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Estonia Insurance Industry – Governance, Risk and Compliance

The Estonia insurance industry report is the result of extensive research into the insurance regulatory framework in the country. It provides a detailed analysis of the insurance regulations for life, property, motor, liability, personal accident & health, marine, aviation, and transit insurance. The report specifies various requirements for the establishment and operation of insurance and reinsurance companies and intermediaries.

The report also gives insurers access to information on prevailing insurance regulations, recent and upcoming changes in the regulatory framework, taxation, and legal system in the country. Furthermore, the report includes the scope of non-admitted insurance in the country.

What are the market dynamics in the Estonian insurance industry?

The Estonian insurance industry is regulated and supervised by the Estonian Financial Supervision Authority (EFSA). The EFSA was established in January 2002. It functions as a public agency, with autonomous powers and a separate budget. The competence rights of EFSA, its obligations, and rights are stipulated in the EFSA Act. The objectives of EFSA include protecting the risk of the policyholders, reducing systematic risks, and enhancing the stability, reliability, transparency, and efficiency of the insurance industry.

On November 16, 2020, the EFSA announced that insurers, insurance brokers and agents are required to apply for temporary licenses to continue operating in the UK after the end of the transitional period for the UK withdrawal for the European Union (BREXIT). The insurance distributors, who are authorized but do not have insurance contracts in force in the UK, must notify the EFSA about the termination of their cross-border activity. Further, insurance distributors, who do not apply for the temporary license must conclude all the existing insurance contracts before December 31, 2020.

What are the types of licenses issued in the Estonian insurance industry?

The different types of insurance licenses issued in the Estonian insurance industry are life insurance license, non-life insurance license, reinsurance license, composite insurance license, and intermediaries. 

Life insurance license in Estonia

An insurer with a life cover license can underwrite and sell life and annuity contracts, pension contracts, and endowment policies. A life insurance license is granted by EFSA after fulfilling all the necessary criteria defined in the Insurance Activities Act 2015. Some of the insurance classes are term & whole life insurance, accidents insurance & sickness insurance as supplementary insurance, annuities, unit-linked life insurance, birth insurance, marriage insurance, etc.

Non-life insurance license in Estonia

A company with a license for non-life insurance can sell property, motor, personal accident, health, fire, and credit insurance. Some of the non-life insurance classes are land vehicles insurance, railway rolling stock insurance, aircraft insurance, watercraft insurance, suretyship insurance, miscellaneous financial loss insurance, and so on.

Reinsurance license in Estonia

A license for a reinsurance business enables a reinsurer to offer insurance products to other insurance companies, covering their financial risks. With the approval of EFSA, a reinsurer can operate in the business of reinsurance. Article 14 of the Act states that there are two types of reinsurance licenses: reinsurance for non-life and reinsurance for life.

Composite insurance license in Estonia

Article 16(5) of the Insurance Activities Act 2015 strictly prohibits the provision of life and non-life insurance simultaneously. However, according to Article 16 (6), a life insurer can underwrite only those classes of non-life insurance, which can be offered together with life policies, such as accident, and sickness insurance. Article 16 (7) stipulates that an insurer may engage in either life insurance and life reinsurance or non-life insurance and non-life reinsurance.

Intermediaries in Estonia

Insurance brokers and insurance agents are allowed to practice operations in Estonia, provided they are registered intermediaries.

The Estonian insurance industry, by license type

The Estonian insurance industry, by license type

For more license type insights, download a free report sample

Which other key associations oversee the Estonian insurance industry?

The key associations that oversee the Estonian insurance industry are the International Association of Insurance Supervisors (IAIS), European Insurance and Occupational Pensions Authority (EIOPA), Federation of European Risk Management Associations (FERMA), The Estonian Traffic Insurance Fund (LFK), and Estonian Insurance Association (Eesti Kindlustusseltside Liit – EKsL)

International Association of Insurance Supervisors 

The IAIS is a membership-driven global organization that represents insurance regulators and supervisors of more than 200 jurisdictions in over 140 countries. The IAIS formulates and issues various global insurance principles, standards, and guidance, provides training and support on issues related to insurance supervision, and organizes meetings and seminars for insurance supervisors. It works closely with other financial sector standard-setting bodies and international organizations to promote financial stability.

The primary objectives of the IAIS are to promote effective and globally consistent supervision of the insurance industry to develop and maintain fair, safe, and stable insurance operations for the benefit and protection of policyholders, and to contribute to global financial stability.

European Insurance and Occupational Pensions Authority 

The EIOPA, a part of the European System of Financial Supervision, is an independent advisory body to the European Parliament and the Council of the EU.

The main responsibilities of the EIOPA are to support the financial system stability, transparency of markets and financial products, protection of insurance policyholders, pension scheme members, and beneficiaries of all European Member States. One of the main responsibilities of the EIPOA is the preparation of the new supervisory regime for insurance and reinsurance undertakings in the EU (Solvency II).

Federation of European Risk Management Associations

The FERMA was established in 1974 and is a member of the International Federation of Risk and Insurance Management Associations. It aims to lead and enhance the effective practice of risk management, risk financing, and insurance in Europe.

The Estonian Traffic Insurance Fund 

The LKF is a traffic insurance guarantee fund, established according to the Motor Third Party Liability Insurance Act for securing the functioning of the traffic insurance system. All insurers providing traffic insurance in Estonia are members of the LKF.

Market report scope

Key license types Life Insurance License, Non-Life Insurance License, Reinsurance License, Composite Insurance License, and Intermediaries
Key associations International Association of Insurance Supervisors (IAIS), European Insurance and Occupational Pensions Authority (EIOPA), Federation of European Risk Management Associations (FERMA), The Estonian Traffic Insurance Fund (LFK), and Estonian Insurance Association (Eesti Kindlustusseltside Liit – EKsL)

Scope 

  • The report covers details of the insurance regulatory framework in Estonia.
  • The report contains details of the rules and regulations governing insurance products and insurance entities.
  • The report lists and analyzes key trends and developments about the country’s insurance regulatory framework.
  • The report analyzes the rules and regulations about the establishment and operation of insurance businesses in the country.
  • The report provides details of taxation imposed on insurance products and insurance companies.

Reasons to Buy

  • Provides FAQ-style analytical insights comprising 129 knowledge elements on insurance compliance applicable to the country.
  • Gain insights into the insurance regulatory framework in Estonia.
  • Track the latest regulatory changes and expected changes impacting the Estonian insurance industry.
  • Gain detailed information about the key regulations governing the establishment and operation of insurance entities in the country.
  • Understand key regulations and market practices about various types of insurance products.

Table of Contents

Table of Contents

ESTONIA

Legislation Overview

Supervision and Control

Legislation

Compulsory Insurance

Non-Admitted Insurance Regulations

Company Registration and Operation

License

Foreign Direct Investment / Ownership

Minimum Capital Requirements

Solvency Margins

Reserve Requirements

Statutory Return Requirements

Fee Structure

Taxation

Tax on Insurance Premium

Corporate Income Tax

Corporate Capital Gains Tax

Value Added Tax

Legal System

Policy Practice

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List of Tables

List of Tables

Estonia – Corporate Tax Rates for the Financial Year 2021

Frequently Asked Questions

The different types of key insurance licenses issued in the insurance industry in Estonia are life insurance license, non-life insurance license, reinsurance license, composite insurance license, and intermediaries.

The key associations overseeing the insurance industry in Estonia are the International Association of Insurance Supervisors (IAIS), European Insurance and Occupational Pensions Authority (EIOPA), Federation of European Risk Management Associations (FERMA), The Estonian Traffic Insurance Fund (LFK), and Estonian Insurance Association (Eesti Kindlustusseltside Liit – EKsL).

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