KÖBE can sell third party liability contracts again

Budapest, 5 March 2016 – From 4^th March on KÖBE Central European Mutual Insurance Association can again sell MTPL contracts, as the Magyar Nemzeti Bank has lifted its restriction on sales by the company, after the insurer submitted a financial plan to abolish the previous reserve deficit.

In its order made yesterday the Magyar Nemzeti Bank (MNB) has lifted the restriction on the sales of motor third party liability (MTPL) contracts by KÖBE Central European Mutual Insurance Association (KÖBE). Following the decision, the insurer – as before – can freely sign new MTPL contracts. The previous restriction had no effect on KÖBE’s non-MTPL insurance contracts, and during the temporary action by the MNB the insurer had to fulfil its duties towards its fee covered MTPL contracts, as provided by the legislation in force.

Due to the all-around examination by the MNB currently underway, the central bank suspended KÖBE’s ability to sell MTPL contracts in its order published on 13 November, 2015, due to the insurer’s not sufficiently established fee policies, its higher than allowed investment risk and unfavourable reserve position. After the suspension, the MNB ordered KÖBE to submit a financial plan to eliminate the reserve deficit within 6 months. The actions of the central bank are aimed at ensuring that insurance and investment risks are reduced, with the goal of improving the company’s financial situation in order to protect the economic interests of the parties involved due to KÖBE’s actions – including clients, members of the association and injured parties.

After the MNB’s order, KÖBE submitted its financial plan to the central bank. Afterwards it announced new MTPL fee tariffs which have already come into effect, and made appropriate calculations to justify them. These steps were judged to be capable of preventing another financial deficit by the central bank. Therefore, the MNB decided to lift its previous, temporary restriction on MTPL contract sales taken as a preventive, early intervention action. This action does not affect other points of the central bank’s other orders.

The MNB also ordered KÖBE to provide data about the changes in its amount of contracts, showing the amount of newly signed contracts as well as the terminated or the soon-to-be-terminated list of contracts.