site.btaDeputy Chairperson of Financial Supervision Commission Agayn Resigns over Insurance Problems Caused by Bankruptcy of Cyprus-registered Olympic Insurance Company Ltd.

Deputy Chairperson of Financial Supervision Commission Agayn
Resigns over Insurance Problems Caused by Bankruptcy of
Cyprus-registered Olympic Insurance Company Ltd.


Sofia, August 21 (BTA) - Deputy Chairperson of Financial
Supervision Commission (FSC) Ralitsa Agayn, who is in charge of
insurance supervision, has resigned. Agayn announced her
resignation to reporters on Tuesday, on her way to an
extraordinary sitting of Parliament demanded by the opposition
Bulgarian Socialist Party (BSP). On the agenda of the sitting
was a resolution on the case of the bankrupt Cyprus-registered
Olympic Insurance Company Ltd. and a hearing of Prime Minister
Boyko Borissov in connection with a recent crash of the
Commercial Register.

Agayn's resignation was approved in a 138-3 vote with three
abstentions.

"This is my emotional and moral commitment to the people," Agayn
 said. She stressed that all powers the FSC has at its disposal
have been applied to the case, "and there has been no omission
in the opportunities whereby the FSC can influence the
situation". 

The bankruptcy of the Olympic Insurance Company Ltd. left some
200,000 Bulgarians without compulsory motor third party
liability insurance. This, and a week-long crash of the
Commercial Register, prompted the BSP to demand the
extraordinary sitting of Parliament on Tuesday.

Agayn Sets Out Insurance Case in Parliament

Speaking in the plenary chamber, Agayn was adamant that the FSC
has not omitted anything, nor are there gaps in the Bulgarian
legislation, which have impacted in any substantial way the
interests of the Bulgarian citizens.

In her words, the FSC has performed strictly everything in the
European legislation. "Regretfully, more than 200,000 Bulgarians
 will sustain losses from the fact that their insurance policies
 were terminated as a result of Olympic's bankruptcy," she said.
 

Due compensations under Olympic insurance policies will be paid.
 However, members of the public will not be indemnified from a
guarantee scheme and will have to wait for the liquidation
procedure in Cyprus to receive compensations.

Agayn said that two steps are needed for people to be paid
compensations. The first is for the competent court in Cyprus to
 declare the insurer in liquidation. According to preliminary
information, the court is expected to have a sitting in the
middle of September. The liquidator's steps for payment of
compensations are expected to start hence. The second step is to
 agree on the mechanisms on how the money will be paid between
the Bulgarian and Cypriot insurance guarantee funds.

Agayn said that 197,000 policies were terminated on August 17.
The bulk of these were with deferred payments by the customer,
so that people will not pay their next instalment, which reduces
 the loss. However, 29,000 people have paid more, and in some
case the average loss will reach 200 leva per person.

Agayn said that the Cyprus-registered Olympic Insurance Company
Ltd. did business in Bulgaria since 2009 and to date, the FSC
has not been alerted by customers about problems.

Citing data from the guarantee fund, Agayn said that Olympic's
price of the motor third party liability insurance was 196 leva
until November 11, 2017, against an average market price of 179
leva. After November 11, 2017, Olympic's price was 207 leva, and
 the average market price was 196 leva.

Agayn said that a notification from Cyprus about withdrawal of
Olympic's license was received on May 10, 2018. She submitted a
report on the case, whereby the FSC acted on the same day and
banned the sale of new policies. The decision was published on
the website of the FSC and later, in the State Gazette.

Agayn said that 618 insurance companies conduct business in
Bulgaria at the moment. She said that in the EU there is not a
mechanism to indemnify customers in the event of bankruptcy of
an insurer, and that twelve EU member states do not have
guarantee funds.

Finance Minister Goranov

Finance Minister Vladislav Goranov said in the plenary chamber
that Bulgaria's compensation fund (part of the guarantee fund)
can be used in the event of a bankruptcy of Bulgarian insurers
pnly. "If you conclude a contract with a non-Bulgarian company,
the risk of losing your policy is real and there is no way to
cover it," Goranov said, adding that this had not been explained
 to the Bulgarian citizens. The Finance Minister said that if it
 is decided to cover such a risk of a company that did not pay
guarantees for it, this will be at the detriment of Bulgarian
companies which are obliged to pay in money in the fund.

Goranov said that that the position of his Ministry agrees with
the idea that the losses of the Bulgarian holders of Olympic
insurance policies are to be covered from the Cypriot guarantee
fund. The Minister reprimanded the FSC that it did not complete
the work on an agreement with the Cypriot guarantee fund "so
that now the Bulgarians with insurance policies from that
company could have got their money back without problems". He
said that the Bulgarian guarantee fund serves only as
"transmission" of the claims and is sending them to the Cypriot
guarantee fund.

Prime Minister Borissov

The Prime Minister proposed that a working group be created in
Parliament, comprising experts from all political groups, which
is to discuss and come up with a solution on how to compensate
the 200,000 Bulgarians with Olympic insurance policies.

Borissov said the experts are to align their terminology, and
agree on where the money will be provided for the compensations.
 

The Prime Minister stressed that the FSC is an independent body
elected by and reporting to Parliament.

Parliament Passes Resolution

In a 107-5 vote and 39 abstentions, Parliament tasked the
ministers of foreign affairs and of finance, and the FSC, to
undertake steps to find opportunities for rendering assistance
(including legal aid) to the persons holding Olympic insurance
polices.

Also, the FSC is to present a report to Parliament on the
supervision it performed in respect of Olympic Insurance Company
 Ltd., about the ownership of the company and the contributions
the insurer paid in the guarantee fund, as well as the current
situation with the fund.

The ministers of foreign affairs and of finance have until
September 7 to inform Parliament of the undertaken steps, and
the FSC, to submit its report.

In a 73-26 vote with 74 abstentions the majority in Parliament
rejected a motion of the BSP for undertaking steps to find
opportunities to refund the money paid for the Olympic insurance
 policies and guarantee the rights of the persons holding such
policies. Arguing that the passed proposal and the rejected one
differed only in one aspect, namely that GERB suggested
rendering of legal aid, while the BSP, refunding the money paid
for the insurance policies, BSP MP Dragomir Stoynev demanded
separate votes of the items, but this was rejected.

Meanwhile, Ombudsman Maya Manolova sent a letter to Cyprus'
Financial Ombudsman Pavlos Ioannou, asking for his cooperation.
 
She wrote that all claims to the insurer must be made under
Cypriot legislation. Under Bulgaria's Insurance Code, Olympic's
Bulgarian Branch Office, being a member of the Council of the
Guarantee Fund, was obliged to make contributions, but at the
same time Bulgaria's legislation does not provide for a
compensation fund which is to guarantee claims in the event of
bankruptcy of an insurer based in an EU Member State, as is the
case with Cyprus-based Olympic, said Manolova.

The Ombudsman expressed concern over the lack of clear detailed
information on the way Bulgarian citizens can protect their
economic interests. She asked her Cypriot counterpart to help
resolve the disputes between Bulgarian drivers and Olympic over
the payment of claims and premiums under the automatically
terminated contracts by specifying the actions and procedure of
filing claims under Cypriot law. ZH, DD

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