Regulation of insurance services in the Czech Republic

DOIhttps://doi.org/10.1108/13581980210810102
Date01 March 2002
Published date01 March 2002
Pages31-36
AuthorVladimir Mráz
Subject MatterAccounting & finance
Regulation of insurance services in the
Czech Republic
Vladimı
´r Mra
´z
Received (in revised form): 31st October, 2001
Czech Insurance Association, Na Por
ˇı
´c
ˇı
´12, 110 00 Prague 1, Czech Republic; tel: +420 2 24875611;
fax: +420 2 24875612; e-mail: vladimir.mraz@cap.cz
Vladimı
´r Mra
´zis President of the Czech
Insurance Association and Chairman of
the Board and General Manager of Koo-
perativa, pojis
ˇt’ovna, a.s., which is ranked
second in the Czech insurance market. He
has been working in the insurance indus-
try since 1968. He founded Kooperativa
and has great knowledge of the transition
from monopoly insurance to market condi-
tions.
ABSTRACT
The Insurance Act was passed in the Czech
Republic in 1991. It provided for the
establishment of new insurance companies
and competition between them. The Min-
istry of Finance was authorised to supervise
insurance activities. Amendments to the
Act in 1993 covered the formation and
financial placement of technical provisions
and made changes to insurance company
accounting rules. The second important
transitional step was taken in 1999 with the
passage of the new Insurance Act and a
motor third party liability insurance Act
with the aim of harmonising Czech insur-
ance law with the EU legal framework.
This harmonisation process should be fin-
ished by the end of 2002.
DEVELOPMENT OF CZECH INSURANCE
LAW
The foundations for the development of
the Czech insurance industry were laid in
1991 with the passage of Act No. 185/1991
Coll. on insurance. It allowed for the estab-
lishment of new insurance companies and
the development of competition. Prices
were liberalised for all types of insurance
except motor third party liability and
workers’ compensation. The Commercial
Code, the Civil Code (regulating insurance
contracts) and tax legislation also dealt
with the position and operations of insur-
ance companies. In 1993, fundamental
changes were made in insurance company
accounting and Act No. 320/1993 Coll.
amended the Insurance Act. This paved the
way for the Decree of the Ministry of
Finance No. 52/1994 Coll. which stipulated
how insurance company technical provi-
sions were to be created, used and placed.
This legislative framework remained
mostly in place up until 1999–2000.
1999 was a turning point for Czech insur-
ance law. It saw the passage of Act No. 168/
1999 Coll. on motor third party liability
insurance and the amendment of some
related acts. This was followed by the pro-
mulgation of Decree No. 205/1999 Coll.
which implemented Act No. 168/1999 Coll.
With Act No. 168/1999 Coll. in place, it
was possible to carry out a fundamental
change in motor third party liability insur-
ance: the transition from ex lege to compul-
sory contractual motor third party liability
insurance.
The second key piece of legislation
Page 31
Journal of Financial Regulation and Compliance Volume 10 Number 1
Journal of Financial Regulation
and Compliance, Vol. 10, No. 1,
2002, pp. 31–36
#Henry Stewart Publications,
1358–1988

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