REPUBLIC OF LITHUANIA

REPUBLIC OF LITHUANIA REPUBLIC OF LITHUANIA LAW ON INSURANCE Chapter 1 General Provisions Article

1. Relations Regulated by the Law on Insurance in the Republic of Lithuania This Law shall regulate relations between insurance agencies, between said agencies and the insured, and the procedure for the founding, operation, and liquidation of insurance agencies. This law shall also regulate activities of organisations performing operations of insurance and reinsurance as a business in addition to their principal business activity. Article
2. The Insured The insured shall include the following natural and legal persons bound by an insurance contract to pay insurance premiums, of other wise obligated to pay same pursuant by law: 1) all legally capable citizens of Lithuania, foreign nationals, as well as persons without citizenship, provided they are 16 years of age and over; and 2) firms, offices, and organisations located on the territory of the Republic of Lithuania or beyond its borders. Where permitted under the insurance regulations, the insured shall have the right to conclude insurance contracts in the name of a third person. Article
3. Insurance Agencies The following insurers shall have the right to conclude insurance contracts in the Republic of Lithuania: 1) the State Insurance Agency; 2) joint stock insurance companies; 3) insurance societies; and 4) mutual insurance societies. Insurance agencies shall have the status of legal persons, and shall function in accordance with their respective by-laws and the laws of the Republic of Lithuania. Insurance agencies shall make payments to the appropriate budgets according to the procedures established under the laws of the Republic of Lithuania. Article
4. Insurance Council For the coordination of matters related to insurance, the Insurance Council shall be formed under the auspices of the Ministry of Finance. The composition of the Insurance Council shall be as follows: one-third of its members shall be representatives of the Ministry of Finance, the Ministry of Internal Affairs, and other bodies having an interest in insurance-related activity; one-third of its members shall be representatives of other insurance agencies and of various insured persons. The activities of the Insurance Council shall be regulated by rules and regulations approved by the Government of the Republic of Lithuania. Article
5. Licence to Engage in the Insurance Business Licences to engage in the insurance business shall be issued by the Insurance Council. When applying for a licence to engage in the insurance business, an insurance agency must file its underlying agreement and its by- laws with the Council. The Insurance Council shall consider the submitted instruments within a month, and then issue a licence, provided the financial terms and conditions of the agency guarantee the discharge of its obligations to the insured, and provided its by- laws do not contradict the laws of the Republic of Lithuania. A licence to engage in the insurance business, when issued to foreign natural and legal persons, shall become valid only after it has been approved by the Government of the Republic of Lithuania. Upon receipt of the licence to engage in the insurance business, the insurance agency's by-laws shall be registered with: the Government of the Republic of Lithuania, if the insurance agency plans to operate in more than one town or region of the Republic; or the appropriate municipal or regional board, if the insurance agency plans to operate in only one town or region of the Republic. Amended by-laws of insurance agencies must be coordinated with the Insurance Council prior to registration. Article
6. Property Insurance The subject matter of a property insurance contract may be property that is owned by a person outright, is leased, is in someone's custody, or is held for sale or repair, as well as any other property, civil liability, credits or other financial resources, provided the insurance contract contains provisions therefor. Article
7. Personal Insurance Personal insurance is insurance on human lives and insurance of human beings against the happening of particular events, as specified by insurance contracts. Article
8. Compulsory Insurance The objects of compulsory personal and property insurance, and contractual conditions thereof shall be established by the Supreme Council of the Republic of Lithuania. Article
9. Voluntary Insurance Contractual conditions of voluntary insurance shall be defined in the regulations of insurance agencies, which must be defined in the regulations of Insurance agencies, which must be filed with the Insurance Council, or in insurance policies, i.e. agreements of effecting insurance. Article
10. Insurable Events Insurable events shall be events specified by legislative acts on compulsory insurance, or by provisions of voluntary insurance contracts, upon happening of which the insurance agency must pay the insurance indemnity, or the insured sum, or the amount of the supplemental pension insurance, or other payments provided by insurance contracts. Article
11. Insurance Contracts Upon agreement between the insured and an insurance agency, a written contract of voluntary insurance shall be concluded. The contract shall state the names of the insured and the insurer, the insured sum or the amount of the supplementary pension insurance, the term of the contract, definition of the insurable event, as well as other significant insurance provisions. Concluding an insurance contract with the insured, the representative of an insurance agency shall have no right to exceed his powers, or to change the insurance provisions that are prescribed by law or regulations. Article
12. Term of Insurance Contract Insurance contract may be concluded for a specified period or for an indefinite period of time. The beginning, duration and expiration of the insurance period shall be established by the insurance regulations. The insurance period and the period of enforceability of the insurance contract may not coincide in time. If the insurance contract prescribes that the insurer shall have to pay the insured sum or the amount of the supplemental pension insurance upon the expiration of the insurance period, the insurance contract shall remain valid until the insurer discharges his obligations. Article
13. Termination of Insurance Contract An insurance contract shall be terminated, if: the insurance agency has discharged all its obligations; the insured has not timely paid the insurance premiums; or there are no persons to whom the insured, who has terminated his activities, could assign his rights and obligations. Upon the termination of an insurance contract, paid insurance premiums or a portion thereof may be refunded to the insured - by paying said sums to the insured or to the person assigned by him, or to his heirs - provided the insurance regulations contain provisions there for. Upon the termination of an insurance contract, disputes related to the amounts payable to the insured shall be resolved in court or by arbitration. In the event the court declares the insured legally incapable or partially incapable, the rights and obligations of the insured may be assigned to his guardian or trustee. Article
14. Unenforceable Insuran