The following terms are
used in the Law:
1) insurance —
acceptance of the risk of a potential loss from a policyholder;
2) reinsurance
— acceptance of ceded risks from an insurance merchant, a reinsurance merchant
or a private pension fund;
3) ceded
reinsurance — transfer of insurance risks to an insurance or reinsurance
merchant;
4) retrocession
— transfer of reinsurance risks to an insurance or reinsurance merchant;
5) insurance
company — a joint stock company registered in the Republic of Latvia,
or the European company (Societas
Europaea), or mutual insurance cooperative society, which may pursue
insurance under this Law;
6) reinsurance
company — a joint stock company or a limited liability company
registered in the Republic of Latvia, or a European company, which may pursue
reinsurance under this Law;
7) captive
insurance company — an insurance company, owned either by a financial
merchant other than an insurance or reinsurance merchant, or a group of
insurance or reinsurance undertakings or the non-financial merchant thereof,
and the purpose of which is to provide insurance cover exclusively for the
risks of the merchant or undertakings which own it, or of the merchant or
undertakings of the group of which the captive company merchant belongs;
8) captive
reinsurance company — a reinsurance company, owned either by a financial
merchant other than an insurance or reinsurance merchant, or by a group of
insurance or reinsurance undertakings, or by the non-financial merchant
thereof, and the purpose of which is to provide reinsurance cover exclusively
for the risks of the merchant or undertakings which own it, or of an merchant
or undertakings of the group to which the captive reinsurance company belongs;
9) insurer
— an insurance company or a branch of a Member State or non-Member State
insurer, which has the right to pursue insurance under this Law;
10) reinsurer
— a reinsurance company or a branch of a Member State or non-Member State
reinsurer, which may pursue reinsurance under this Law;
11) Member
State insurer – an insurance company which is registered in a Member State
other than the Republic of Latvia and which may pursue insurance in the country
of its domicile;
12) Member
State reinsurer — a reinsurance company which is registered in a Member
State other than the Republic of Latvia and which has the right to pursue
reinsurance in its home country;
13) non-Member
State insurer — an insurance company which is registered in a country other
than the Member States and which has the right to pursue insurance in its home
country;
14) non-Member
State reinsurer — a reinsurance company which is registered in a country
other than the Member States and which has the right to pursue reinsurance in
the country of its domicile;
15) insurance
merchant — a legal person which may pursue insurance in a Member State;
16) reinsurance
merchant — a legal person which may pursue reinsurance in a Member State;
17) insurance
licence — authorisation to pursue the insurance activity;
18) reinsurance
licence — authorisation to pursue the insurance activity;
19) insurance
holding company — a parent company which is not a mixed financial holding
company and the core activity of which is to acquire and have a holding in
subsidiaries, if at least one subsidiary company is an insurance or reinsurance
merchant, whereas the other subsidiary companies are:
a) only insurance or reinsurance undertakings or
non-Member State insurers or reinsurers, of which at least one is an insurance
or reinsurance merchant,
b) mainly (according to the most recent approved
annual report the total assets or income of insurance companies, reinsurance
companies, Member State or non-Member State insurers and Member State and
non-Member State reinsurers is more than half of the total assets or income of
all the subsidiary companies controlled by the parent company) insurance or
reinsurance undertakings or non-Member State insurers or reinsurers, from which
at least one is an insurance or reinsurance merchant;
20) mixed-activity
insurance holding company - a
parent company that is not an insurance or reinsurance merchant, non-Member
State insurer or reinsurer, an insurance holding company or a mixed financial
holding company, however, at least one of the subsidiary companies of which is
an insurance or reinsurance merchant;
21) branch of
an insurance company - a branch of an insurance company established and
registered outside the Republic of Latvia, which acts on behalf of the
insurance company;
22) branch of
a reinsurance company - a branch of a reinsurance company established and
registered outside the Republic of Latvia, which acts on behalf of the
reinsurance company;
23) branch of
a Member State insurer — a
branch of the Member State insurer, which is established and registered in the
Republic of Latvia;
24) branch of
a non-Member State insurer — a
branch of the non-Member State insurer, which is established and registered in
the Republic of Latvia;
25) branch of
a Member State reinsurer — a
branch of the Member State reinsurer, which is established and registered in
the Republic of Latvia;
26) branch of
a non-Member State reinsurer — a
branch of the non-Member State reinsurer, which is established and registered
in the Republic of Latvia;
27) home
Member State — the Member State in which:
a) the place of management (the seat of the company)
of the insurance merchant or non-Member State insurer is situated;
b) the place of management (the seat of the company)
of the reinsurance merchant is situated.
28) host
Member State — a Member State other than the home Member State and in
which:
a) the insurance or reinsurance company has a branch,
b) the insurance or reinsurance company provides
services under the freedom to provide services principle, without opening a
branch;
29) Member State
— a Member State of the European Union or the European Economic Area;
30) country in
which the insured objects related to the insurance risk are located:
a) a country where the insured immovable property or
the assets (property) therein are located if the relevant immovable property
and the assets located therein are insured under the same insurance contract,
b) the country of registration of a vehicle if a
vehicle of any kind is insured,
c) a country in which a policyholder has concluded an
insurance contract for a term of up to four months insuring any travelling
related risk, and
d) in all other cases not mentioned in Sub-clauses
‘a’, ‘b’ and ‘c’ hereof, the country of permanent place of residence of the
policyholder or, if the policy holder is a legal person, the country in which
the structural unit thereof to which the insurance contract applies is located;
31) outsourced
service — a service specified in this Law, the provision of which the
insurance or reinsurance company delegates to the provider of outsourced
services based on a written agreement for the outsourced service;
32) stress
test - an analysis carried out by an insurance or reinsurance company to
determine and assess the likely impact of various exceptional, however,
possibly unfavourable events or changes to market conditions on the ability of
an insurance or reinsurance company to fully perform its obligations arising
from insurance and reinsurance contracts and ensure the financial standing
thereof;
33) control
— a person has control over a commercial company if:
a) such a person has a decisive influence in the
commercial company based on the holding thereof;
b) such a person has a decisive influence in the
commercial company on the basis of a contract between a group of companies; or
c) any other relationship similar to that referred to
in Sub-clause “a” or “b” hereof exists between such a person and the commercial
company;
34) qualifying
holding — directly or indirectly obtained holding by a person or several persons
who take concerted action based on an agreement, and such a holding is 10 per
cent or more of the share capital or of the shares carrying voting rights of
the commercial company, or provides the opportunity to significantly influence
the development of the financial and operational policies of the commercial
company;
35) close
links — relationship between two or more persons:
a) by holding – a person directly or by means of control
has 20 or more per cent of voting rights in the commercial company, or a person
directly or by control has acquired a holding that includes 20 or more per cent
of share capital or of shares carrying voting shares,
b) by control,
c) if these are related to the same person by
control;
36) parent
company — a commercial company that controls another commercial
company. For the purpose of the supervision of the groups of insurance and
reinsurance companies a commercial company which under the assessment by the
Financial and Capital Market Commission (hereinafter - the Commission) has a
decisive influence shall also be considered a parent company;
37) subsidiary
company — a commercial company that is controlled by another
commercial company. A subsidiary company of any subsidiary company shall be
considered the subsidiary company of the parent company thereof. For the
purpose of the supervision of a group of insurance and reinsurance companies a
commercial company in which under the assessment by the Commission a parent
company has a decisive influence shall also be considered a subsidiary company;
38) participation
— ownership of 20 per cent or more of the voting rights in another commercial
company acquired directly or by control, or a holding of 20 per cent or more of
the share capital or of the shares carrying voting rights of another company,
acquired directly or by control, acquired by a commercial company. For the
purpose of the supervision of a group of insurance and reinsurance companies
participation shall also be a direct or indirect holding or voting rights in
the share capital of a commercial company, as a result of which, under the
assessment of the Commission, the commercial company has a decisive influence
in another commercial company.;
39) participating
company — a parent company or a commercial company, which has acquired
participation in a commercial company, or a commercial company whose links to a
commercial company are manifested as the joint management of these companies
under the concluded agreement or the foundation document of these commercial
companies, or the provisions of their articles of association, or owing to the
fact that during the financial year at least half of the members of any
management body were the same persons;
40) associated
company — a subsidiary company or a commercial company, in which
participation has been acquired, or a commercial company whose links to a
commercial company are manifested as the joint management of these companies
under the concluded agreement or the foundation document of these commercial
companies, or the provisions of their articles of association, or owing to the
fact that during the financial year at least half of the members of any
management body were the same persons;
41) group
— a group of commercial companies:
a) consisting of a participating company, its
subsidiary companies and commercial companies, in which the participating
companies or the subsidiary companies thereof have participation, as well as
commercial companies linked to the participating company, the subsidiary
thereof or a company in which the participating company or the subsidiary
company thereof has participation, manifests itself as joint management of
these companies under the concluded agreement or the foundation documents of
these commercial companies, or the provisions of their articles of association
or owing to the fact that during the financial year at least half of the
members of any management body were the same persons;
b) which is based on establishing firm and
sustainable contractual relations or financial relations of another kind
between these commercial companies and which can include mutual insurance
cooperative companies, if one of these commercial companies has, through
centralised coordination, decisive influence over the decision-making of the
commercial companies united in the group, including financial decisions, and
the establishing or termination of such relations have been approved, for the
purpose of the supervision of the group, by the supervisory authority of the
group. The commercial company engaged in such centralised coordination shall be
considered a parent company, whereas the other commercial companies shall be
considered subsidiary companies;
42) financial
merchant is:
a) a credit institution, financial institution within
the meaning of the Credit Institution Law or a
commercial company whose core activity is the buying or management of immovable
property, provision of data processing services or any other similar activity
that supplements the basic activity of one or several credit institutions,
b) an insurance or reinsurance merchant or an
insurance holding company,
c) an investment firm or financial institution within
the meaning of Article 4, Paragraph 1, Sub-paragraph 26 of Regulation (EU) No. 575/2013 of
the European Parliament and of the Council of 26 June 2013 on prudential requirements
for credit institutions and investment firms and amending Regulation (EU)
No. 648/2012 (Text
with EEA relevance),
d) a mixed financial holding company;
43) supervisory
authority — an authority of a Member State or a non-Member State which is
conferred with the statutory right to carry out the supervision of Member State
insurers, Member State reinsurers, non-Member State insurers, and non-Member
State reinsurers;
44) free capital
— the value of assets owned by a person, which is reduced by the value of
liabilities of the person and the value of such assets, which are considered to
be long-term investments;
45) technical
provisions — the sum of the best estimate of technical provisions and the
risk margin;
46) fund
participant — a commercial company which may pursue insurance under this
law, and branch of a Member State or non-Member State insurance which makes
payments into the Insured Protection Fund;
47) competent
authority — a court, liquidator, administrator and another institution or a
person who pursuant to its statutory powers adopts decisions on reorganisation
measures or winding-up, carries out reorganisation measures or winding-up, or
supervises the course of reorganisation measures or winding-up;
48) reorganisation
measures — legal acts carried out in respect of the insurance merchant or
the branch of a non-Member State insurer which injure or might injure the
rights of the third parties and which are carried out in order to preserve or
restore the solvency of the insurance merchant or the non-Member State insurer,
and which have an impact on the existing rights of any such party, which itself
is not an insurance company or branch of a non-Member insurer;
49) netting of
claims and liabilities — legal relations established between a debtor and a
creditor under a written agreement after the commencement of the winding-up of
a debtor or declaration of the insolvency thereof to aggregate the claims and
liabilities arising from mutual contracts into a single claim or liability so
that only a single claim is brought and only a single obligation shall be
performed;
50) cancellation
of claims and liabilities — complete mutual cancellation of the claims and
liabilities of the debtor and creditor arising from the contract after the
commencement of the winding-up of a debtor or declaration of the insolvency
thereof regardless of the amount (sum) of claims and liabilities;
51) function
— administrative capacity to carry out the objectives of the system of system
of governance laid down in this Law. The system of governance includes the risk
management function, compliance function, internal audit function and actuarial
function;
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