Bulgarian Insurance Broker Qualification Exam cheat sheet

Insurance activity in Bulgaria is regulated by the Insurance Code (Кодекс за застраховането, effective 2016) and supervised by the Financial Supervision Commission (FSC, КФН).

Insurers must be licensed by the FSC for each class of non-life insurance (18 classes) and life insurance (classes I–VII) under the Insurance Code; brokers and agents must also be registered with the FSC.

Insurance intermediaries are registered in the FSC's public register; brokers must meet capital, professional liability insurance, and qualification requirements.

The FSC may impose supervisory measures including fines, restriction of activity, and withdrawal of license for violations of the Insurance Code.

The Insurance Code transposes EU Solvency II Directive (2009/138/EC) and Insurance Distribution Directive (IDD, 2016/97) into Bulgarian law.

Brokers must maintain professional indemnity insurance covering at least EUR 1,250,000 per claim and EUR 1,850,000 in aggregate (IDD minimum, as implemented).

The Guarantee Fund (Фонд за гарантиране на застрахователни вземания) protects policyholders in case of insurer insolvency for certain compulsory insurances and life insurance.

Insurance contracts and intermediation are also subject to the Consumer Protection Act (Закон за защита на потребителите) and the Personal Data Protection Act (GDPR implementation).

An insurance contract is concluded when the insurer accepts the applicant's offer; the insurer must issue the policy within 3 working days of acceptance unless otherwise agreed.

The policy must contain: parties, insured risk, sum insured, premium, duration, exclusions, and conditions for termination; failure to include mandatory content may affect enforceability.

The applicant has a duty to disclose all circumstances known to them that are material to the risk assessment; negligent or intentional non-disclosure entitles the insurer to terminate or reduce liability.

The insurer must provide the policy and conditions before conclusion; for distance contracts, a 14-day cooling-off period applies to life insurance (not to non-life).

Premium payment: unless otherwise agreed, the premium is due on conclusion; non-payment may lead to suspension of cover or termination after a written notice.

The insured must notify the insurer of any material change in risk; failure may allow the insurer to terminate or adjust premium.

Termination grounds: mutual agreement, expiry, cancellation by either party with notice (as per contract), non-payment, breach of duty, or insurer insolvency.

In life insurance, the policyholder may surrender the policy for a cash value after a specified period; the insurer must pay the surrender value within 30 days.

Insurable interest: the policyholder must have a legal or economic interest in the subject matter of insurance; otherwise the contract is void.

Indemnity principle: non-life insurance compensates actual loss, not profit; sum insured is the maximum liability of the insurer.

Underinsurance: if the sum insured is less than the value of the insured property, the insurer pays proportionally to the loss (average clause).

Overinsurance: if sum insured exceeds actual value, the insurer may reduce the sum insured and premium; the insured cannot profit from loss.

Subrogation: upon paying a claim, the insurer acquires the insured's right of recourse against third parties responsible for the loss, up to the amount paid.

Sum assured (life insurance): the amount payable on death or survival, agreed at contract conclusion; it is not subject to indemnity and can be paid in addition to other benefits.

Risk is the uncertain event insured against; the insurer assesses and accepts risk based on information provided by the applicant.

Deductible/franchise: the amount deducted from each claim; it reduces the premium and must be clearly stated in the policy.

Property insurance covers damage to or loss of property from fire, natural disasters, theft, and other perils; often includes business interruption cover.

Liability insurance covers legal liability for bodily injury or property damage to third parties; compulsory for motor third party liability (MTPL) and certain professions.

Motor insurance: MTPL is compulsory; casco (own damage) is optional; MTPL covers liability for damage to third parties, including passengers.

Accident insurance provides lump-sum benefits for accidental death, disability, or medical expenses; 24/7 or occupational cover can be selected.

Health insurance covers medical expenses or provides fixed benefits for illness; can be individual or group; often complements statutory health insurance.

Transport insurance (cargo and hull) covers goods in transit and vessels/aircraft; includes Institute Cargo Clauses (A, B, C) with different levels of cover.

Agricultural insurance covers crops, livestock, and farm buildings against weather, disease, and other perils; often subsidized by the state.

Non-life policies are typically annual; claims must be notified promptly, and the insurer must settle within 15 days of receiving all necessary documents (unless otherwise agreed).

Risk life insurance provides a death benefit only; no savings component; premium is lower than for savings products.

Endowment (savings) life insurance combines death protection with a savings element; pays a sum assured on survival to maturity or on earlier death.

Annuities provide periodic payments for a fixed term or for life; can be immediate or deferred, and may include a guaranteed period.

Unit-linked life insurance: the policy value is linked to the performance of underlying investment funds; the policyholder bears the investment risk.

Life insurance policies have a cooling-off period of 14 days from conclusion for distance contracts, during which the policyholder can cancel and receive a refund.

Surrender value: the cash value payable if the policyholder terminates a savings or unit-linked policy before maturity; may be subject to charges.

Life insurance premiums are calculated based on mortality tables, interest rates, and expenses; insurers must maintain technical provisions.

Tax treatment: in Bulgaria, life insurance premiums may be tax-deductible for individuals under certain conditions; benefits are generally tax-exempt if conditions met.

Insurance broker acts on behalf of the client, must act in the client's best interest, and is independent from insurers; must disclose any conflicts of interest.

Insurance agent acts on behalf of one or more insurers and represents the insurer in concluding contracts; must disclose the insurer(s) represented.

Brokers and agents must be registered with the FSC and meet qualification and professional indemnity requirements.

Intermediaries must provide the client with a disclosure document (IPID) before conclusion, including their status, remuneration, and complaints procedure.

Remuneration: brokers may receive commission from insurers or fees from clients; both must be disclosed to the client before conclusion.

Conflicts of interest: intermediaries must identify and manage conflicts; if not possible, disclose to the client before concluding the contract.

Intermediaries must act with integrity, diligence, and professionalism; they must not make misleading statements and must recommend suitable products.

Record-keeping: intermediaries must keep records of transactions and advice for at least 5 years (or as required by the FSC).

Insurance intermediaries are obliged entities under the Anti-Money Laundering Act (AMLA); they must apply customer due diligence (CDD) measures.

CDD includes identifying the customer and beneficial owner, verifying identity, and understanding the purpose of the business relationship.

Enhanced due diligence (EDD) is required for politically exposed persons (PEPs), high-risk countries, and complex or unusual transactions.

Intermediaries must report suspicious transactions to the State Agency for National Security (SANS) without tipping off the customer.

Sanctions screening: intermediaries must check customers and beneficial owners against EU and UN sanctions lists and freeze assets if a match is found.

Record-keeping: CDD records must be kept for 5 years after the end of the business relationship or transaction.

Risk-based approach: intermediaries must assess ML/TF risks and apply proportionate measures; training and internal policies are required.

Life insurance intermediaries must pay special attention to policies with high premiums or surrender values, as they may be used for money laundering.

Consumer protection: insurance contracts are subject to the Consumer Protection Act; unfair terms are void, and consumers have the right to clear information before conclusion.

The insurer must provide a summary of cover (IPID) in a clear and understandable format, highlighting exclusions and obligations.

Data protection: intermediaries must comply with GDPR; they must obtain consent for processing personal data and ensure data security.

Clients have the right to access, rectify, and erase their personal data; intermediaries must respond within one month.

Professional ethics: intermediaries must act honestly, fairly, and professionally, putting the client's interests first.

Complaints handling: intermediaries must have a complaints procedure and inform clients of their right to complain to the FSC or the ombudsman.

Advertising must be fair, clear, and not misleading; comparisons must be accurate and verifiable.

Confidentiality: intermediaries must protect client information and not disclose it without consent, except as required by law.