Supporting transfer of contracts

Events where transfer of pension contracts may be supported

Transfer of an insurance portfolio of pension contracts to another insurer is supported on account of the sectoral fund if the amount of the technical provisions and financial obligations corresponding to the insurer’s pension contracts exceeds the tied assets corresponding to the insurance portfolio of pension contracts and:

1) the Financial Supervision Authority declares the insurer’s activity license invalid on the basis of § 26 of the Insurance Activities Act;
2) the Financial Supervision Authority establishes the special regime stipulated in subsection 103 (1) of the Insurance Activities Act for the insurer for the purpose of ascertaining the reasons and nature of payment difficulties and the options of recovering solvency, and adopting measures to protect the interests of policyholders, insured persons and beneficiaries.
3) the insurer is declared bankrupt; or
4) another event or act, which is stipulated in the legislation of the country of location of a contracting party’s insurer that has a branch in Estonia and whose consequences resemble those stipulated in clauses 1) to 3) of this subsection, takes place.

If any of the events specified in clauses 1) to 4) occurs, the Supervision Authority immediately informs the Fund of said event and of the insurer or branch involved in the event.

The Financial Supervision Authority ascertains whether or not it is necessary to support the transfer of the insurance portfolio of pension contracts of an insurer or a branch on the account of the sectoral fund is necessary and makes the corresponding proposal to the supervisory board of the Fund.

Process of supporting the transfer

The Financial Supervision Authority organises a competition for transfer of insurance portfolios.

Insurance portfolios are transferred to insurers who request the smallest amount of support in their offers for acceptance of insurance portfolios.

The Supervision Authority informs the Fund of the appointment of the insurer that accepts the insurance portfolio immediately after the corresponding decision is made and submits the data required for payment of the support.

The transferor and transferee of the insurance portfolio and the Fund enter into the insurance portfolio transfer contract provided in § 89 of the Insurance Activities Act.

Other sources for compensation and support 

If the assets of the sectoral fund are insufficient for performance of the sectoral fund’s obligations, the Fund may do the following on the basis of the resolution of its supervisory board:

  • take a loan from a credit institution or other persons;
  • perform the obligation of the sectoral fund for the account of another sectoral fund;
  • apply for a loan for the Fund from the state or the state’s guarantee to the loan to be taken by the Fund.

Right of claim

When transfer of an insurance portfolio of pension contracts is supported, the right of claim of the policyholders and beneficiaries of the pension contracts contained in the insurance portfolio against the fund participants transfers to the Fund to the extent of the amount of support that was paid out.