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Sunday 18.03.2018 | Name days: Ilona, Adelīna

Industry player: revoking Balva's licenses will increase competition

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUThe decision of the Finance and Capital Market Commission (FCMC) to revoke the licenses of Balva Insurance Company will change the market. This will increase competition among other insurance companies, as Ergo Baltic Board member Ingrida Kirse told BNN.

“Even after the initial announcements about halting Balva’s activities competitors began actively fighting for its clients. The latest news could make the situation even worse”, – Kirse predicts. She adds that competition is expected to be the steepest in the OCTA segment, where Balva was among the leading companies and held 15% of the market.

She believes the company had gained the largest share of the OCTA market thanks to its low price policy.

Nevertheless, it will only be able to properly assess the consequences of Balva’s end and the subsequent division of 4% of its market share no sooner than after the next quarter.

It should be added that this is the second time in the last five years when the FCMC decides to revoke insurance licences. In 2009, the licenses of RSK were revoked.

BNN has previously reported that the Finance and Capital Market Commission (FCMC) has made the decision to revoke all licenses currently held by Balva Insurance. This decision was made in order to protect the interests of the agency’s clients.

In accordance with the law, Balva is to initiate a liquidation process and coordinate debt repayment with FCMC or reform itself as a legal person that does not provide insurance services. Balva is still obligated to keep up all of its previously signed contracts with its clients, FCMC reports.

As previously reported, starting from Tuesday, April 16, the validity of the licences issued by Balva insurance association was temporarily halted. This decision was made by the Finance and Capital Market Commission (FCMC).

The halt of activities provides for restrictions for Balva to sign new insurance contracts, increase insurance amounts and extend insurance contracts. This decision was made because the FCMC had identified a number of statutory violations. As soon as the insurance company rectifies all identified violations, the FCMC will make certain and will lift the restrictions. The law states that an insurance association is required to rectify the identified violations within six months.


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