RESOLUTION OF THE NATIONAL COMMISSION ON THE FINANCIAL MARKET OF THE REPUBLIC OF MOLDOVA

of December 20, 2013 No. 60/5

About approval of the Regulations on gradualness of the penalties imposed to the insurer (overcautious person) or the insurance and/or reinsurance broker

For the purpose of execution of provisions of Art. 54 of the h. (2) the item c) the Law No. 407-XVI of 21.12.2006 "About insurance" (The official monitor of the Republic of Moldova, 2007 No. 47-49, of the Art. 213), with subsequent changes and amendments, the National commission on the DECIDES: financial market

Approve Regulations on gradualness of the penalties imposed to the insurer (overcautious person) or the insurance and/or reinsurance broker according to appendix.

Appendix

to the Resolution of the National commission on the financial market of December 20, 2013 No. 60/5

Regulations on gradualness of the penalties imposed to the insurer (overcautious person) or the insurance and/or reinsurance broker

1. The regulations on gradualness of the penalties imposed to the insurer (overcautious person) or the insurance and/or reinsurance broker (further - the Provision) are developed for the purpose of maintenance of level of financial stability of the insurer (overcautious person), non-admission of deterioration in its financial position, and also the prevention of infringement of legitimate rights and interests of the insurers who were injured persons and/or beneficiaries owing to violation by the insurer the operation or failure to act of provisions of the legislation in insurance field.

2. This Provision establishes gradualness of the penalties imposed to the insurer (overcautious person) or the insurance and/or reinsurance broker for violation of the law in insurance field, considering influence on stability of insurance activity in the Republic of Moldova, interest of insurers, risk profile of the insurer, the practiced categories of insurance, degree of social danger of act, circumstance of its making, the pursued purpose and influence of committed violation.

3. Intended or accidental violation of provisions of the legislation in insurance field is punished by action or failure to act:

1) restriction of transactions with the way:

a) restrictions for a certain time amount of the added awards on all classes or on some classes of insurance this amount did not exceed certain level;

b) prohibitions of renewal of insurance contracts on which effective period, or, on circumstances, only separate insurance agreements which are directly determined by the decision on punishment imposing expires;

c) prohibitions of the conclusion of new insurance contracts (reinsurance) and receipt of the corresponding awards in the period which is directly established in the decision on punishment imposing;

d) prohibitions of implementation by the insurer (overcautious person) of certain investments;

2) imposing of penalty on officials of the insurer (overcautious person) or the insurance and/or reinsurance broker;

3) imposing of penalty at the rate to 1 percent of the minimum authorized capital on the insurer (overcautious person);

4) imposing of penalty at the rate to 20 percent of the minimum authorized capital on insurance and/or the reinsurance broker;

5) suspension and/or revocation of license;

6) the instruction to the insurer (overcautious person) or the insurance and/or reinsurance broker to terminate orders with insurance agents and subagents or broker assistants.

4. In case of assignment of punishment the National commission on the financial market (further - the National commission) shall:

1) to estimate violation consequences on:

a) rights of insurers and beneficiaries;

b) financial stability of the insurer (overcautious person), in particular, and insurance market, generally;

c) risk profile of the insurer (overcautious person) - the description of risks to which the insurer/overcautious person is subject. The risk profile reflects nature of risks which threaten the insurer, depending on complexity of activities and from its strategic objectives;

2) to consider the following aspects:

a) the practiced categories of insurance;

d) severity of committed violation;

e) degree of social danger of act;

f) violation duration;

g) circumstances of making of violation;

h) method and means of making of the established violation;

i) number and type of violations;

j) the pursued purpose;

k) personal and real circumstances of making of violation;

l) notes and arguments of the insurer (overcautious person) or insurance and/or reinsurance broker of the violations which are rather established in the inspection statement;

m) the ascertainings stated in the inspection statement;

n) extent of cooperation of the insurer (overcautious person) with the National commission for the purpose of correction of the established violations;

o) frequency of violations;

p) reasons of timeliness, assessment and analyses relating to the established violations having influence on activities of the insurer (overcautious person) or insurance and/or reinsurance broker.

5. The established punishment shall be proportional severity and influences of committed violation.

6. Measurement of severity of act shall be performed by impact assessment of committed violation on interests of insurers, on solvency, liquidity and duration of activities of the insurer (overcautious person) or insurance and/or reinsurance broker from the point of view of the consequences and aspects determined by item 4.

7. Circumstances of making of violations and behavior of the insurer (overcautious person) or insurance and/or reinsurance broker shall be analyzed on the basis of risk profile of the insurer (overcautious person), procedures of the prevention of the risks and the technician of their reduction provided by the instructions of the legislation (relating to the minimum regulations of activities of internal control, prudential regulations of management of the insurer, internal system of administration of petitions, regulations of the prevention and anti-money laundering and financing of terrorism by means of the insurance market, to procedures of internal control), own internal system of management of risk which shall correspond to type and the sizes of each insurer.

8. The violations made by the insurer (overcautious person) are punished by penalty at the rate to 1 percent of the minimum authorized capital of the insurer (overcautious person) according to the fork of penalty consisting of the following steps:

1) in the amount of percent 0,01 to percent 0,25;

2) in the amount of percent 0,26 to percent 0,5;

3) in the amount of percent 0,51 to percent 0,75;

4) in the amount of percent 0,76 to 1 percent.

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