Control in Non-Banking Financial Sector

Vocabulary flashcards covering the regulatory framework, statistics, and organizational roles within the Bulgarian non-banking financial sector, including the Financial Supervision Commission and the Insurance Code.

Non-banking financial sector

A sector comprising investment activity, insurance activity, and social insurance activity.

Special Investment Purpose Companies (АДСИЦ)

Entities within the investment activity sector that, as of 2024, numbered 49 with $2\,billion\,BGN$ in assets managed.

Financial Supervision Commission (FSC) Act

An Act that regulates the establishment, scope, organization, functions, and operation of the Financial Supervision Commission.

Financial Supervision

Supervision over regulated securities markets, insurance and health insurance activities, and supplementary social insurance companies and funds.

Supervision Methods (FSC)

The exercise of supervision through the issuance of licenses, conduct of off-site and on-site inspections, and the application of compulsory administrative measures or sanctions.

FSC Commission Composition

Consists of 5 members: a Chairperson, three Deputy Chairpersons (Investment, Insurance, and Social Insurance), and a member for risk analysis and investor protection.

FSC Member Term of Office

The term of office for members of the Commission is $6\,years$.

FSC Objectives

To protect interests of the insured and investors, and to ensure the stability, transparency, and credibility of financial markets and infrastructure.

Public Registers (FSC)

Registers kept by the Commission for entities such as investment intermediaries, public companies, insurers, reinsurers, and social insurance companies.

National Social Security Institute and National Health Insurance Fund

Entities to which the provisions of the Financial Supervision Commission Act do not apply.

Insurance Code - Objectives

To provide protection for consumers of insurance services and establish conditions for a stable, transparent, and efficient insurance market.

Local Insurer

A joint-stock company, European company, or mutual insurance cooperative with a seat in Bulgaria that has obtained a license under the Insurance Code.

Minimum Capital Requirement

For an insurer or reinsurer, the registered capital may not be less than the amount specified under Article 192, spanning from $2.7\,MEUR$ to $4\,MEUR$.

Minimum Guarantee Capital

The minimum capital for an insurer under Article 210, ranging from $4.6\,MBGN$ to $7\,MBGN$.

Reinsurer License Scope

A license issued for operations under Life Insurance, General Insurance, or both.

Programme of Operations

A document containing the types of insurance an insurer intends to underwrite, technical reserve methods, and a three-year financial projection.

Technical Reserves

Reserves maintained by insurers for all insurance and reinsurance obligations, calculated based on expected future fulfillment of assumed obligations.

Qualified Participation

A direct or indirect participation in an insurance company that reaches or exceeds $20\,percent$, $30\,percent$, or $50\,percent$ of voting rights or capital.

Independent Board Member (Insurance)

A natural person who is not an employee, a related party, or in permanent commercial relations with the insurer, making up at least one third of the board.

Responsible Actuary

An individual who coordinates the calculation of technical reserves, guarantees methodology appropriateness, and assists in the risk management system.

Internal Control System (Insurance)

A system including administrative/accounting procedures, compliance functions, and reporting rules at all levels.

Internal Audit Function (Insurance)

An impartial and independent function that assesses the adequacy and effectiveness of the internal control and management systems.

External Auditors (Insurance Code)

Two audit companies that certify the annual financial statements and express an opinion on the truthfulness of financial condition and technical reserve sufficiency.

Supervisory Review Process

The review and assessment of strategies, processes, and reporting procedures to ensure compliance with the Insurance Code and EU Directives.

Coercive Administrative Measures

Orders applied by the Deputy Chairperson or Commission to terminate violations, such as dismissing heads of departments or suspending shareholder voting rights.

Questor

An official appointed by the Commission to manage and represent an insurer when there are serious management deficiencies, false information reporting, or solvency issues.

Tax on Insurance Premiums Rate

The tax rate applied to insurance premiums, which is set at $2\,\%$ per calendar quarter.

Bulgarian Export Insurance Agency (BEIA EAD)

A joint-stock company implemented to handle insurance and reinsurance of non-market risks at the expense of the state.

Political Risk (Export Insurance Act)

Risks involving political events like war, civil unrest, strikes, general moratoriums on payments, or nationalization in the debtor's country.

Non-market risk

Includes short-term commercial and political risks related to the production and export of Bulgarian goods and services.