the members’ interests.
Decision on form Change of a Mutual Insurance Company
Article 218
The decision on the organizational form change of a mutual insurance company includes the nominal amount of initial capital, share amount and the method of determining the individual contribution of some members in the capital and other elements from the establishment act of the joint stock insurance company.
The nominal amount of the initial capital cannot exceed the value of the assets of the mutual insurance company, reduced by the liabilities of the company on the date of calculation.
If the decision defined in paragraph 1 of the present Article does not specify otherwise, all mutual insurance company members participate in the nominal capital of the joint stock insurance company.
The participation of an individual mutual insurance company member in the joint stock insurance company capital, provided members do not participate with the same amount, can be determined on the basis of the insured amounts, the amount of contributions (premiums) and the amount of required coverage in case of life insurance, criteria for allocation of surplus, and period of membership in the company.
Each mutual insurance company member objecting to the decision on form change is entitled to a refund of his/her participation in the capital.
Application of the Provisions on Establishment of an Insurance Company, an Insurance Brokerage Company, an Insurance Agency and an Agency Providing other Insurance Services
Article 219
Organizational form changes of the companies defined in Article 216 of the present Law are regulated by the provisions of the present Law regarding the establishment of such companies.
Associations of Insurance Companies
Article 220
Insurance companies can join insurance company associations.
The associations as defined in paragraph 1 of the present Article operate according to the law determining the legal status of a company.
Obstruction of Supervision
Article 221**
(Ceased to exist)
Unauthorized Engagement in Insurance Activities
Article 222
Authorized persons in an insurance companies, insurance brokerage companies, insurance agencies, agencies providing other insurance services, enterprises or other legal entities with a special purpose department for providing other insurance services as well as insurance agents, who engage in insurance activities without being licensed by the National Bank of Serbia, shall be sentenced for a criminal offence from three to six years of imprisonment.
False Opinions and Reports
Article 223
Certified actuaries or certified auditors, who, against the provisions of the present Law, give a false opinion and/or report, shall be sentenced for a criminal offence from one to three years of imprisonment.
False Assessment
Article 224
Authorized persons in an insurance company, insurance brokerage company, insurance agencies, agencies providing other insurance services, enterprises or other legal entities with special purpose departments for providing other insurance services, as well as insurance agents, who on the occasion of risk and claims assessment give a false assessment and statement shall be sentenced for a criminal offence of up to three years of imprisonment, or shall be charged with a fine.
Article 225
A fine in the amount of 100,000 to 1,000,000 CSD shall be charged to the insurance company, reinsurance company, insurance brokerage company, insurance agency, agency providing other insurance services, enterprises or other legal entities with a special purpose department for providing other insurance services or a legal entity which conducts insurance brokerage and agency activities in accordance to a special law:
1) If it does not reinsure the obligations from the insurance, and/or reinsurance contract over the self insured retention and/or does not retain a portion of the risk in self insured retention (Article 15 paragraphs 1, 3, 4 and 5);
2) If it conducts insurance brokerage and agency activities without being previously registered by the National Bank of Serbia (Article 24, paragraph 2);
3) If it has a cross-ownership of shares in capital or voting rights with another joint stock insurance company, joint stock reinsurance company, insurance brokerage company, insurance agency, agency providing other insurance services, enterprise or other legal entity with a special purpose department for providing other insurance services (Article 31);
4) If it gains the qualified share in an insurance company without the approval of the National Bank of Serbia, and/or if it does not inform the National Bank of Serbia of a decrease in ownership in the company’s capital (Article 32);
5) If it does not submit or does not promptly submit the register to the National Bank of Serbia (Article 42 paragraph 3, article 71, Article 80 paragraph 3, Article 99 and Article 105);
6) If it nominates members of the management and members of the supervisory board without the approval of the National Bank of Serbia (Article 48 paragraph 1);
7) If it enables members of management or of the supervisory board to continue with the function after the National Bank of Serbia has withdrawn the approval of the nomination, and/or if it does not dismiss the member, and/or members of the management or of the supervisory board when ordered to do so by the National Bank of Serbia and if it does not nominate new ones (Article 49, paragraphs 1 and 2);
8) If it does not seek the approval of the National Bank of Serbia on the draft decision to change the name and address (Article 57 paragraph 1);
9) If it does not seek the approval of the National Bank of Serbia for the investment providing the direct or indirect qualified share in another entity, as well as for any further investments in such a legal entity (Article 59 paragraph 1);
10) If it does not inform policyholders of all legal and economic relationships with the insurance company which may affect the impartiality of the insurance brokerage company in fulfilling its obligations towards policyholders (Article 85 paragraph 1);
11) If it does not keep the agency contract in its office (Article 96 paragraph 1);
12) If it does not pay and/or deliver financial resources and other instruments of payment and collateral (Article 97, paragraph 1);
13) If it does not calculate technical reserves or does not calculate them as prescribed (Article 107);
14) If it does not deposit or invest technical reserves according to the prescribed methodology and does not inform the National Bank of Serbia of that within a specified time period (Articles 113 to 115 and Article 117);
15) If it does not deposit or invest the guarantee reserves according to the prescribed methodology and does not inform the National Bank of Serbia of that within a specified time period (Article 118);
16) If it does not invest and deposit insurance assets according to the prescribed methodology (Article 119);
17) If it does not calculate the solvency margin according to the prescribed methodology and does not maintain it in the prescribed amount (Articles 120 to 122);
18) If it does not enact the programme of measures to equalize the guarantee reserves and solvency margin and/or does not submit it to the National Bank of Serbia within the prescribed time periods (Article 124);
19) If it does not inform the National Bank of Serbia of loss and/or deficit and does not submit the programme for loss and/or deficit coverage to the National Bank of Serbia within the prescribed time periods (Article132 paragraph 2);
20) If it does not calculate the profit and/or surplus, and loss and/or deficit according to the prescribed methodology (Article 133);
21) If it does not organize internal auditing according to the prescribed methodology (Articles 135 and 136);
22) If it does not report to the National Bank of Serbia in accordance with the prescribed methods or time periods (Articles 156 to 160);
23) If it does not eliminate established illegalities and irregularities within the prescribed deadline and does not inform the National Bank of Serbia of the matter within the prescribed time period (Articles 162 and 163);
24) If it does not implement the resolution of the National Bank of Serbia on temporary measure (Article 178);
25) If it does not provide to the certified actuary constant and unobstructed access to business information necessary to conduct the actuarial activities and which the certified actuary requests (Article 185);
26) If it does not inform or does not promptly inform the National Bank of Serbia that its competent authority did not adopt the opinion of the certified actuary (Article 191 paragraph 1);
27) If it does not submit the report of the certified auditor to the certified actuary or if it does not submit the report within the prescribed time period (Article 192 paragraph 1);
28) If it does not inform the National Bank of Serbia that the certified actuary did not accept the opinion of the certified auditor (Article 193);
29) If it does not inform the National Bank of Serbia, within the prescribed time period, on the nomination of the auditor (Article 197 paragraph 1);
30) If it does not submit the financial statement or the short version of the financial statement (Article 201);
31) If it did not start the process of life insurance contracts transfer to another insurance company (Article 203);
32) If, without the consent of the National Bank of Serbia, it transfers the insurance portfolio or a portion of the insurance portfolio to another insurance company (Article 209 paragraph 1);
33) If it does not inform the insurance policyholders of the insurance portfolio transfer in accordance with the prescribed methodology and time period (Article 211 paragraph 1);
34) If it does not obtain the consent of the National Bank of Serbia to change the organizational form of the company and/or the agency (Article 216).
The authorized person in the legal entity shall be fined from 10,000 to 50,000 CSD for each of the offences defined in paragraph 1 of the present Article.
Article 226
A fine in the amount of 10,000 to 50,000 CSD shall be charged:
1) To the member of management of the insurance joint stock company if he/she does not inform the supervisory board or the National Bank of Serbia within the prescribed time period of the prescribed information (Article 52 paragraph 3);
2) To the member of the supervisory board of the joint stock insurance company if he/she does not inform the National Bank of Serbia within the prescribed time period with the prescribed information (Article 54 paragraph 1);
3) To the insurance agent if he/she does not submit to the National Bank of Serbia or does not promptly submit the resolution on registering with the competent management authority (Article 94 paragraph 3) and/or if within the prescribed time period it does not pay and/or deliver financial resources and other instruments of payment and collateral (Article 97, paragraph 1);
4) The person engaged in the activities of internal auditing if he/she does not conduct the internal auditing according to the prescribed methodology (Article 138 paragraph 5);
5) The receiver if the receivership does not submit the report to the National Bank of Serbia or does not submit it promptly (Article 169);
6) The receiver if the receivership does not summon or does not summon promptly the general assembly of the insurance company (Article 170 paragraph 2);
7) The certified actuary if he/she does not propose to the management or the supervisory board of the insurance company the measures to eliminate the determined irregularities (Article 184) or does not review his/her opinion or does not do so within the prescribed period or does not inform the competent authority of the insurance company which adopted the financial report of his/her opinion (Article 192 paragraph 2);
8) The general manager of the joint stock insurance company if he/she does not inform the National Bank of Serbia of the circumstances defined in (Article 52 paragraph 2 of the present Law, or does not nominate the certified actuary or a new certified actuary in the prescribed time period (Article 181 paragraph 4 and Article 190).
Article 227
A fine in the amount of 10,000 to 50,000 CSD shall be charged to the legal entity for the offence of using the term "insurance" or the term derived from the term "insurance" in the name of the company and/or in the name of its products or service in breach of the terms defined in the present Law (Article 19).
A contractor using the term "insurance" or a term derived from the term "insurance" in the name of the company and/or in the name of its product or service in breach of the terms defined in paragraph 1 of the present Article in the present Law shall be charged for the offence (Article 19).
The National Bank of Serbia
Article 228
The National Bank of Serbia shall employ the personnel from the ministry in charge of finance (hereinafter referred to as: Ministry) who were in charge of the property and personal insurance business in the Ministry on the day the present Law came into force, and it shall take over the equipment, archives and other documents and office supplies used in conducting insurance business.
In the procedure of supervision over insurance activities established by this Law, the National Bank of Serbia can also control the dealings of supervision subjects which have been started until the day of entering into the force of this Law, if these dealings are in progress.
Current Insurance Companies and other Legal Entities
Article 229
Insurance companies, reinsurance companies, and agencies providing other insurance services and other legal entities with special purpose departments for providing other insurance services established by the effective date of the present Law shall continue to operate according to the methodology and conditions from their registration and they shall continue to engage in the activities they were licensed for by the competent federal authority in charge of finance.
The insurance companies and other organizations defined in paragraph 1 of the present Article must organize and adjust their Articles of Association and other general regulations and business policy acts according to the provisions of the present Law within one year as of the day the present Law came into force, if the deadlines for the adjustment are not otherwise regulated.
The entities defined in paragraph 2 of the present Article are obliged to submit to the National Bank of Serbia the documents defined in the paragraph within 15 days from the date of their adoption.
Approval for the Position of a Member of the Management and of the Supervisory Board
Article 230
The members of management and of the supervisory board of the insurance companies and other entities defined in Article 229 paragraph 1 of the present Law must obtain approval to engage in the activities of members of the management and/or of the supervisory board, according to the provision of the present Law, within one year from the day the present Law comes into force.
Harmonizing the License to Engage in Insurance, Brokerage and Agency Activeties
Article 231
Insurance companies and other entities defined in Article 229 paragraph 1 of the present Law must, prior to changing the registration information, submit to the National Bank of Serbia evidence that the conditions prescribed by the present Law have been fulfilled regarding the issues of the harmonization of the organization, Articles of Association and other general regulations and business policy acts with the present Law.
The National Bank of Serbia shall render a resolution stating whether the conditionson the incorporation of the entities as defined in paragraph 1 of the present Article have been fulfilled as prescribed by the present Law, within 60 days from the date of receiving the necessary documents.
Special Purpose Department for Providing other Insurance Services
Article 232
Companies and other entities with a special purpose department for providing other insurance services defined in Article 43 of the Property and Personal Insurance Law ("Official Gazette FRY", no. 30/96, 57/98, 53/99 and 55/99) must harmonize their status, organization and regulations within the provisions of the present Law within one year from the effective date of the present Law.
If the entities defined in paragraph 1 of the present Article do not act according to the provision defined in that paragraph, their license for engagement in providing other insurance activities shall be withdrawn.
In cases defined in paragraph 2 of the present Article, the National Bank of Serbia shall propose the elimination of such activities from the registration of the entities.
Pecuniary Portion of Initial Capital
Article 233
Insurance and reinsurance companies and other entities defined in Article 229 of the present Law established prior to the effective date of the present Law are obliged to provide the pecuniary portion of the initial capital as defined in Articles 28, 76, 91, 102 and 104 of the present Law and according to the following method; two thirds in the course of six months from the day the present Law comes into force and the total prescribed amount by December 31st, 2005.
Insurance companies and other entities as defined in paragraph 1 of the present Article are obliged to, prior to registering the change in the initial capital, submit to the National Bank of Serbia evidence of fulfilling the conditions determined by the present Law regarding the pecuniary portion of the initial capital and its structure.
Based on the documents submitted by the entities as defined in paragraph 1 of the present Article, the National Bank of Serbia is obliged to evaluate whether the conditions determined by the present Law have been fulfilled in the course of 30 days from the date of receipt of the necessary documents.
Separation of Life and Non-Life Insurance
Article 234
Insurance companies which on the day of the present Law coming into force possess a license to engage in insurance activities are obliged to perform appropriate changes in their status and business activities by December 31st 2014 according to Article 14 of the present Law.
Insurance organizations and/or companies shall submit to the National Bank of Serbia within the time frame defined in paragraph 1 of the present Article the evidence of the separation of life and non-life insurance activities.
Based on the evidence defined in paragraph 2 of the present Article the National Bank of Serbia must evaluate whether the conditions prescribed by the present Law have been fulfilled within 30 days from the date of receipt of the evidence.
Separation of Insurance and Reinsurance
Article 235
Insurance companies which on the day of the present Law coming into force possess a license to engage in reinsurance activities must separate insurance and reinsurance activities by December 31st, 2009.
Insurance and/or reinsurance companies shall submit evidence of the separation of insurance and reinsurance activities to the National Bank of Serbia within the time limit defined in paragraph 1 of the present Article.
Based on the documents submitted by the entities defined in paragraph 2 of the present Article the National Bank of Serbia shall evaluate whether the conditions prescribed by the present Law have been fulfilled within 30 days from the date of receipt of the evidence.
Engaging in Health and Pension Insurance Activities
Article 236
Insurance organizations that were licensed to engage in health and pension insurance activities up to the day of the present Law coming into force will continue to act according to the provisions of the present Law up to the implementation of the special law regulating the voluntary pension and disability insurance and/or voluntary health insurance.
Obligation of Harmonizing Assets and Activities
Article 237
Insurance companies shall harmonize their activities with the provisions of Articles 30 to 33 of the present Law by December 31st, 2004 and/or with the provisions of Articles 114 to 118, 120 and 122 of the present Law by December 31st, 2005.
Insurance companies shall submit to the National Bank of Serbia the evidence of the harmonization of assets and activities within the time limit as defined in paragraph 1 of the present Article.
Based on the evidence defined in paragraph 2 of the present Article the National Bank of Serbia must evaluate whether the conditions prescribed by the present Law have been fulfilled within 30 days from the date of receipt of the evidence.
Withdrawing the License
Article 238
If an insurance company and other entities defined in Article 229 of the present Law do not abide by the provisions defined in Articles 229 to 237 of the present Law, their license shall be withdrawn.
In the case defined in paragraph 1 of the present Article, entities defined in Article 229 of the present Law, except for the legal entities which have a special department for providing other insurance services, cease to operate, and then the competent court, after liquidation proceedings are complete, shall delete them from the register.
Deadline for Rendering Regulations to Implement the Present Law
Article 239
The regulations to implement the present Law shall be adopted in the course of six months from the day the present Law comes into force except for the regulation defined in Article 39 of the present Law that shall be adopted within 60 days from the day the present Law comes into force.
Until the rendering of the regulations as defined in paragraph 1 of the present Article, the regulations rendered according to the Property and Personal Insurance Law ("FRY Official Gazette" No. 30/96, 57/98, 53/99 and 55/99) except for the provisions contradictory to the provisions of the present Law shall be in effect.
Until the adoption of the regulations as defined in Article 134 paragraphs 2 and 3 of the present Law, the following regulations shall be applied:
1) Regulation on Chart of Accounts and Contents of the Accounts within the Chart of Accounts for Insurance Organizations ("FRY Official Gazette", No. 19/97);
2) Regulation on Forms and Contents of Items in the Balance Sheet and Income Statement Forms for Insurance Organizations ("FRY Official Gazette", No. 19/97);
3) Regulation on Report on Distribution of Results and Covering the Loss ("FRY Official Gazette", No. 5/02);
4) Regulation on Additional Accounting Report – Annex ("FRY Official Gazette", No. 28/97, 3/98 and 5/02);
5) Regulation on Form and Contents of Items in the Cash Flow Balance Form for Insurance Organizations ("FRY Official Gazette", No. 64/98).
Certified Actuaries
Article 240
Persons licensed as certified actuaries prior to the day of the present Law coming into force and according to the provisions and regulations effective at the time shall be considered certified actuaries according to the provisions of the present Law.
Certified Brokers and Certified Agents
Article 241
Upon the request and submitted evidence by persons with at least three years of experience as brokers and agents in insurance prior to the implementation of the present Law, the National Bank of Serbia shall, based on their request and submitted evidence, approve the certifications for certified brokers and/or certified agents in insurance and register them on the list of certified insurance brokers and/or agents.
The requests defined in paragraph 1 of the present Article can be submitted within one year from the day the present Law comes into force.
Apart from the conditions defined in paragraph 1 of the present Article, the persons who are certified as brokers and agents in insurance must fulfil the conditions defined in Articles 82 and 95 of the present Law.
Upon the request from the persons defined in paragraph 1 of the present Article, insurance organizations and agencies providing other insurance activities and other legal entities shall issue the relevant certificates proving work experience with the appropriate documents on activities regarding the conclusion of insurance contracts, claim settlements and other insurance activities and/or activities directly related to insurance contract conclusions and executions.
Commenced Procedures
Article 242
Commenced procedures for licenses and approvals prior to the day the present Law comes into force shall be completed according to the provisions of the present Law.
Privatization of Insurance Companies
Article 243
The subject of privatization is the socially owned and/or state owned capital in insurance companies registered in shares (hereinafter referred to as: the capital).
The insurance companies has the obligation to register the capital from the paragraph 1 of this Article in shares and enter these shares into the Central Register, Depot and Securities Clearing.
The property or part of the property of the insurance company may be sold in the privatization procedure, in the manner and subject to terms and conditions prescribed by the present Law.
The procedure for the privatization of the capital referred to in paragraph 1 of the present Article shall be initiated by a decision of the Ministry.
The Deposit Insurance Agency founded under a special law (hereinafter referred to as: the Agency) shall organize and conduct the procedure for the privatization of the capital referred to in paragraph 1 of the present Article.
The Ministry shall supervise the conducting of the procedure referred to in paragraph 5 of the present Article.
Article 243a
In the procedure of privatization, 70% of the socially owned capital which is under the procedure of privatization in the insurance company (hereinafter referred to as: the subject of privatization) shall be sold.
The Agency shall be authorized to conduct the procedure for the sale of parts of the property of the insurance company operating with socially owned capital if it assesses that the privatization procedure would be conducted more efficiently in that manner.
The real estate or movables directly employed for the performance of activity of the subject of privatization may not be the subject of sale as defined in paragraph 2 of the present Article.
The sale of capital, that is property or parts of property referred to in paragraphs 1 and 2 of the present Article, shall be conducted through the public tender method.
The government shall prescribe the procedure for the sale of capital and property referred to in paragraph 4 of the present Article.
Article 243b
The Agency shall conclude a contract on the sale of the capital referred to in Article 243a of the present Law with the buyer. The contract shall be deemed entered into after being signed by the Agency and the buyer.
The buyer shall obtain ownership of the capital referred to in Article 243a, paragraph 1 of the present Law subject to the provisions of the contract on the sale of capital.
Article 243c
The sale and purchase price quoted in the contract on the sale of capital referred to in Article 243b, paragraph 1 of the present Article shall be paid to the credit of the account of the Agency.
The funds referred to in paragraph 1 of the present Article shall be used to settle sale expenses incurred in the privatization procedure and special compensation realized by signing the agreement on selling the capital and property (provision).
Sale expenses as defined in paragraph 2 of the present Article shall mean the expenses for the engagement of financial and legal advisors in the privatization procedure, fees for the announcement of public invitations and other information of consequence for conducting the privatization procedure, as well as other expenses incurred in the privatization procedure.
The minister in charge of finances shall decide about the amount of provision referred to in paragraph 2 of this Article.
Article 243d
(Deleted)
Article 243e
The Agency shall pay, to the Republic of Serbia budget account, the funds realized by selling the capital, after the settlement of sale expensessubject to Article 243c paragraph 2 of this Law and assignment of 10% amount of the realized purchase/sale price for the requirements of the insurance guarantee fund.
The funds referred to in paragraph 1 of the present Article paid to the credit of the Republic of Serbia budget account shall be allocated pursuant to relevant provisions of the law governing privatization.
Article 243f
The Agency shall also organize and conduct the procedure for the sale of shares of insurance companies owned by the Republic of Serbia, Fund for the Development of the Republic of Serbia and the Republic Fund for Pension and Disability Insurance.
The Agency shall organize and conduct the procedure for the sale of other shares of insurance companies when the legal holders of such shares authorize the Agency by a special written contract to conduct the sale of such shares in their name and for their account to a third party.
The Agency shall conclude a contract on the sale of the shares referred to in paragraphs 1and 2 of the present Article. The contract shall be deemed entered into after being signed by the Agency and the buyer of the shares.
The shares referred to in paragraphs 1 and 2 of the present Article shall be sold through public tender method subject to the regulation referred to in Article 243a, paragraph 5 of the present Law.
Article 243g
The insurance company operating with socially owned and/or state owned capital may not, without prior approval of the Agency, pass decisions on the reduction or increase of capital, reorganization or restructuring, investment, sale of part of property, encumbering of property by pledge of assets or mortgage, long-term lease, composition with creditors, taking or granting of loans or issuance of guarantees, outside the course of regular business operations.
The decisions passed in breach of the provision of paragraph 1 of the present Article shall be annulled by the Agency.
Article 243h
Unless otherwise provided by the present Law, the provisions of the law governing the privatization of socially owned and state owned capital in enterprises and other legal entities , save for the provisions regarding the transfer of capital free of charge, shall be applied to the procedure for the privatization of the capital in insurance companies.
Reporting to the National Bank of Serbia
Article 244
Until June 30th 2005, the provisions of Articles 113, 115, 118 and 157 of the present Law shall be applied in such a way that the insurance companies and other entities defined in Article 148 of the present Law shall semi-annually report to the National Bank of Serbia on the prescribed information and information starting from the day the present Law comes into force.
Termination Date
Article 245
On the day the present Law comes into force, the Property and Personal Insurance Law ("FRY Official Gazette" No. 30/96, 57/98, 53/99 and 55/99) will be null and void except for the provisions on compulsory insurance (Articles 73 to 108, Articles 111 and 112) and provisions on public authorizations (Articles 143 to 146).
From the day the present Law comes into force, the provisions of Articles 6 and 28 of the Accounting and Auditing Law ("FRY Official Gazette" No. 71/2002) shall not be applied in the part referring to insurance organizations.
Deferred Application
Article 246
The provision of Article 119, paragraph 2 of the present Law shall be applied as of January 1st 2007.
Implementation
Article 247
The present Law shall come into force on the eighth day following the day of its publication in the "Official Herald of the Republic of Serbia".
Independent Articles of the Law on Amendments and Supplements
to the Insurance Law
("Official Herald of the Republic of Serbia", No. 61/2005)
Article 37
For the purpose of the present Law, it shall be deemed that the Agency has given its approval of the decisions of the insurance company operating with socially owned or state owned capital on the reduction or increase of capital, reorganization or restructuring, investment, sale of part of property, encumbering of property by pledge of assets or mortgage, long-term lease, composition with creditors, taking or granting of loans or issuance of guarantees, outside the course of regular business operations, if such insurance company has obtained prior approval of such decisions pursuant to Article 398a of the Law on Enterprises ("FRY Official Gazette", no. 29/96, 33/96, 29/97, 59/98, 74/99, 9/01 and 36/02) before the date of the present Law coming into force.
Article 38
The present Law shall come into force on the day following the day of its publication in the "Official Herald of the Republic of Serbia".
Independent Articles of the Law
on Amendments and Supplements
to the Insurance Law
("Official Herald of the Republic of Serbia", No. 101/2007)
Article 25
The provisions of the Articles 1 and 2 of this Law shall be applied at the expiration of five years from the day when the Republic of Serbia joins the World Trade Organization, and provisions of the Article 3, Article 10 paragraph 2 and Article 13 paragraph 2 of this Law from the day when the Republic of Serbia joins the World Trade Organization.
Article 26
The procedures of privatization of insurance companies which have been started until the day of entering into force of this Law shall be completed acording to the provisions of this Law.
Article 27
This Law shall enter into force on the eight day from its publishing in the "Official Herald of the Republic of Serbia".
Independent Article of the Law on Amendments
to the Insurance Law
("Official Herald of the Republic of Serbia", No. 107/2009)
Article 2
This Law shall enter into force on the day after its publishing in the "Official Herald of the Republic of Serbia".
Independent Article of the Law on
Amendments to the Insurance Law
("Official Herald of the Republic of Serbia", No. 99/2011)
Article 2
The present law shall enter into force on the eighth day after the day of its publishing in the "Official Herald of the Republic of Serbia".
Independent Article of the Law on
Amendments
to the Insurance Law
("Official Herald of the Republic of Serbia", No. 116/2013)
Article 3
The present law shall enter into force on the day that follows the day of its publication in the "Official Herald of the Republic of Serbia".