21 March 2017

The MNB has imposed a HUF 20 million fine on CIG Pannónia Insurer for the firm’s failure to enter its lead agent into the supervisory register of insurance intermediaries and to obtain the necessary licence for the company to operate as its lead agent.

The Magyar Nemzeti Bank (MNB) conducted an investigation at CIG Pannónia First Hungarian General Insurer Ltd. (CIG Pannónia Insurer) of the firm’s cross-border activities in Italy and, in conjunction with this, the operation of a Budapest-based company providing insurance intermediary services and performing outsourced activities.

During the investigation, the MNB established that CIG Pannónia Insurer did not comply with regulations by failing to notify the MNB of entering the intermediary company into the supervisory list of insurance intermediaries and by not including it in its own private register. Furthermore, the insurer entrusted the company with lead agent duties without prior license from the MNB. In addition the MNB’s investigation also identified a notification delay, internal regulatory deficiencies and inaccuracies.

The MNB warned the insurer about the importance of complying with the regulations concerning the uncovered deficiencies, ordered the insurer to operate in compliance with the regulations in force and also imposed a supervisory fine of HUF 20 million on the company.

While deciding the level of the fine, the fact that CIG Pannónia Insurer failed to register and obtain the necessary permits for an insurance intermediary with significant business authority was an aggravating circumstance. Registering insurance agents is a fundamental condition, failing which constitutes a serious infringement of the regulations aimed to ensure the safe and transparent functioning of the insurance market. It was recognised as a mitigating circumstance that CIG Pannonia Insurer’s legal relationship with the agent was partially in line with the rules pertaining to outsourcing.

Magyar Nemzeti Bank