KNF, Poland’s Financial Supervisory Authority, has issued a reminder that any company from outside the EU may only conduct reinsurance activities in Poland:
- if it has a ‘main branch’ and reinsurance licence in Poland; or
- o if it operates directly from the country where it has its registered office, and that country has an agreement with the EU for supervising its reinsurance undertakings (under Directive 2005/68/EC, Art. 50).
According to KNF, reinsurance contracts executed by Polish insurance companies with unauthorized business cannot be taken into account in the calculation of its technical and underwriting reserves.
Any Polish insurance company performing reinsurance agreements that have been executed in violation of these rules may be subject to supervisory measures from KNF. The company would first be instructed to comply, then given a decision requiring it to comply with the instruction, and ultimately subject a fine imposed on the company, members of its management board or proxies.
There is also a risk that under Polish law unauthorised agreements may be invalid, even if they are governed by the law of a different country.