Financial Services, Insurance, Latvia, Legislation, Transport

The decision was made because Balva is not able to cover the growing costs, said the bureau’s board chairman Janis Abasins in a statement to the press. The LTAB has tried to recover the motor third partly liability (MTPL) insurance claims paid from the Guarantee Fund because the insurer had not been able to cover these costs.

So far, the LTAB has paid almost EUR 3 million in claims from the Guarantees Fund for Balva, but has recovered slightly more than EUR 1 million.

The LTAB said that launch of the insolvency process will allow to sooner complete sale of Balva’s remaining assets and in in interests of the company’s customers and the whole MTPL sector. Due to loss sustained during Balva’s liquidation process and the projected loss from the insolvency process, the size of the Guarantee Fund will drop below the minimum requirement of EUR 20 million set by the law, and insurers will have to make their monthly payments into the Guarantee Fund from each MTPL insurance policy sold.

In 2013, the Latvian financial regulator, the Finance and Capital Market Commission (FKTK), decided to revoke all licenses of Latvia's Balva non-life insurance company in order to ensure the protection of the company's clients. Balva had been providing MTPL, motor own damage (MOD), property, health and travel insurance.