3.The Supervisory Commission may, within 1 month after receiving all the information specified under paragraph 1 of this Article, refuse to send out information referred to in paragraph 2 of this Article, notifying the insurance undertaking thereof, where the insurance undertaking is in non-compliance with the requirements stipulated in the legal acts of the Republic of Lithuania and/or the financial situation of the insurance undertaking is stable and sound according to the requirements set out in the legal acts of the Republic of Lithuania.
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4.Refusal of the Supervisory Commission referred to in paragraph 3 of this Article may be appealed by an insurance undertaking to the court following the procedure set out in the legal acts of the Republic of Lithuania.
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5.Upon receiving information referred to in paragraph 2 of this Article from the Supervisory Commission and having fulfilled other conditions laid down in the legal acts of another European Union Member State, an insurance undertaking shall have the right to start providing services in another European Union Member State.
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6.An insurance undertaking must notify, not later than one month in advance, about any changes it plans to make in the information filed pursuant to the provisions of paragraph 1 of this Article. Provisions of paragraphs 1 - 5 of this Article shall apply to filing of the information by an insurance undertaking, sending that information to the competent authority of another European Union Member State, and refusal to send that information. Refusal of the Supervisory Commission to send information shall deprive the insurance undertaking from making the changes planned.
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Article 54Establishment of a Branch of an Insurance Undertaking in Another European Union Member State
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1.An insurance undertaking which intends to establish a branch in another European Union Member State must file with the Supervisory Commission the following information and documents:
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1)the name of the European Union Member State in which it intends to establish a branch;
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2)a scheme of operations of a form and content determined by the Supervisory Commission;
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3)the address of the branch office to which and at which correspondence may be sent and received and a confirmation that any correspondence addressed to the head of the branch of the insurance undertaking may be sent to the indicated address;
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4)documents attesting that the insurance undertaking has appointed a person of good repute, having adequate professional qualifications and experience in the field of insurance to act as the branch’s head duly empowered to establish rights and obligations for the insurance undertaking which has founded the branch in another European Union Member State, to represent the undertaking in the court at other government and administration institutions of that Member State when dealing with respect to third parties;
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5)where an insurance undertaking intends to carry out, through a branch founded in another European Union Member State, insurance falling within the insurance class referred to in subparagraph 10, paragraph 3, Article 7 of this Law (except carriers’ civil liability/third party insurance), documents attesting that the insurance undertaking is a member of the Insurers’ Bureau and the guarantee reserve of that European Union Member State.
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2.Documents specified in paragraph 1 of this Article must be submitted in Lithuanian and English and the state language of another European Union Member State, or in one of the state languages where legal acts of another Member State stipulate a requirement that all documents filed with the competent authority of that Member State must be in its state language or one of its state languages.
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3.Within three months after receiving documents and information specified in paragraph 1 of this Article and in the absence of the conditions referred to in paragraph 4 of this Article, the Supervisory Commission must send, notifying on the same day the insurance undertaking thereof, to the competent authority of another European Union Member State in which the insurance undertaking intends to establish a branch the documents and information received together with a proof that the insurance undertaking meets the solvency margin requirements set out in the legal acts of the Republic of Lithuania.
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4.The Supervisory Commission may, within three months after receiving all the documents and information specified in paragraph 1 of this Article, refuse, notifying the insurance undertaking thereof, send the documents and information referred to in paragraph 3 of this Article only where:
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1)the structure of the supervisory and management bodies of the insurance undertaking does not meet the requirements stipulated in the legal acts of the Republic of Lithuania and/or is not adequate for an efficient management of the undertaking;
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2)the insurance undertaking is in non-compliance with the requirements stipulated in the legal acts of the Republic of Lithuania and/or the financial situation of the insurance undertaking is not stable and sound according to the requirements stipulated in the legal acts of the Republic of Lithuania;
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3)members of the supervisory board and the board, the head of the administration, the chief financier, chief actuary of the insurance undertaking or the appointed head of the branch to established do not meet the criteria set out in the legal acts of the Republic of Lithuania;
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4)it may be assumed from the scheme of operations that the interests of the policyholders, insured persons, beneficiaries, and any injured party are not properly protected or there is good reason to believe that the commitments of the insurance undertaking under the contracts of insurance will not be fulfilled on a continuous basis.
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5.A refusal of the Supervisory Commission referred to in paragraph 4 of this Article may be appealed to the court by the insurance undertaking in accordance with the procedure specified in the laws of the Republic of Lithuania.
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6.An insurance undertaking may establish a branch and launch its activities upon receiving from the competent authority of another European Union Member State a notification about the right to establish the branch and start its activities as well as the conditions of the activities; where such a notification is not received within two months after receiving by the insurance undertaking from the Supervisory Commission a notification in writing referred to in paragraph 3 of this Article, the insurance undertaking may establish its branch upon the expiry of a two-month time period.
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7.The Supervisory Commission and the competent authority of another European Union Member State where a branch has been established must be notified at least one month in advance of any planned changes in the documents referred to in subparagraphs 2 – 4, paragraph 1 of this Article. Filing of the information by the insurance undertaking, sending of the information submitted to the competent authority of another Member State, and refusal to send that information shall be subject to the provisions of paragraphs 1- 5 of this Article, however, the three month time period provided fort in paragraphs 3 and 4 of this Article shall be replaced by a time period of one month. Refusal of the Supervisory Commission to send information shall deprive the insurance undertaking of the right to make the changes planned.
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Article 55Branches of Insurance Undertakings Engaged in Non-life Insurance in the Confederation of Switzerland
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Branches of insurance undertakings engaged in non-life insurance in the Confederation of Switzerland shall be established and shall operate under the rules applicable to the establishment and activity of branches of insurance undertakings in other European Union Member States to the extent the Agreement between the European Economic Community and the Confederation of Switzerland on Direct Insurance Other than Life Assurance does not provide otherwise.
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CHAPTER III
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ACTIVITIES OF INSURANCE UNDERTAKINGS OF OTHER EUROPEAN UNION MEMBER STATES IN THE REPUBLIC OF LITHUANIA
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Article 56Right to Carry out Insurance Activity in the Republic of Lithuania
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Insurance undertakings of other European Union Member States shall have the right to establish subsidiaries, provide services or establish a branch in the Republic of Lithuania.
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Article 57Right of Insurance Undertakings of Other European Union Member States to Provide Services in the Republic of Lithuania
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1.An insurance undertaking of another European Union Member State shall have the right to start providing services in the Republic of Lithuania only upon the receipt by the Supervisory Commission from the competent authority of the Member State of documents which must be submitted by this authority to the Supervisory Commission in accordance with the legal acts of that European Union Member State upon meeting other conditions stipulated in this Article.
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2.Where an insurance undertaking of another European Union Member State intends to provide insurance falling within the group referred to in subparagraph 10, paragraph 3, Article 7 of this Law, with the exception of carriers’ civil liability/third party insurance, it must additionally provide to the Supervisory Commission:
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1)documents evidencing that the insurance undertaking of that Member State is a member of the Insurers’ Bureau of the Republic of Lithuania and participates in the guarantee fund of the Bureau;
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2)documents evidencing that the insurance undertaking of that Member State has assigned a representative for settlement of claims in the Republic of Lithuania who is empowered to represent the undertaking in the court and other state and administration institutions of the Republic of Lithuania as well as in dealings with natural and legal persons, and indicate the name, surname and the address of the representative;
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3)documents evidencing that the assigned representative has been granted the right to administer insured events, pay insurance benefits, verify on behalf of the insurance undertaking of another European Union Member State the fact of conclusion and coming into effect compulsory insurance contracts;
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4)the address of the representative in the Republic of Lithuania.
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3.The representative of an insurance undertaking of another Member State indicated in paragraph 2 of this Article shall have no right to conclude on behalf of the represented insurance undertaking insurance contracts in the Republic of Lithuania. A branch of an insurance undertaking other than the represented undertaking of another European Union Member State established in the Republic of Lithuania may be assigned as a representative.
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4.Assignment of a representative provided for in this Article and the presence of a representative in the Republic of Lithuania shall not be considered a branch or agency and office of an insurance undertaking of another European Union Member State in the Republic of Lithuania within the meaning of paragraph 54 of Article 2 and Article 6 of this Law.
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5.In any other case not provided for in this Article the possibility for insurance undertakings of other European Union Member States to provide services in the Republic of Lithuania shall not give the right to an insurance undertaking of another European Union Member State to assign a person subordinate to instructions and control of the represented undertaking who will in the Republic of Lithuania permanently or for a long period of time, who has been empowered to establish the rights and obligations for an insurance undertaking of another European Union Member State with regard to third parties.
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Article 58Branches of Insurance Undertakings of Other European Union Member States
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1.Upon being informed by the competent authority of another European Union Member State about the intention of an insurance undertaking of the Member State to establish a branch in the Republic of Lithuania and upon receiving from that authority information and documents of the insurance undertaking of another Member State which the authority must provide to the Supervisory Commission in accordance with the legal acts of that Member State, the Supervisory Commission must inform, within two months after the receipt of this information, the competent authority of that European Union Member State about conditions applicable to the activities of branches of insurance undertakings of other Member States in the Republic of Lithuania precluding breaches of public order. Where the Supervisory Commission fails to provide such information within the set time period an insurance undertaking of another European Union Member State shall have the right to establish a branch and commence its activities in the Republic of Lithuania.
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2.An insurance undertaking of another Member State which, when planning to establish a branch in the Republic of Lithuania submitted to the competent authority of the European Union Member State information and documents in accordance with the requirements of the legal acts of the Member State must, not later than one month in advance, notify the Supervisory Commission about any planned changes in the information and documents filed.
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3.An insurance undertaking of another European Union Member State shall have the right to engage in the activity falling within the group referred to in subparagraph 10, paragraph 3, Article 7 of this Law, with the exception of carriers’ liability insurance, through a branch established in the Republic of Lithuania, only upon becoming a member of the Insurers’ Bureau of the Republic of Lithuania and taking part in the guarantee fund of the Bureau.
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4.As far as Lloyd’s insurers association is concerned, in any disputes in the Republic of Lithuania arising from or related to insurance contracts concluded by a branch of this association established in the Republic of Lithuania, the policyholders, insured persons, beneficiaries and any injured party shall have the same rights as in disputes arising from insurance contracts with any other insurance undertakings and branches of insurance undertakings of other European Union Member States or non-member countries. The head of a branch of Lloyd’s insurers association in the Republic of Lithuania must have powers sufficient to enable him to represent that association in disputes settled in court and other disputes stemming from an insurance contract or related to it and by his actions cause the establishment of rights and obligations for the insurers of that association.
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Article 59Branches of Insurance Undertakings of the Confederation of Switzerland Engaged in Non-life Insurance Activity
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Unless otherwise provided by the Supervisory Commission, the provisions applied to setting up and pursuit of activity for branches of insurance undertakings of other European Union Member State shall also apply to setting up and pursuit of activity in the Republic of Lithuania for branches of insurance undertakings of the Confederation of Switzerland engaged in non-life insurance activity.
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Article 60Language
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All documents filed with the Supervisory Commission shall be in the Lithuanian language, and where documents are filed by a competent authority or insurance undertaking of another European Union Member State - also/or in the English language..
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CHAPTER IV
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ACTIVITY OF INSURANCE UNDERTAKINGS Of non-member COUNTRIES IN THE REPUBLIC OF LITHUANIA
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Article 61Right to Engage in Insurance Activity
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1.Foreign insurance undertakings shall have the right to engage in insurance activity only through a subsidiary, a branch or an agency established in the Republic of Lithuania.
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2.Activity and supervision of branches of insurance undertakings of non-member countries shall be subject to the same requirements as insurance undertakings of the Republic of Lithuania, taking account of exceptions and characteristics of the legal status and activity of a branch provided for in this Chapter and resolutions of the Supervisory Commission.
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3.The Supervisory Commission, having regard to the exceptions and characteristics of the legal status and activity of branches of insurance undertakings of non-member countries, shall approve mandatory instructions or recommendations on the application of the provisions of this Law to branches of insurance undertakings of non-member countries.
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4.Activity and supervision of agencies of insurance undertakings of non-member countries shall be subject to the same provisions that are applied to branches of insurance undertakings of non-member countries.
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Article 62Authorisation for Insurance Activities of a Branch
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1.A branch of an insurance undertaking of a non-member country shall have the right to carry out insurance activity in the Republic of Lithuania subject to an authorisation obtained from the Supervisory Commission for the activity of the branch and subsequent registration of the branch in the Register of Legal Persons. A branch of an insurance undertaking of a non-member country must, within five working days, inform the Supervisory Commission about the registration.
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2.An authorisation for insurance activity of a branch shall be issued for all the insurance activities of the whole insurance class or a number of insurance classes falling within life or non-life insurance categories, except the cases when the applicant wishes to engage in the insurance of only a part of risks covered by the insurance class/classes.
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3.An authorisation for the activity of a branch shall be granted for an unlimited period of time.
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4.An authorisation for the insurance activity of a branch shall be issued only to a concrete insurance undertaking of a non-member country and may not be transferred to another person.
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5.An authorisation shall be issued for insurance activity of only one branch. Structural units of the branch shall be established and operate in the Republic of Lithuania in the manner stipulated by the Supervisory Commission.
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6.The procedure of granting authorisations and the form of the authorisation for the insurance activity of a branch of an insurance undertaking of a non-member country shall be determined by the Supervisory Commission.
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Article 63Application for Authorisation for Insurance Activity of a Branch
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1.An insurance undertaking of a non-member country must file with the Supervisory Commission an application for an authorisation for the insurance activity of a branch in the Republic of Lithuania.
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2.An application for authorisation for the insurance activity of a branch in the Republic of Lithuania an insurance undertaking of a non-member country must be accompanied by the following documents:
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1)a proof in writing from a competent authority of a non-member country that the insurance undertaking of that country has the right to engage in the insurance activity in the non-member country in which it is registered;
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2)an authorisation issued by a competent authority of the non-member country to establish a branch in the Republic of Lithuania or a proof that the competent authority of the non-member state does not object to the establishment of a branch in the Republic of Lithuania;
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3)confirmation of the competent authority of the non-member state that the insurance undertaking of that country has met for the last three years the requirements of solvency margin, establishment of technical provisions and their cover by assets as well as other requirements stipulated in the legal acts of the non-member state for the activities of insurance undertakings, also indicating the insurance classes in the activities of which the insurance undertaking of the non-member state has the right to engage. Where the insurance undertaking of a non-member country has been operating for less than three years, the competent authority of that country must provide proof about the entire period of the activities of the insurance undertaking;
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4)a decision of the management of the insurance undertaking of a non-member country to establish a branch in the Republic of Lithuania, to approve the articles of association of the branch, and to appoint the head of the branch, as well as a written commitment of the management to keep financial statements and other documents related to the activities of the established branch at the office of the branch;
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5)documents certifying that the insurance undertaking of a non-member country has appointed a person of good repute, adequate professional qualifications and experience to act as the head of the who has been empowered to establish rights and obligations for the insurance undertaking, to represent the undertaking in the court of the Republic of Lithuania and other state and administration institutions;
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6)documents certifying that the insurance undertaking of a non-member country has appointed persons of good repute, adequate professional qualifications and experience to act as the chief financier and the chief actuary of the branch;
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7)articles of association of the branch;
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8)agreements specified in paragraph 1, Article 27 of this Law if they have been concluded;
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9)information in a form set by the Supervisory Commission about shareholders, other controlling persons, participating undertakings and the members of the supervisory and management bodies of the insurance undertaking of a non-member country;
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10)a scheme of operations in a form set by the Supervisory Commission together with financial statements of the insurance undertaking of a non-member country for the last three years audited by an independent auditor. Where the insurance undertaking of a non-member country has been operating for less than three years, it shall be subject to a requirement to provide financial statements for each completed financial year audited by an independent auditor;
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11)documents attesting that the insurance undertaking of a non-member country has concluded a bank deposit contract as specified in paragraph 1, Article 72 of this Law, and documents attesting that the insurance undertaking of anon-member country has transferred to a bank account in the Republic of Lithuania the amount of money which together with the deposit funds of the insurance undertaking would constitute the guarantee fund specified in paragraph 2, Article 71 of this Law. It shall be also obligatory to provide information about the origin all these funds;
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12)for the activity of the insurance class provided for in subparagraph 10, paragraph 3, Article 7 of this Law, with the exception of carriers’ civil liability/third party insurance, documents evidencing that the insurance undertaking has assigned in each European Union Member State a representative empowered to deal with issues of insurance benefits, also to indicate the name and address of the representative.
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Article 64Granting of Authorisation for the Insurance Activity of a Branch
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1.The Supervisory Commission shall, within six months after filing of an application for an authorisation for the insurance activity of a branch, adopt a decision on granting of an authorisation and notify the applicant in writing thereof.
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2.The Supervisory Commission shall refuse to issue authorisation where:
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1)documents stipulated in this Law or requested following the procedure set out in this Law have not been filed or where documents filed do not meet the requirements of the laws of the Republic of Lithuania;
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2)an insurance undertaking of a non-member country in a non-member country where it has been registered does not own assets equivalent in Euro to at least 1/2 of the amount referred to in paragraph 3, Article 39 of this Law, taking account of the insurance class in which it intends to be engaged;
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3)members of the supervisory board, the board of the insurance undertaking of a non-member country (or members of the bodies equivalent to them), the head of the administration, and the head of the branch about to be established, its chief financier and the chief actuary area not of good repute, adequate professional qualifications and experience;
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4)shareholders (member share holders etc.) and controlling persons of an insurance undertaking of a non-member country are not of good repute, their financial situation and/or the financial situation of the insurance undertaking of a non-member country is not stable and sound;
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5)it may be assumed from the submitted scheme of operations that the interests of the policyholders, insured persons, beneficiaries and any injured party will not be properly protected or there is a good reason to believe that the commitments of the branch of the foreign insurance undertaking arising from contracts of insurance will not be met on a continuous basis;
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6)the origin of the deposit of the insurance undertaking of a non-member country and the guarantee fund of its branch is not legal;
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7)the head of the branch of the insurance undertaking of a non-member country also holds a position which may give rise to a conflict of interests;
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8)the Supervisory Commission has not entered into a co-operation agreement with the competent authority of the non-member state on the exchange of information or the competent authority of the non-member state has not assumed, in accordance with form of obligation determined by the Supervisory Commission, a unilateral obligation to provide information to the Supervisory Commission;
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9)legal acts of the non-member state do not provide conditions for an ongoing and efficient supervision of the insurance undertaking of that country, protection of the interests of the policyholders, insured persons, beneficiary, and any injured party, or the competent authority of that country does not perform efficient supervision of that insurance undertaking and does not protect the interests of the policyholders, insured persons, beneficiaries, and any the injured party.
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3.When issuing an authorisation for the activities of a branch of a non-member- country insurance undertaking the Supervisory Commission shall have the right to set conditions which must be fulfilled by the branch of the said undertaking before starting its activity and/or conditions or restrictions on insurance activity of certain risks which must be complied with by the branch of a non-member-country insurance undertaking in its activities.
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4.A branch of a non-member-country insurance undertaking in the Republic of Lithuania may engage only in the insurance activity of those insurance classes which it is authorised to carry out by its license (authorisation etc.) for insurance activity and/or legal acts of the non-member state. Where a non-member-country insurance undertaking has the right to engage in life assurance and non-life insurance categories at the same time, a branch of a non-member-country insurance undertaking established in the Republic of Lithuania shall have the right to engage only in the activity of insurance classes falling within non-life insurance category..
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5.When there is a suspicion that the deposit of a non-member country insurance undertaking or the guarantee fund of its branch may have been paid from financial resources of illegal origin, the Supervisory Commission must apply the State Security Department seeking its conclusion about the origin of the said funds. In such a case the time period specified in paragraph 1 of this Article shall be suspended and shall be resumed upon receipt of the conclusion from the State Security Department.
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Article 65Information about Amendments
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A branch of a non-member-country insurance undertaking established in the Republic of Lithuania must notify the Supervisory Commission, following the procedure prescribed by it, about any amendments of the information given in the documents submitted to the Supervisory Commission for obtaining an authorisation for insurance activities of the branch.
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Article 66Suspension and Withdrawal of Authorisation for the Insurance Activity of a Branch
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1.When there are grounds provided in paragraph 1, Article 198 of this Law, the Supervisory Commission shall have the right to suspend the authorisation granted to a branch to engage in insurance activity.
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2.The Supervisory Commission shall have the right to withdraw the authorisation for the insurance activity of a branch where:
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1)a non-member-country insurance undertaking or its branch in the Republic of Lithuania no longer meets the requirements which were set for the issuance of the authorisation for the insurance activity of the branch;
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2)the branch of a non-member-country insurance undertaking is in gross breach of legal acts;
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3)at the request of a non-member-country insurance undertaking;
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4)the branch of a non-member-country insurance undertaking has not commenced insurance activities within 12 months after the issuance of the authorisation;
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5)the branch of a non-member-country insurance undertaking has not been engaged in insurance or related activity for more than six months;
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6)the branch of a non-member-country insurance undertaking has failed to implement the plans for recovery of the financial situation set out in Article 40 of this Law;
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7)the foreign insurance undertaking is in liquidation or bankruptcy proceedings have been instituted against it;
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8)the time period for the operation of the branch se in the articles of association of the branch has expired;
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9)the competent authority of a non-member country prohibits to the non-member-country insurance undertaking to carry out its activity in the Republic of Lithuania;
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10)in the case specified in paragraph 9, Article 74 of this Law;
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11)the court hands down a decision to terminate the activity of the branch for a violation of the laws of the Republic of Lithuania.
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3.The Supervisory Commission shall notify the competent authority of the non-member state in question about its decision to withdraw the authorisation for insurance activity of the branch.
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4.The decision on the withdrawal of the authorisation for insurance activity of the branch must be motivated in great detail. The Supervisory Commission must notify the non-member-country insurance undertaking about the decision and its motives.
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Article 67Head and Other Employees of the Branch
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1.Before the appointment of the head of a branch, the non-member-country insurance undertaking must provide to the Supervisory Commission information of a form determined by the Commission and obtain from it approval of the person who is seeking the position. The Supervisory Commission shall make a decision concerning the candidate within 30 working days.
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2.An insurance undertaking of a non-member country must:
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1)determine the strategic goals of the branch along with measures for achieving these goals, a procedure for monitoring of these measures and evaluation of the results;
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2)establish and monitor independent risk management strategy of the branch related to the activity carried out by it.
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3.Apart from other functions provided by laws, the head of a branch of a non-member-country insurance shall perform the following functions:
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1)determine the procedure for concluding insurance contracts which shall be also applicable to undertakings of insurance agents, attaching a particularly high importance to disclosure of information which is essential when concluding insurance contracts to the policy holders, respect for and security of the interests of every policyholder;
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2)prescribe the procedure for notification about the insured events, the events which may be recognised as insured events and the procedure for keeping records of the results of analysis of these notifications, and the rules of investigation of insured events and events which may be recognised as insured events;
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3)prescribe the procedure for hearing of claims of the policyholders, insured persons, beneficiaries and any injured party and replying to claimants; this procedure must be announced publicly on the website of the branch of a non-member-country insurance undertaking and made available to any interested person on request after the fee for the service has been paid;
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4)define the procedure for assessment of professional qualifications, good repute and experience of persons seeking senior positions in the administration of the branch;
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5)implement instructions and recommendations of the Supervisory Commission relating to enhancement of internal control of the and transparent, credible and prudent management.
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4.The head of the branch shall have no right to appoint the chief financier, chief actuary and the head of the internal audit service/internal auditor. Those persons shall be appointed by another body of a non-member-country insurance undertaking; their appointment and activity shall be subject to the requirements laid down in this Law, however, they shall be accountable to the body of a non-member-country insurance undertaking which has appointed them.
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5.The head of a branch of an non-member-country insurance undertaking may not perform obligations of another member of the management, the chief financier or chief actuary of the non-member-country insurance undertaking in question, be a member of the supervisory board or the board of another insurance undertaking or be employed in the administration of another insurance undertaking.
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Article 68Scheme of Operations
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1.The activities of a branch of a non-member-country insurance undertaking must be based on the scheme of operations. The branch must notify the Supervisory Commission about the amendments it is planing to make in the scheme and get the Commission’s agreement to the amendments in accordance with the procedure prescribed by the Commission.
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2.The form of the scheme of operations and the procedure of filing it shall be established by the Supervisory Commission.
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Article 69Technical Provisions of a Branch
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1.A branch of a non-member-country insurance undertaking must meet the requirements set for establishing and covering by assets of technical provisions as stipulated in this Law and by the Supervisory Commission.
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2.Assets which a branch of a non-member-country insurance undertaking uses to cover its technical provisions may be situated only in the Republic of Lithuania.
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Article 70Characteristics of Reinsurance Activity Carried out by a Branch
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A branch of a non-member-country insurance undertaking established in the Republic of Lithuania shall have the right to engage in reinsurance of the risks of the insurance class which it carries out in accordance with the procedure stipulated in the laws of the Republic of Lithuania, provided that the non-member-country insurance undertaking has the right to perform reinsurance of the risks of an analogous insurance class in that country.
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Article 71Solvency Margin of a Branch
\n
1.Solvency margin of a branch of a non-member-country insurance undertaking shall be calculated according to the procedure established by this Law and the Supervisory Commission.
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2.A portion of the available solvency margin which equals the greater of the two amounts – the minimum guarantee fund or 1/3 of the required solvency margin – shall constitute the guarantee fund of a branch of a non-member-country insurance undertaking. The minimum guarantee fund of the branch shall be equal to 1/2 of the amount specified in paragraph 3, Article 39 of this Law, taking account of the activities of insurance classes carried out by the branch. The funds referred to in paragraph 1, Article 72 of this Law shall be included when calculating the minimum guarantee fund.
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3.The guarantee fund must be kept or invested only in the Republic of Lithuania, while other funds of the solvency margin - only in the European Union Member States.
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Article 72Deposit of a Non-Member-Country Insurance Undertaking
\n
1.A non-member-country insurance undertaking which has established a branch in the Republic of Lithuania must, throughout the entire period of the activity of the branch, have in a bank account opened in the Republic of Lithuania under a demand deposit contract a sum of money not smaller than 1/4 of the amount referred to in paragraph 3, Article 39 of this Law, having regard to the activity of the insurance class that the established branch intends to carry out.
\n
2.Funds referred to in paragraph 1 of this Article may be used only in accordance with the procedure determined by the Supervisory Commission in order to perform the obligations of the branch arising from insurance contracts.
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3.The bank deposit contract specified in paragraph 1 of this Article must have a clause providing that a branch of a non-member-country insurance undertaking shall have the right to dispose the deposit funds only upon submitting to the bank a consent in writing from the Supervisory Commission.
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Article 73Transfer of Rights and Obligations Arising from Insurance Contracts of a Branch
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1.A branch of a non-member-country insurance undertaking shall have the right to transfer rights and obligations arising from all insurance contracts or part of them to an insurance undertaking or a branch of an insurance undertaking of another non-member country established in the Republic of Lithuania where the information in possession of the Supervisory Commission or the information held by the competent authority of the chosen European Union Member State, notified according to the procedure set out in Article 74 of this Law, allows to assume that after the transfer of the rights and obligations the solvency margin of the entity taking over the rights and obligations shall remain at the level prescribed by legal acts.
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2.A branch of a non-member-country insurance undertaking shall also have the right to transfer rights and obligations arising from all insurance contracts or part of them to an insurance undertaking of another European Union Member State, provided that the competent authority of that Member State verifies that after the transfer of the rights and obligations, the solvency margin of the entity taking over the rights and obligations shall remain at the level prescribed by legal acts, 3. A branch of a non-member-country insurance undertaking shall also have the right to transfer rights and obligations arising from all insurance contracts or part of them to a branch of a non-member-country insurance undertaking established in another European Union Member State, provided that the chosen competent authority of the European Union Member State, notified in accordance with the procedure determined by the Member State or Article 74 of this Law, verifies that the solvency margin of the entity taking over the rights and obligations shall, after the transfer of the rights and obligations, remain at the level prescribed by legal acts, that legal acts of the Member State in question permit such transfers of rights and obligations, and that the Member State in question does not object to the transfer of rights and obligations.
\n
4.In cases specified in paragraphs 1 - 3 of this Article the Supervisory Commission shall issue an authorisation for the to transfer of rights and obligations arising from insurance contracts only where the conditions referred to in subparagraphs 1 – 4, paragraph 3, Article 42 of this Law are met and a permit has been obtained from the competent authority of another European Union Member State in which the insurance risk is situated or another European Union Member State of the commitment under a life assurance contract.
\n
5.Where a consent or approval stipulated in this Article is not received within three months after the submission of information to the competent authority of another Member State, it shall be deemed that the competent authority of the Member State in question does not object to the transfer of rights and obligations.
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6.Other requirements set out in Articles 41 and 42 of this Law shall also apply to the transfer of rights and obligations unless this Article provides otherwise,.
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Article 74Privileges when Establishing and after the Establishment of Branches in Several European Union Member States
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1.A non-member-country insurance undertaking which hopes to be granted or which has already been granted authorisations for insurance activity in more than one European Union Member State shall have the right to apply to the Supervisory Commission for the following privileges:
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1)solvency margin may be calculated having regards to the insurance activities of branches of the insurance undertaking carried out in the Republic of Lithuania and other European Union Member States;
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2)a deposit of the insurance undertaking may be kept in only one European Union Member State, in which a branch of the insurance undertaking is engaged in insurance business;
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3)the guarantee fund may be kept in any European Union Member State where a branch of the insurance undertaking is engaged in insurance business.
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2.The application shall be accompanied by documents certifying that an analogous application has been or is being filed with the competent authorities of all other European Union Member States in which the non-member-country insurance undertaking intends to carry out or is already carrying out insurance activity through the branches it has established. The application must indicate the chosen competent authority of a Member State which in future will supervise solvency determined by the activities performed in the European Union Member States and the reasons for choosing this particular competent authority.
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3.Privileges may be applied only where all the competent authorities of the Member States to which an application for privileges must be submitted agree to apply the privileges.
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4.Privileges shall come into effect when the chosen competent authority informs the Supervisory Commission and the competent authorities of the other Member States that it will supervise solvency determined by the insurance activity performed by the branches in the Republic of Lithuania and the European Union Member States or, where the Supervisory Commission has been chosen as the competent authority, when it informs the appropriate competent authorities of the other Member States.
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5.The Supervisory Commission must provide information necessary for the supervision of solvency to the competent authority of another European Union Member State chosen by a non-member-country insurance undertaking.
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6.The Supervisory Commission, having regard to the privileges revoked by other competent authorities, shall revoke application of privileges where at least one competent authority requests that.
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7.Financial statements, other financial and statistical reports of non-member-country insurance undertakings shall be submitted to the competent authority of the chosen European Union Member State following the procedure set out in the legal acts of that Member State. A deposit of a non-member-country insurance undertaking must be held only in that European Union Member State.
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8.After withdrawal of an authorisation for insurance activity of a privileged branch of a non-member-country insurance undertaking, the Supervisory Commission must notify the competent authorities of the European Union Member States in which the non-member-country insurance undertaking has branches.
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9.Upon receiving a notification that the competent authority of another Member State has adopted a decision to withdraw the authorisation of a privileged branch of a non-member-country insurance undertaking for insurance activity, the Supervisory Commission shall have the right to resort to sanctions also to the branch of non-member-country insurance undertaking established in the Republic of Lithuania. Where the competent authority of another European Union Member State has adopted a decision to withdraw the authorisation for insurance activity due to insufficiency of the available solvency margin calculated by including all the branches of a non-member-country insurance undertaking in the European Union Member States, the Supervisory Commission shall withdraw the authorisation for insurance activity of the branch.
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10.The chosen competent authority of another European Union Member State referred to in paragraph 2 of this Article, in carrying out supervision of solvency of the branch of a non-member-country insurance undertaking, shall have the same rights to have access to information as the Supervisory Authority.
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CHAPTER V
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INSURANCE CONTRACT AND CO-INSURANCE SECTION ONE GENERAL PROVISIONS
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Article 75Application of Provisions of Chapter V
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1.Pre-contractual relations between the parties, the terms and conditions of the insurance contract and the relations arising from and related to the insurance contract shall be subject to provisions of the Civil Code and this Chapter.
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2.Provisions of this Chapter shall apply to reinsurance only where this is expressly provided in this Chapter.
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3.The provisions of Section One of this Chapter shall apply to all insurance contracts, unless the provisions of other sections of this Law or this section do not provide otherwise.
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4.The provisions of sections 1, 2 and 3 of this Chapter on contractual relations of the insurance contracts of large risks shall be applicable to the extent the parties to the contract have not agreed otherwise.
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Article 76Classification of Insurance Contracts
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1.According to the categories of insurance, insurance contracts may be classified into life and non-life insurance contracts. Non-life insurance contracts shall comprise property, civil liability and health insurance contracts.
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2.According to the nature of insurance benefits, insurance contracts shall be classified into indemnity and sum insurance contracts.
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3.Sum insurance contracts shall be life assurance contracts, also health insurance contracts under which the insurer commits himself to pay, when the insurance event occurs, a benefit equal to the sum insured or its part.
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4.Indemnity insurance contracts shall be property, civil liability, also health insurance contracts under which the insurer commits himself to pay, when the insured event occurs, a benefit in the amount of the loss incurred.
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Article 77Insurance Policy Conditions
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1.Insurance policy conditions shall specify the following:
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1)cases where insurance contracts are concluded upon a written application of the policyholder;
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2)insured events;
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3)non-insured events where the insurer must not pay insurance benefits;
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4)the subject covered;
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5)procedure for calculation of sums insured where they are established, calculation of rates of premiums, procedure for payment of premiums as well as consequences for breaches of the procedure;
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6)conditions for double insurance, underinsurance and supplementary insurance where there is an indemnity insurance contract;
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7)rights and obligations of the insurer, policyholder, beneficiary and the injured party;
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8)loss evaluation procedures;
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9)procedure for calculation of benefits and time periods for their payment;
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10)revision and termination of the terms and conditions of an insurance contract, including the procedure for termination of an insurance contract where the policyholder objects to the insurer’s intention to transfer rights and obligations under the insurance contract to another insurer/s;
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11)the procedure for settlement between the parties to the contract after the termination of the contract, including settlement with the policyholder who, objecting to the insurer’s intention to transfer rights and obligations under the insurance contract to another insurer(s) has terminated the insurance contract;
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12)the procedure for transfer of the insurer’s rights and obligations to another insurer;
\n
13)the procedure for resolution of disputes between the insurer and the policyholder;
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14)the procedure for providing information to the other party.
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2.Insurance policy conditions must be announced on the website of the insurance undertaking.
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3.At the request of the Supervisory Commission, the insurer must amend insurance policy conditions which are in contradiction to the provisions of legal acts or which violate consumer rights and interests. At the request of the Supervisory Commission, in future the insurer must conclude insurance contracts according to the amended insurance policy conditions.
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4.Before commencing compulsory insurance, at the request of the Supervisory Commission, the insurer must submit compulsory insurance policy conditions to the Supervisory Commission, except for the cases where compulsory insurance conditions are provided in legal acts. The Supervisory Commission shall verify whether the submitted compulsory insurance conditions are in compliance with legislative requirements, are not in breach of the interests of policyholders, insured persons, beneficiaries and the injured party, including consumer interests.
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Article 78Information for the Policyholder
\n
1.Before concluding a life assurance contract, the insurer or a person authorised by him must provide to the policyholder:
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1)information specified in paragraph 8, Article 6.993 of the Civil Code;
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2)information about the law applicable to the insurance contract; where the contractual parties are free to choose the applicable law – the law proposed by the insurer.
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2.During the term of the validity of the contract, the insurer shall inform, without delay, the non-life insurance contract policyholder - a natural person about any amendment of the information specified in paragraph 1 of this Article.
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3.Upon conclusion of an insurance contract, an insurance policy must be issued to the policyholder, and where an individual insurance contract has been concluded - a copy of the individual insurance contract.
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4.Where upon conclusion of an insurance contract, the policyholder asks the insurer to be provided the insurance policy conditions or the individual insurance contract, the policy, the policyholder’s written application for the conclusion of an insurance contract and copies of any other documents in attestation of the conclusion of the insurance contract, the insurer must issue to the policyholder copies of the documents requested after the latter pays the agreed fee which is not in excess of the costs of issuing of copies of documents, where such a fee is provided for in the insurance contract.
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5.Where this Chapter provides for an individual discussion of a condition of the insurance contract, the insurer must inform the policyholder about the condition of the contract proposed as well as its effect. This condition of individual agreement shall be valid only where the policyholder confirms by his signature that he has become familiar with it and in writing expresses his consent to include it in the contract.
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Article 79Insurable Interest
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A lawful interest of the policyholder and the insured person which may be expressed in money shall be an obligatory precondition for an indemnity insurance contract .
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Article 80Failure to Pay the Premium
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1.If the policyholder fails to pay the premium or its part by the time provided for in the insurance contract, except in the cases where coming into effect of the contract is conditional on the payment of the premium or its part, the insurer must inform the policyholder of the fact in writing, and state that unless the premium or its part is paid within 15 days and on life assurance - within 30 days after receipt of the information, insurance cover will be suspended and will be renewed only after the policyholder pays the premium or its part. If the contract does not provide any other ways of communication, it shall be presumed that the insurer has received the notice sent by post after a reasonable period of time after it has been sent. The insurance contract may provide time periods longer than those specified in this paragraph.
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2.If an insured event occurred during the suspension of the insurance cover, the insurer must not pay the insurance benefit. If, in civil liability insurance the insurance contract provides that an insured event will be considered filing of the claim for compensation of the loss, any acts that resulted in the loss during the suspension of the contract gives the insurer the right to refuse to pay the benefit even if the claim for compensation for the loss has been submitted after the moment of suspension of insurance cover.
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3.If the suspension of insurance cover lasts for more than three months and in life assurance - for more than six months, the insurer shall have the right to cancel the insurance contract unilaterally.
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Article 81Right to the Insurance Benefit
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The right to request payment of the insurance benefit shall belong to the policyholder and, in cases provided for in law and/or in the insurance contract, also to the beneficiary or the injured party. If the beneficiary or the injured party requests payment of the insurance benefit, the insurer shall have the right to use all the pleadings he has against the policyholder.
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Article 82Payment of the Benefit
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1.The policyholder, beneficiary and/or any injured party must provide to the insurer submit all the documents and information available to him about the circumstances and consequences of the insured event which are necessary in order to establish the amount of the benefit. At the request of the insure, the above-mentioned persons must also provide documents about the circumstances and consequences of the insured event necessary for establishing the amount of the insured event which they are entitled to obtain following the procedure established by laws and other legal acts. The insurance contract must indicate what documents have been provided to the insurer.
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2.The insurance benefit must be paid within 30 days from the day of receipt of all the information important for establishing the fact, circumstances and consequences of the insured event as well as the amount of the insurance benefit. If the insurance contract provides for a periodic payment of insurance benefits, the provision in first sentence of this Article shall apply to the first periodic insurance benefit.
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3.The insurer shall not have the right to:
\n
1)pay the insurance benefit or refuse to pay it unless he is convinced of the existence of the insured event;
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4.refuse to pay the benefit without prior verification of all the information available must provide to the insurer all the information available to them about the circumstances and consequences of the insured event and of the event that may be recognised as an insured event. If the circumstances of the insured event or the event that may be recognised as an insured event are investigated by state institutions, at the request of the insurer, the institutions must provide free of charge the written information about the facts established during the investigation and its findings.
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5.If the event is an insured event and if the policyholder and the insurer disagree on the amount of the insurance benefit, at the request of the policyholder, the insurer must pay the amount on which the parties agree where establishment of an exact amount of the benefit lasts for more than three months.
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6.The insurer must prove the circumstances which release him from payment of the insurance benefit or give him the right to reduce the benefit.
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7.When the insurer refuses to pay the benefit or reduces it due to violation of the insurance contract conditions by the policyholder, he must have regard to the policyholder’s fault, the gravity of breach of the insurance contract, its causal relationship with the insured event and the amount of loss resulting from the breach.
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8.When the insurer refuses to pay the insurance benefit or reduces it, he must provide a detailed and motivated explanation of the reasons for such a decision to the policyholder, beneficiary or the injured party. Where the insurance benefit is not paid within 30 days from the report about the insured event, the insurer must provide to the policyholder/beneficiary a detailed account in writing about the progress of the investigation of the insured event.
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Article 83Automatic Extension of the Period of Validity of the Insurance Contract
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1.Upon expiry of an insurance contract, in the cases provided for in the insurance contract the validity period of the contract may be extended automatically but not for a longer period than one year unless a party to the contract expresses its disagreement as to the extension of the contract.
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2.In the case specified in paragraph 1 of this Article, the disagreement must be stated by a party to the contract in writing at least one month before the expiry of the period of validity of the insurance contract and where the validity period of the contract is shorter than three months - before any other reasonable term agreed between the parties.
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3.Conditions for an automatic extension of the validity period of the insurance contract must be negotiated individually at the moment of concluding the insurance contract.
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Article 84Settlement of the Insurer with the Policyholder after Termination of the Insurance Contract
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When determining conditions for the settlement between the parties after termination of the insurance contract, account must be taken of the fault of a party for breach of the contract conditions, the insurer’s administrative costs related to conclusion and implementation of the contract, the insurance premium amounts paid for the period which was not provided insurance cover, the unpaid insurance premium amounts for the provided cover and other important circumstances.
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Article 85Obligations of the Beneficiary, Insured Person and Injured Party
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1.An insurance contract may specify obligations of the beneficiary and the injured party, which must be performed when exercising their right to the insurance benefit, and the obligations of the insured person.
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2.In exercising his rights, the insurer shall have no right to invoke non-compliance of the beneficiary, insured and injured party with their obligations under the insurance contract, if they are unaware of conclusion of the contract and of their obligations under the insurance contract, or if they do not have a possibility to perform such obligations.
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3.In exercising his rights, the insurer shall have the right to invoke the fact that the policyholder failed to perform his obligation to duly inform the beneficiary, insured person or the injured party about the concluded contract and their obligations.
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SECTION TWO CHARACTERISTICS OF PROPERTY INSURANCE
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Article 86Policyholder, Insured Person and Beneficiary
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A policyholder may conclude a contract for insurance of his own property interests or the interests of another person who, upon conclusion of the insurance contract, becomes the insured person. In property insurance, only the person whose property interests have been covered shall be the beneficiary.
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Article 87Value of Property in Property Insurance
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Where the value of property is not specified in the insurance contract, it shall be considered that the value of property is its market value at the moment of conclusion of the insurance contract.
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Article 88Insurance Benefit
\n
The amount of the insurance benefit shall be equal to the amount of loss incurred and/or other expenses (insurable interest) borne by the policyholder, insured person or beneficiary due to an insured event unless it has been agreed between the parties that the insurer must compensate only part of the loss/other expenses. .
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Article 89Gross Negligence
\n
An insurance contract may specify the cases where the insurer is released from the obligation to pay the insurance benefit if the insured event occurs due to gross negligence of the policyholder or the insured person. Such cases must be discussed individually.
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SECTION THREE CHARACTERISTICS OF CIVIL LIABILITY INSURANCE
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Article 90Insured Person
\n
A policyholder may conclude a civil liability insurance contract for insurance of his own or another person’s property interests relating to civil liability; under the insurance contract that other person becomes the insured person.
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Article 91Insured Event
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Unless the contract on civil liability insurance provides otherwise, the insured event shall mean the policyholder’s or the insured person’s civil liability for the consequences of the actions (act or omission) committed by the policyholder or the insured person during the period of validity of the insurance contract even if such consequences occurred after the expiry of the contract.
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Article 92Expenses Refunded by the Insurer
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1.Unless the insurance contract provides otherwise, the insurer must refund reasonable expenses incurred by the policyholder or the insured person borne while rebutting the claim of the injured party for an indemnity. The expenses shall be refunded even if it turns out later on that the claim was unfounded.
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2.The insurer shall not be obliged to refund the expenses provided in paragraph 1 of this Article and shall have the right to require that the refunded expenses be returned if the policyholder or the insured have caused loss to the injured party intentionally.
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Article 93Payment of the Benefit
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1.The insurer shall pay the insurance benefit to the injured party, and where the policyholder or the insured person compensated the loss caused to the injured party, the insurer shall pay the insurance benefit to the policyholder or the insured person.
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2.Where the sum insured is less than the joint loss caused to all injured parties, the insurance benefit shall be distributed among the injured parties proportionately having account of the amount of the loss.
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Article 94The Right of Direct Claim
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The injured party shall have the right to claim directly that the insurer, who has covered civil liability of the person liable for the loss, pays the benefit.
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Article 95Consequences of Payment of Insurance Benefit
\n
When the insurer pays the benefit for the loss in the amount equal to part of the sum insured, the insurer’s obligation shall continue until the expiry of the insurance contract for the total sum insured without deductions of benefits paid, except for the cases where the insurance contract provides that the insurer’s obligation remains in force only for the remaining amount of the sum insured.
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Article 96Insurer’s Right to Reclaim the Amounts Paid from the Policyholder and the Insured
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1.Where an insured event occurs, as specified in paragraph 3, Article 6.1014 of the Civil Code, with the policyholder’s or the insured person’s intent, the insurer, upon payment of the benefit, shall have the right to reclaim the amount paid from the policyholder or the insured person.
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2.In the cases specified in the civil liability insurance contract, where the insured event occurs due to a gross negligence of the policyholder or the insured person, the insurer, upon payment of the benefit, shall have the right of reclaim the amount paid or its part from the policyholder or the insured person. This term of the insurance contract must be negotiated individually.
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Article 97Transfer of an Object
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1.Where a contract has been concluded on insurance of civil liability which may arise when possessing, using or disposing an object with individual features, the insurance contract shall expire when the owner of the object changes unless the contract provides otherwise.
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2.Where the insurance contract specifies several objects with individual features, upon the change of the owner of one of these objects, insurance cover of property interests relating to the object shall expire.
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SECTION FOUR CHARACTERISTICS OF LIFE ASSURANCE
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Article 98Conclusion of an Insurance Contract
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1.The policyholder may conclude a life assurance contract for his own or any other person’s property interests.
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2.A life assurance contract shall be considered concluded for the benefit of the person/the insured whose life is covered unless the contract provides another beneficiary.
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3.A life assurance contract may be concluded for the benefit of the person who is not the insured subject to consent of the insured in writing. Where the insured is under 18, or he has been recognised incompetent or of limited competence, the insurance contract may be concluded only for the benefit of the insured person except for the cases where there the following conditions
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1)the insured person is under 18;
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2)the beneficiary named is a close relative of the insured;
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3)the beneficiary is appointed in the event the insured person survives until the expiry of the time period provided in the contract.
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4.Transfer of the commitment of the annuity payer provided in 1 paragraph, Article 6.448 of the Civil Code shall be possible where the annuity payer concludes an insurance contract with the insurer and pays the premium in the amount of the annuity.
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5.When concluding an insurance contract specified in paragraph 2, Article 6.289 of the Civil Code, the legal person in liquidation shall pay the premium to the insurer while the insurer commits himself to pay periodical insurance benefits to the beneficiary – the person to whom the legal person under liquidation has an obligation to compensate the loss incurred as a result of injury or loss of life of the natural person.
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Article 99Information to the Policyholder of a Life Assurance Contract
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1.Prior to conclusion of a life assurance contract, the insurer or his authorised representative must provide to the policyholder information in writing specified in this paragraph 1, Article 78 of this Law and, in addition, inform the policyholder in writing about:
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1)possible conditions of the insurance contract concerning the sums insured and benefits which the policyholder is free to choose when concluding the insurance contract, the amounts of premiums for each chosen variant of the sum assured and benefit;
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2)possible terms of the assurance contract;
\n
3)conditions and ways for the termination of the contract, including among them the policyholder’s right to terminate the life assurance contract according to the procedure specified in Article 107 of this Law on concessionary terms;
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4)forms, procedures for and time periods of payment of premiums;
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5)the procedure for and forms of determining the amount of insurance benefits and the procedure of their payment;
\n
6)the interest rate, the principles and ways of calculation of the insurer’s profit share belonging to the policyholders and methods of the distribution of that profit share , the procedure for determining the surrender value and approximate amounts of the surrender value, if a contract concluded is relating to capital accumulation;
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7)where an assurance contract is concluded under which the policyholder bears investment risk - the objects into which investment may be made, their nature, income from investments during the last three years;
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8)essential information about taxation procedures applicable to insurance contracts.
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2.During the period of validity of the insurance contract, the insurer must promptly notify the policyholder of the life assurance contract about:
\n
1)any amendments of the insurer’s name, legal status or the office address, and where the contract is concluded by a branch of the insurer - about changes in the particulars relating to the branch;
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2)any amendments of the information specified in paragraph 1 of this Article where policy conditions or the law applicable to the insurance contract are amended.
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3.Each year the insurer, within the time periods specified in the insurance contract, must inform the policyholder in writing about the insurer’s profit share belonging to the policyholder, the amount of the surrender where the contract concluded is related to capital accumulation.
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4.The information provided must be clear and readily understood.
\n
5.The information shall be provided in the Lithuanian language or, at the request of the policyholder and subject to the agreement with the insurer, - in any other language.
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Article 100Insurance Risk
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1.The insurer shall be prohibited from requesting in any form the policyholder, insured person and other persons to provide to him data of genetic research.
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2.The insurer, in executing the rights provided to him under law or the life assurance contract, shall not invoke the following:
\n
1)the policyholder has not performed the obligation under Article 6.993 of the Civil Code due to negligence, if more than 10 years have passed since the conclusion of the contract;
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2)the policyholder has not performed the obligation under Article 6.1010 of the Civil Code due to negligence, if more than 10 years have passed since the increase of the risk.
\n
3.The terms specified in paragraph 2 of this Article shall also be applied where additional risks of health insurance are included in the life assurance contract.
\n
4.The insurer in exercising the rights granted to him by the life assurance contract, during the validity period of the contract shall have no right to unilaterally increase the premium where the insurance risk increases due to the policyholder’s or insured person’s age and/or sickness, with the exception of cases where the policyholder or the insured person causes his sickness deliberately.
\n
5.In the cases specified in insurance contracts which must be negotiated individually, the insurer shall have the right to unilaterally change the amount of the a specified insurance premium only where this change relates to:
\n
1)the change of the interest rate on domestic and international markets;
\n
2)changed statistical data about insured events and insurance benefits.
\n
6.It shall be permitted to unilaterally change the amount of the premium on the grounds specified in paragraph 5 of this Article only where this change is not essential. In defining whether the change is essential, it must be taken into account, whether the policyholder (beneficiary) is not deprived, because of the essential change, of the possibility to receive what he expected from the insurance contract.
\n
7.Prior to a change of the premium, the policyholder must be given detailed information in writing, specifying the reasons for the change of the premium and providing conditions for him to terminate the insurance contract.
\n
Article 101Benefit Owing to Death of the Insured Person
\n
Where the policyholder or the insured person in the cases specified in the life assurance contract has not appointed the beneficiary, the benefits payable owing to the insured person’s death shall be inherited according to the procedure specified by laws.
\n
Article 102Appointment and Replacement of the Beneficiary
\n
1.The policyholder shall have the right to appoint one or several beneficiaries, who, upon the occurrence of the insured event, shall acquire the right to the insurance benefit or its part. The policyholder shall notify the insurer about the appointed beneficiary in writing. Where the insured person is under 18 years of age, he has been is recognised incapable or is of limited capability, the policyholder shall have no right to appoint the beneficiary with the exception of the following cases:
\n
1)the insured person is under 18 years of age;
\n
2)the beneficiary to be appointed is a close relative of the insured person;
\n
3)the beneficiary is appointed in the event the insured person survives until the expiry of the time period provided in the contract.
\n
2.The policyholder shall have the right to appoint an irrevocable beneficiary. The policyholder must also inform in writing the person appointed about his appointment as the irrevocable beneficiary.
\n
3.When appointing the beneficiary who is not the insured person, a written consent of the insured person is obligatory, with the exception of the follo0wing cases:
\n
1)where the insured person is under 18 years of age ;
\n
2)the beneficiary to be appointed is a close relative of the insured person;
\n
3)the beneficiary is appointed in the event the insured person survives until the expiry of the time period provided in the contract.
\n
4.Where the policyholder has appointed several beneficiaries without specifying the individual amounts of benefit due to each beneficiary, upon occurrence of the insured event, the beneficiaries shall have equal rights to the benefit.
\n
5.The policyholder shall have the right to replace or revoke the beneficiary by notifying the insurer in writing thereupon. When replacing the beneficiary by another beneficiary who is not the insured person, a written consent of the insured person is obligatory, with the exception of the following cases:
\n
1)where the insured person is under 18 years of age ;
\n
2)the beneficiary to be appointed is a close relative of the insured person;
\n
3)the beneficiary is appointed in the event the insured person survives until the expiry of the time period provided in the contract 6. The irrevocable beneficiary may be replaced or revoked only subject to his written consent.
\n
7.The beneficiary shall be considered appointed, replaced or revoked when he received a written notification on the appointment, replacement or revocation of the beneficiary from the policyholder, and has met the conditions specified in paragraphs 3, 5 and 6 of this Article.
\n
8.Where the policyholder specifies in his will how his insurance benefits are to be inherited after his death, this request of the policyholder shall be equal to the appointment or replacement of the beneficiary provided that insurer has been is informed thereupon in writing by the policyholder or, upon his death, by his inheritors, and the provisions specified in paragraphs 3, 5 and 6 of this Article have been met.
\n
9.In the cases and according to the procedures specified in the insurance contract, the insured person shall also have the right to appoint, replace and revoke the beneficiary. In such a case, appointment, replacement or revocation of the beneficiary shall be subject mutatis mutandis to the provisions of this Article.
\n
10.Where the beneficiary has been appointed, replaced or revoked disregarding the provisions of this Article, the beneficiary’s appointment, replacement or revocation shall be void except for the case of revocation of the beneficiary who is not an irrevocable beneficiary, as provided in paragraph 4, Article 6.191 of the Civil Code.
\n
11.Upon the occurrence of the insured event, the beneficiary, appointed only according to the procedure specified in this Article, shall acquire the right to the benefit.
\n
Article 103Exceptions in the Application of the Civil Code
\n
The Civil Code provisions on insurance in excess of the insurance value (Article 6.1001), insurance against different risks (Article 6.1002) and on the transfer of the policyholder’s rights to compensation of loss to the insurer (Article 6.1015) shall not apply to the life assurance contract.
\n
Article 104Benefit
\n
1.The benefit under an insurance contract shall be paid with no regard to the policyholder’s or beneficiary’s income from other sources.
\n
2.The insurer shall have the right to reduce the benefit by the amount of the premiums not paid for suspension of the term of insurance cover and the amount of income which would have been received from their investment.
\n
Article 105Policyholder’s Right to Refuse Payment of Premiums
\n
1.When during the validity period of the life assurance contract related to capital accumulation the minimum amount, if specified in the insurance contract, is accumulated, the policyholder shall have the right not to pay the premium. In this case the life assurance contract shall stay in force for the remaining validity period of the contract and benefits under the contract shall be adjusted following the procedure specified in the contract, taking into account the accumulated minimum amount.
\n
2.The policyholder’s right provided in paragraph 1 of this Article shall be exercised according to the procedure specified in the life assurance contract.
\n
Article 106Insurer’s Right to Terminate the Insurance Contract
\n
The insurer shall have the right to unilaterally terminate the life assurance contract only in the event of an essential breach of the conditions of the contract and in the case specified in paragraph 1, Article 6.1009. of the Civil Code.
\n
Article 107Termination of Insurance Contract on Concessionary Terms
\n
1.Where the policyholder who is a natural person unilaterally terminates a life assurance contract by notifying in writing the insurer within 30 days from the moment he was informed about the concluded contract, the insurer must reimburse the total premium which has been paid, with the exception of cases where the term of the life assurance contract is six months or less.
\n
2.Upon termination of a life assurance contract by the policyholder who is a natural person in the case specified in paragraph 1 of this Article, no obligations related to the insurance contract may arise.
\n
Article 108Reimbursement of Premium Upon Termination of the Insurance Contract
\n
The insurance contract may specify the cases and procedure, where a life assurance contract related to capital accumulation, terminated by the insurer because the policyholder has not paid the premium, shall be renewed where the policyholder, within 6 months from the termination of the contract, reimburses the surrender value paid by the insurer.
\n
Article 109Payment of Surrender Value
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1.Where a life assurance contract related to capital accumulation is terminated or otherwise expires before the term, or where the insurer exercises the right granted by laws or the insurance contract to refuse payment of the benefit or to reduce it, the amount paid to the policyholder must not be less than the surrender value.
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2.Where upon recognition of a life assurance as invalid, restitution is due for the benefit of the policyholder, the insurer must return to the policyholder the surrender value if it is higher than the premiums paid by the policyholder.
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3.The procedure for the calculation and payment of the surrender value as well as approximate amounts of the surrender value must be specified in the life assurance contract.
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Article 110Transfer of Property Rights Arising From Insurance Contract
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1.According to procedure specified in a life assurance contract, the policyholder and the beneficiary may transfer the property rights arising from the insurance contract to another person.
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2.Upon the transfer of the rights arising from the life assurance contract, appointment of the beneficiary, except for the irrevocable beneficiary, shall become void.
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Article 111Mortgage of the Property Rights Arising From Insurance Contract
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1.The policyholder, in order to ensure performance of the obligation, may mortgage the property rights arising from the life assurance contract related to capital accumulation: the right to the benefit and the right to the surrender value.
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2.The beneficiary may mortgage the right to the benefit only upon occurrence of the insured event.
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3.The insurer shall be informed in writing of the mortgage of the property rights arising from the insurance contract.
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4.The claim of the mortgagee may be satisfied from the insurance benefit only upon the occurrence of the insured event. The insurer must satisfy the claim of the mortgagee from the insurance benefit only upon expiry of the time period specified in paragraph 2, Article 82 of this Law.
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5.The mortgagee shall have priority against the beneficiary for the satisfaction of his claim, save for the case where the beneficiary is irrevocable. Where the irrevocable beneficiary was appointed after the pledge of the property rights arising from the insurance contract, the mortgagee shall have priority against the irrevocable beneficiary for the satisfaction of his claim.
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6.After the insurer satisfies the mortgagee’s claim, the surrender value or the insurance benefit shall be reduced by an amount equal to the amount of the mortgagee’s claims satisfied by the insurer.
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SECTION FIVE CHARACTERISTICS OF HEALTH INSURANCE
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Article 112Insured Person
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1.The policyholder may conclude an insurance contract for the cover of his health related property interests or the property interests of another person who, upon conclusion of the contract becomes the insured person.
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2.If health insurance is insurance against loss, only the insured person may be the beneficiary, and in the event of his death - the appointed beneficiary.
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Article 113Application of Other Provisions of This Law
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1.Provisions of paragraph 1, Article 100, and Articles 101, 102 and 106 of this Law shall be applicable mutatis mutandis to a health insurance contract.
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2.If the health insurance contract is a contract of insurance of amounts, provisions of this Law Article 98, 103 and 104 shall be applicable to it mutatis mutandis , however the provisions of the Civil Code concerning underinsurance (Article 6.999) and supplementary insurance (Article 6.1000)shall not apply to it.
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Article 114Insurance Risk
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1.In executing the rights granted by law and the health insurance contract, the insurer may not invoke the facts that:
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1)the policyholder has not fulfilled the obligation specified in Article 6.993 of the Civil Code due to negligence, if more than five years have passed since conclusion of the insurance contract;
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2)the policyholder has not fulfilled the obligation specified in Article 6.1010 of the Civil Code due to negligence, if more than five years have passed since the risk increase;
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2.The insurer, in executing the rights granted by the life assurance contract, during the validity period of the insurance contract, the insurer shall have no right to unilaterally increase the premium when the insurance risk increases due to the age and sickness of the policyholder or of the insured person, save for the cases where the policyholder or the insured person causes his sickness intentionally.
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SECTION SIX CO-INSURANCE
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Article 115Participation in Co-insurance
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1.Mutual rights and obligations of the insurers participating in coinsurance shall be established in the contract where the following conditions shall be stated:
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1)the insurer who is appointed leading insurer;
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2)the fee of the leading insurer for the administration of co-insurance contracts, unless otherwise agreed;
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3)the share of insurance risk in percentage assumed by each insurer;
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4)the procedure of distribution of insurance premiums received under the co-insurance contract;
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5)the procedure for communicating by the leading insurer to the other insurers of the information relating to co-insurance contract;
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6)one of the ways for paying out the insurance benefit as specified in paragraph 5 of this Article;
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7)the procedure for effecting by the insurers settlement with the leading insurer if one of the ways for paying out the insurance benefit specified in paragraph 5(1) of this Article is applied;
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8)the procedure and conditions of the insurer’s withdrawal from co-insurance.
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2.The leading insurer shall exercise all the rights and obligations of the insurer, unless this Law provides otherwise.
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3.An insurance contract shall be concluded according to the terms and conditions prepared by the principal insurer.
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4.The insurance policy issued by the leading insurer, in addition to the insurance policy particulars prescribed by paragraph 1 of Article 6.991 of the Civil Code, must contain the following information:
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1)the name and registered office address of the leading insurer;
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2)the names and registered office addresses of other insurers participating in c-insurance;
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3)share of insurance risk in percentage assumed by each insurer;
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4)one of the ways of payment of insurance benefit provided for in paragraph 5 of this Article;
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5)signatures and seals of all the insurers, if their mutual contract provides that the insurance policy shall be signed not only by the leading insurer but also by all other insurers.
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5.Insurance benefit, according to the co-insurance contract, shall be paid out in one of the following ways, which must be specified in the insurance contract:
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1)the leading insurer shall pay out the insurance benefit on his own behalf and on behalf of other insurers participating in co-insurance;
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2)each insurer participating in the co-insurance shall pay out the amount of insurance benefit in proportion to the share of insurance risk assumed.
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6.If it is established in the insurance contract that the leading insurer pays out the insurance benefit on its own behalf and on behalf of other insurers participating in co-insurance, the policyholder, beneficiary or any injured party must apply to the leading insurer for the payment of insurance benefit.
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7.If it is established in the insurance contract that each insurer participating in co-insurance shall pay the amount of the insurance benefit in proportion to the assumed share of insurance risk, after the leading insurer has stated the fact of the insured event and the amount of the insurance benefit and decided upon the payment thereof, the policyholder, beneficiary or any injured party must apply to each insurer participating in co-insurance for the payment of insurance benefit taking into account the share of insurance risk assumed by them. In the event of a dispute between the policyholder, beneficiary or any injured party and one of the insurers regarding the payment of a share of the insurance benefit, the said insurer shall be the defendant in court.
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8.The leading insurer’s decision concerning the existence or non-existence of the insured event, the amount of the insurance benefit and decision to pay the insurance benefit shall be binding on the insurers participating in co-insurance.
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Article 116Co-insurance in the European Union Member States
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1.The provisions of Article 115 of this Law shall not apply to co-insurance operations in the European Union Member States by insurance undertakings and insurance undertakings of other European Union Member States, which satisfy the following conditions:
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1)co-insurance contract shall be concluded for covering the risks of insurance classes referred to in subparagraphs 3 to 13 and 16 of paragraph 3, Article 7 of this Law, except for the risks of insurance class referred to in subparagraph 13, paragraph 3 of Article 7 of this Law which concern damage arising from the use of nuclear sources or from medicines or other medicinal products;
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2)co-insurance contract is concluded only for covering large insurance risks which by reason of their nature or size call for the participation of several insurers for their coverage;
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3)insurance risk is covered by a single insurance contract for the period specified in the contract at an overall premium provided in the contract and by two or more insurers each of whom assumes a share of insurance risk and one of whom is the leading insurer;
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4)insurance risk is situated within a European Union Member State or Member States;
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5)the leading insurer complies with the requirements set in this Article and according to the status defined by the contract concluded between the insurers the leading insurer is treated as if he were the insurer covering the whole risk;
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6)at least one of the co-insurers participates in the contract by means of a head office or branch established in any other European Union Member State other than that of the leading insurer;
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7)the leading insurer fully assumes the rights and obligations of the leading insurer and in particular has the right to determine the terms and conditions of the insurance contract and the amount of the insurance premium.
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2.The requirements provided for in Articles 53 or 57 of this Law shall be applied to the leading insurer.
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3.The determination of the technical provisions of insurance undertakings of the Republic of Lithuania and branches of non-member-country insurance undertakings established in the Republic of Lithuania, which participate in co-insurance in the European Union, the representation of the technical provisions by matching assets, communication of statistical data and other information to the Supervisory Commission shall be subject to the provisions of the laws of the Republic of Lithuania.
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4.The Supervisory Commission shall co-operate with the European Commission and the competent authorities of other European Union Member States for the purpose of examining any difficulties which might arise in implementing the provisions of this Article, compliance with the provisions of this Article and in observing any practices which might indicate that the purpose of the provisions is being misused either in that the leading insurer does not assume the leader's role in co-insurance practice or the risks clearly do not require the participation of two or more insurers for their coverage.
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CHAPTER vi LAW APPLICABLE TO INSURANCE CONTRACTS
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Article 117Application of Provisions of this Chapter
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This Chapter shall establish the law applicable to non-life insurance contracts that cover the risks within the European Union Member States, to compulsory insurance contracts where a European Union Member State provides for the commitment to conclude an insurance contract as well as the law applicable to life assurance contracts where the policy holder has his habitual residence or, if the policy holder is a legal person, the latter's head office, to which the life assurance contract relates, is situated in a European Union Member State.
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Article 118Mandatory Rules of the Law
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The mandatory rules of the law of the European Union Member State of the commitment under the assurance contract where the insurance risk is situated or of the European Union Member State which stipulates the commitment to conclude the contract shall be applied whatever the law applicable to the contract.
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Article 119The Law Applicable to Non-life Insurance Contracts
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1.This Article shall set out the law applicable to non-life insurance contracts which cover insurance risks situated in the European Union Member States, where the parties to the non-life insurance contract have not chosen the law applicable.
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2.Where the policyholder has his habitual residence or the policy holder has his head office in a European Union Member State in which the insurance risk is situated, the law of that Member State shall be applied, or, where the law of that Member State so allows, the parties may choose the law of any other state.
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3.Where the policyholder has his habitual residence or head office not in the same European Union Member State where the insurance risk is present, the parties to the insurance contract may choose either the law of the Member State in which the insurance risk is situated or the law of the Member State in which the policyholder has his habitual residence or head office.
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4.Where the policyholder is engaged in commercial economic activities or operates as a self-employed person, the parties to the insurance contract covering insurance risks related to the activity of the policyholder which are situated in differed European Union Member States may choose the law of any of these Member States or the law of the Member State in which the policyholder has his habitual residence or its head office.
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5.Notwithstanding the provisions of paragraphs 2, 3 and 4 of this Article, in concluding an insurance contract in respect of insured events which may occur in a European Union Member State other than the Member State where the risk is situated, the parties to the insurance contract may choose the law of the first Member State.
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6.The parties to insurance contracts by virtue of their size shall be granted freedom to choose the law applicable.
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7.The fact that the parties to an insurance contract have chosen the applicable law in cases defined under paragraphs 2 and 6 of this Article shall not affect the application of the mandatory rules of law of the European Union Member State to which all other circumstances applicable when choosing the law are connected.
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8.Agreement of the parties to an insurance contract over the applicable law must be implicitly or explicitly indicated in the terms and conditions of the insurance contract or must be clearly presumable from concrete circumstances. Where this is not the case or where the parties to the insurance contact have not chosen the applicable law, the law of the state referred to in the previous paragraphs of this Article, with which the insurance contract is most closely connected shall be applied. However, a substantial part of the insurance contract which is more closely connected with a state other than those referred to in paragraphs 1 to 5 of this Article may, by way of exception, be subject to the law of that state. It shall be presumed that an insurance contract is most closely connected with the law of the European Union Member State where the insurance risk is situated.
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9.Where an insurance contract is concluded for covering insurance risks situated in more than one Member State, for the purpose of this paragraph the insurance contract shall be deemed to consist of several insurance contracts each of which is connected only with one Member State.
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Article 120Law Applicable to Compulsory Insurance Contracts
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1.A compulsory insurance contract shall be subject to the law of the Member State which provides for the obligation to conclude the insurance contract.
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2.Where the laws of the Republic of Lithuania provides for the obligation to conclude an insurance contract, this obligation shall not be deemed properly discharged where the concluded insurance contract does not comply with the provisions of the legal acts of the Republic of Lithuania which are applicable to such insurance.
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3.Where in cases of compulsory insurance the law of the Member State in which insurance risk is situated is contrary to the law of the Member State which provides for the obligation to conclude an insurance contract the law of the latter state shall be applied.
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4.Where an insurance contract is concluded for covering risks situated in more than one European Union Member State, and at least one of them stipulates compulsory insurance, for the purpose of paragraph 2 of this Article the insurance contract shall be deemed to consist of several insurance contracts each of which is connected only with one Member State.
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5.Where a Member State provides for compulsory insurance and the policyholder is obliged to notify the competent authorities about the termination of insurance protection, the insurance protection shall have legal effects on the third persons only under the circumstances specified in the legal acts of that European Union Member State.
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Article 121Law Applicable to Life Assurance Contracts
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1.This Article shall specify the law applicable to life assurance contracts, where the parties to the life assurance contract have not chosen the law applicable to the insurance contract.
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2.The law applicable to life assurance contracts stipulated in this Article shall be the law of the Member State of the commitment.
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3.Where the policyholder has his habitual residence in a European Union Member State other than that of which he is a national, the parties to the insurance contract may choose the law of the Member State of which the policyholder is a national.
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CHAPTER VII
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INTERVENTION MEASURES, WINDING-UP, REORGANISATION AND BANKRUPTCY SECTION ONE INTERVENTION MEASURES
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Article 122Application of the Provisions of this Section
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1.This Section regulates application of intervention measures to:
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1)insurance undertakings of the Republic of Lithuania and their branches established in the Member States of the European Union;
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2)branches of non-member-country insurance undertakings established in the Republic of Lithuania. subparagraphs 1 to 8 of paragraph 1 of Article 2.131 of the Civil Code shall be considered as intervention measures provided that they meet the criteria set forth in Article 2(36) of this Law.
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3.Measures provided for in subparagraphs 5 and 9 of Article 197 of this Law imposed by the Supervisory Commission and other measures, which are intervention measures as indicated during their application by the Supervisory Commission upon considering their possible effects.
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Article 123Intervention measures
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1.Only the court or the Supervisory Commission shall have the right to pass a decision concerning imposition of intervention measures.
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2.The law of the Republic of Lithuania shall be applicable to intervention measures.
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Article 124Information about Intervention Measures
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1.The Supervisory Commission, upon receipt of the experts’ report and recommendations, as specified in paragraph 2 of Article 2.130 of the Civil Code, shall submit to the court a conclusion regarding the intervention measures which the court intends to impose. Having passed a decision to impose a measure involving intervention, the court shall forthwith notify the Supervisory Commission of the decision made and of its coming into effect.
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2.The Supervisory Commission inform as a matter of urgency the competent authorities of the other European Union Member States of the decision of the court or the Supervisory Commission to impose a measure involving intervention and of the coming into effect of the decision indicating the possible effects of the measure on natural or legal persons of the other Member State. Where possible, the Supervisory Commission must inform the competent authorities of the other Member States thereof before the passing of a decision to impose a measure involving intervention.
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3.The court or the Supervisory Commission shall, upon passing the decision to impose a measure involving intervention, immediately publish the operative part of the decision in the supplement Informaciniai Pranešimai of the state gazette Valstybės žinios.
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4.The Supervisory Commission must immediately publish the operative part of the decision in question in the Official Journal of the European Communities.
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5.Notification referred to in paragraphs 3 and 4 of this Article shall specify the institution which has passed the decision to impose the measure involving intervention right to instruct the insurance undertaking or the branch of the non-member-country insurance undertaking to inform the above persons of the measure involving intervention.
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SECTION two WINDING-UP, REORGANISATION AND BANKRUPTCY OF INSURANCE UNDERTAKINGS AND TERMINATION OF ACTIVITIES OF BRANCHES OF NON-MEMBER-COUNTRY INSURANCE UNDERTAKINGS
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Article 125Winding-up, Reorganisation and Bankruptcy of Insurance Undertakings
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1.Reorganisation of an insurance undertaking upon the decision of the general meeting of shareholders, its restructuring shall be effected upon the authorisation of the Supervisory Commission, granted in the manner prescribed by the Supervisory Commission. Where the insurance undertaking is reorganised by the order of the court, before issuing the said order, the court shall receive the conclusion of the Supervisory Commission.
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2.The Supervisory Commission shall have the right to obligate the insurance undertaking to inform the interested persons about the reorganisation, restructuring and change of the type of activity and, having regard to the provisions of Article 133 of this Law, to establish the procedure for the submission of information.
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Article 126Voluntary Liquidation of an Insurance Undertaking
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1.The general meeting of shareholders of the insurance undertaking shall have the right to take a decision to liquidate the insurance undertaking only where the insurance undertaking has transferred its rights and obligations under insurance contracts in accordance with the procedure laid down in this Law and has been granted authorisation by the Supervisory Commission, in accordance with the procedure established by the Supervisory Commission, to liquidate the insurance undertaking.
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2.The Supervisory Commission shall take a decision regarding the granting of the authorisation within 30 working days from the submission of all necessary and properly executed documents.
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3.Before a person is appointed liquidator, member or chairman of the liquidation commission, an approval of the person's candidature by Supervisory Commission must be received in accordance with the procedure established by the Supervisory Commission. The Supervisory Commission shall take a decision on the approval of the candidature within 30 working days from the submission of all necessary and properly executed documents.
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4.The insurance undertaking shall within three working day notify the Supervisory Commission in writing of the decision taken to liquidate the insurance undertaking and to appoint the liquidator or to set up the liquidation commission and appoint its chairman.
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Article 127Application to Initiate Investigation of Insurance Undertaking’s Activity
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1.Upon revoking insurance activity license, the Supervisory Commission shall obligate the insurance undertaking to transfer its rights and obligations under insurance contracts and set the deadline for the transfer.
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2.An insurance undertaking having rights and obligations under insurance contracts shall have no right to engage in any other commercial activities.
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3.If the insurance undertaking fails to transfer its rights and obligations under insurance contracts within the time period set by the Supervisory Commission, the latter shall apply to the prosecutor for initiating investigation of activities of the insurance undertaking following the procedure prescribed by Articles 2.124 through 2.131 of the Civil Code.
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Article 128Compulsory Liquidation of an Insurance Undertaking
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1.Before passing a decision regarding compulsory liquidation of an insurance undertaking on the grounds laid down in Article 2.106 of the Civil Code, the court must inform the Supervisory Commission thereof and receive its conclusion regarding compulsory liquidation of the insurance undertaking.
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2.The Supervisory Commission shall nominate to the court the candidates to the post of a liquidator or liquidation commission and its chairperson. Having passed a decision to liquidate an insurance undertaking, to appoint a liquidator or liquidation commission and its chairperson, the court must notify the Supervisory Commission thereof in writing within three working days.
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Article 129Bankruptcy of an Insurance Undertaking
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1.The insurance undertaking bankruptcy case shall be heard in accordance with the procedure laid down by the Law on Enterprise Bankruptcy, unless this Law provides otherwise.
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2.The bankruptcy proceedings in respect of an insurance undertaking shall be conducted only in court. The petition for bankruptcy shall be filed with the court by the Supervisory Commission. The court shall within seven days consider the petition for bankruptcy filed by the Supervisory Commission.
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3.If the petition for bankruptcy is filed by other persons according to the procedure laid down by law, before passing a decision to institute bankruptcy proceedings the court must receive a conclusion from the Supervisory Commission regarding the insolvency of the insurance undertaking.
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4.The Supervisory Commission shall nominate to the court a candidate to the post of the administrator.
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5.Having passed a decision to institute bankruptcy proceedings against the insurance undertaking, the court must notify the Supervisory Commission thereof in writing within three working days.
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6.No meetings of the insurers and other creditors shall be called during the investigation of the bankruptcy case of an insurance undertaking. The interests of said persons shall be represented by a committee of creditors' representatives formed by the Supervisory Commission. The committee shall consist of no more than 15 persons drawn from the insurers, policyholders, beneficiaries, injured party, other creditors and representatives of the Supervisory Commission. The regulations of the committee of the representatives of creditors shall be approved by the Supervisory Commission.
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7.The first meeting of the committee of creditors' representatives shall be called by the Supervisory Commission or, by the order of the Supervisory Commission, the administrator.
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Article 130Reorganisation of a Non-Member-Country Insurance Undertaking Related to a Branch Established in the Republic of Lithuania
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1.Reorganisation of a non-member-country insurance undertaking may have legal consequences for the interests of the policyholders, insured, beneficiaries and injured party of a branch of this undertaking established in the Republic of Lithuania only upon the granting of authorisation by the Supervisory Commission.
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2.The Supervisory Commission shall have the right to obligate a non-member-country branch of an insurance undertaking to inform about the reorganisation procedures and, having regard to the provisions of Article 133 of this Law, to establish the procedure for the submission of information.
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Article 131Termination of Activities of a Non-Member-Country Branch of an Insurance Undertaking Established in the Republic of Lithuania
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1.A non-member-country insurance undertaking shall have the right to take a decision to terminate the activities of a branch established in the Republic of Lithuania only upon delegating, in the manner prescribed by this Law, its rights and obligations under insurance contracts concluded by the branch and upon being granted authorisation by the Supervisory Commission.
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2.The Supervisory Commission shall take a decision regarding the granting of the authorisation within 30 working days from the submission of all necessary and properly executed documents.
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3.Having made a decision to terminate the activities of a branch, the non-member-country insurance undertaking must appoint a person responsible for the termination of activities of the branch. Before appointing a person responsible for the termination of activities of the branch, the non-member-country insurance undertaking must obtain the Supervisory Commission's approval of the nominee in the manner prescribed by the Supervisory Commission. The Supervisory Commission shall take a decision on the approval of the nominee within 30 working days from the submission of all necessary and properly executed documents.
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4.Any decision to terminate the activities of a branch of a non-member-country insurance undertaking and to appoint a person responsible for the termination of activities of the branch must be presented by the non-member-country insurance undertaking in writing to the Supervisory Commission within three working days.
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Article 132Compulsory Termination of Activities of a Branch of a Non-Member-Country Insurance Undertaking Established in the Republic of Lithuania
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1.The activities of a branch of a non-member-country insurance undertaking established in the Republic of Lithuania, shall be terminated in a compulsory manner after the Supervisory Commission adopts the decision to revoke the authorisation granted to the branch to engage in insurance activities. In this case the Supervisory Commission shall nominate the person responsible for the termination of activities.
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2.If, in accordance with the procedure established by law, other institutions of the Republic of Lithuania intend to pass a decision to terminate the activities of a branch of a non-member-country insurance undertaking established in the Republic of Lithuania, the Supervisory Commission shall submit the candidature of the person responsible for the termination of activities. Having passed the decision to terminate the activities of a branch of a non-member-country insurance undertaking and appoint the person responsible for the termination of activities, the state institution must notify the Supervisory Commission thereof in writing within three working days.
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Article 133
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Information Related with Liquidation and Bankruptcy Case of an Insurance Undertaking and Termination of Activities of a Branch of a Non-member- Country Insurance Undertaking 1. The Supervisory Commission shall immediately inform the competent authorities of other European Union Member States about the adopted decision to liquidate the insurance undertaking, terminate the activities of a branch a non-member-country insurance undertaking or to institute bankruptcy proceedings against the insurance undertaking, indicating possible consequences of the above actions for natural or legal persons of this European Union Member State.
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2.Where possible, the Supervisory Commission shall notify the competent authority of any other European Union Member State before the decision to liquidate the insurance undertaking, to terminate the activities of a branch of a non-member-country insurance undertaking or to institute bankruptcy proceedings against the insurance undertaking is adopted.
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3.The liquidator of the insurance undertaking in liquidation, the chairman of the liquidation commission, the person responsible for the termination of activities of a branch of a non-member-country insurance undertaking and the administrator of the insurance undertaking in bankruptcy shall without delay publish the decision to liquidate the insurance undertaking, to terminate the activities of a branch of the non-member-country insurance undertaking or to institute bankruptcy proceedings against the insurance undertaking in the supplement Informaciniai pranešimai of the state gazette Valstybės žinios.
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4.The liquidator of the insurance undertaking in liquidation, the chairman of the liquidation commission, the person responsible for the termination of activities of a branch of a non-member-country insurance undertaking and the administrator of the insurance undertaking in bankruptcy shall without delay publish an excerpt from the adopted decision in the Official Journal of the European Communities. In addition to other information, the announcement shall contain the address and other contact information of the liquidator of the insurance undertaking in liquidation, the chairman of the liquidation commission, the person responsible for the termination of activities of a branch of a non-member-country insurance undertaking and the administrator of the insurance undertaking in bankruptcy as well as the law which is applied to liquidation or bankruptcy procedures.
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5.The liquidator of the insurance undertaking in liquidation, the chairman of the liquidation commission, the person responsible for the termination of activities of a branch of a non-member-country insurance undertaking and the administrator of the insurance undertaking in bankruptcy shall without delay notify in writing every known creditor whose habitual residence is in any other European Union Member State about the decision to liquidate the insurance undertaking, to terminate the activities of the branch of a non-member-country insurance undertaking or to institute bankruptcy proceedings against the insurance undertaking. The information must indicate the following:
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1)the time period and the procedure for filing the creditor's claim and the entity with whom the claim shall be filed;
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2)legal consequences of failure to file or late filing of creditors' claims;
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3)the ranking of the creditor’s credit claims and the measures to secure a credit claim;
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4)consequences for insurance contracts of liquidation and bankruptcy of an insurance undertaking, termination of activities of a branch of a non-member-country insurance undertaking and the moment of expiry of rights and obligations related with the insurance contract.
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6.The information referred to in paragraph 5 of this Article shall be presented in the Lithuanian language and the national language or one of national languages of a European Union Member State. The document shall be under the heading “Invitation and Deadline for Filing Credit Claims” in all official languages of the European Union. If the creditor’s credit claim arises from the insurance contract, the information shall be submitted in the national language or in one of the national language of a European Union Member State where the creditor has his habitual residence or head office.
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7.A creditor who has a habitual residence in any other European Union Member State, while exercising the right to file a credit claim must submit copies of documents confirming credit claims (if any), indicate the date when the credit claim arose, the amount of credit claim and means whereby credit claim is secured. The creditor’s information shall be submitted in the national language or one of the national languages of the European Union Member State where the creditor has his habitual residence or head office. However, the information must contain the heading Kreditorinis reikalavimas (Credit claim) or Pastabos dėl kreditorinio reikalavimo (Comments concerning credit claim) in the Lithuanian language.
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8.The liquidator of the undertaking in liquidation, the chairman of the liquidation commission, the person responsible for the termination of activities of a branch of a non-member-country insurance undertaking or the administrator of the undertaking in bankruptcy must properly and on a regular basis inform creditors about the progress of liquidation or bankruptcy procedures.
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9.The liquidator of the undertaking in liquidation, the chairman of the liquidation commission, the person responsible for the termination of activities of a branch of a non-member-country insurance undertaking or the administrator of the undertaking in bankruptcy must submit information to the Supervisory Commission in the manner established by the Supervisory Commission.
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10.The Supervisory Commission, upon the request of the competent authority of any other European Union Member State, must present information about liquidation of an insurance undertaking, termination of activities of a branch of a non-member-country insurance undertaking of or bankruptcy of the insurance undertaking.
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Article 134
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Use of Assets Covering Insurance Technical Provisions of an Insurance Undertaking in Liquidation or in Bankruptcy or a Branch of a Non-Member-Country Insurance Undertaking whose Activities are Terminated 1. Assets covering insurance technical provisions of an insurance undertaking in liquidation or in bankruptcy or a branch of a non-member-country insurance undertaking, whose activities are terminated, which are included in the list specified in Article 35(7) of this Law may only be used to satisfy credit claims of the policyholders, insured, beneficiaries and injured party, which arise from insurance contracts, save for the exception indicated in paragraph 4 of this Article. Assets that cover insurance technical provisions and funds received following assignment of the funds may not be used for recovery under other liabilities of an insurance undertaking or a branch of a non-member-country insurance undertaking.
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2.If assets covering insurance technical provisions are not sufficient to satisfy all credit claims arising under insurance contracts of the insurance undertaking in liquidation or in bankruptcy or of a branch of a non-member-country insurance undertaking whose activities are being terminated , the said claims shall be satisfied in proportion to the sum which is due to every creditor.
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3.Funds other than assets covering technical provisions of the insurance undertaking or a branch of a non-member-country insurance undertaking shall be used to satisfy credit claims of creditors referred to in paragraph 1 of this Article, whose claims were not fully satisfied from the assets covering insurance technical provisions and of all other creditors in the manner established by law. The balance of funds of insurance technical provisions which remains after satisfying credit claims of creditors referred to in paragraph 1 of this Article, shall also be used to satisfy claims of all other creditors in the manner established by law.
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4.If assets, other than those covering insurance technical provisions of the insurance undertaking in bankruptcy, prove not sufficient to cover administrative expenses, the court, upon the proposal of the committee of creditors’ representatives, having regard to the opinion of the Supervisory Commission, upon the administrator's request shall have the right to allocate up to 10% of assets covering insurance technical provisions for administrative expenses of the insurance undertaking in bankruptcy.
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Article 135Termination of Insurance Contracts of Insurance Undertakings in Bankruptcy
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1.Following the institution of bankruptcy proceedings, non-life insurance contracts shall terminate. The policyholders of these contracts shall acquire the right of credit claim to the paid share of the insurance premium for the period from the institution of bankruptcy proceedings until the end of the period of the insurance contract provided for in the insurance contract.
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2.If after the effective date of the court ruling concerning the institution of bankruptcy proceedings the rights and obligations under the life assurance contracts are not transferred within the time period specified by the Supervisory Commission, these contracts shall terminate.
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Article 136Termination of Contracts Concluded by Branches of Non-Member-Country Insurance Undertakings
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1.Upon the revocation by the Supervisory Commission of the authorisation of a branch of non-member-country insurance undertaking because the branch’s liabilities exceed the assets assigned to it, all non-life insurance contracts shall be terminated. The policyholders under those contracts shall acquire the right of credit claim to the share of the paid premium for the period from the revocation of the authorisation to engage in insurance activities to the date of termination of the insurance contract provided for in the contract.
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2.If the rights and obligations under life assurance contracts are not transferred from the moment of revocation of the authorisation to engage in insurance activities until the termination of the time period set by the Supervisory Commission, such contracts shall terminate.
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3.If after the revocation of the authorisation to engage in insurance activities the branch’s liabilities exceed the assets assigned to the branch, the Supervisory Commission shall state this fact by a resolution. In such case non-life insurance contracts shall terminate; if the rights and obligations under life assurance contracts are not transferred within the time period set by the Supervisory Commission, these contracts shall terminate.
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Article 137Policyholders’ Credit Claims after Termination of Life Assurance Contracts
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1.Each policyholder of life assurance contracts which have expired due to reasons specified in Article 135 or 136 of this Law shall acquire the right of credit claim against an insurance undertaking or against a branch of a non-member-country insurance undertaking.
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2.Where a life assurance contract has been concluded only for covering a death risk, the policyholders shall acquire the right of credit claim to the share of the paid premium for the period from the termination of the insurance contract for reasons specified in Article 135 or 136 of this Law to the expiry of the period of the insurance contract provided for in the contract.
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3.The amount of the policyholders’ credit claim in case of a life assurance contract with capital savings shall equal the amount of technical provisions established for the contracts concluded by the policyholders as for the day the contract termination.