New insurance law sets management guidelines
The insurance law does not clarify what kind of education and what professional experience are sufficient to fulfill the requirements. One could say that a person having an university degree in economic sciences and having five years' job experience in different financial institutions is eligible to sit on the management board of an insurance company. Very often such opinion is incorrect. The lack of proper knowledge in this regard, in practice, leads insurance companies to fail to meet their legal requirements. Governing bodies of insurance companies often are not certain whether the persons who are elected by them to the management board have proper education and professional experience to manage the insurance company. Each time a board member is appointed, the insurance company has to notify the Commission for Insurance and Pension Funds Supervision of the changes of membership in the management board within 30 days after the changes took place. Unless the insurance company's management board already includes two members who have proper education and professional experience, the insurance company has to justify (in light of the legal requirements set out in the insurance law) the appointment of a given member by attaching documents that show the education and professional experience of the new elected member.
The supervision office, looking at education and experience on the basis of the enclosures provided by the insurance company, assesses compliance of a new board member with the requirements of the insurance law. Given the above and the fact that no clear practice has been established by the supervision office (during the past seven years no official definitions or guidelines have been worked out), it is obvious that the insurance market needs guidelines on this matter. Fortunately the Polish government, after a few months of hard work, on June 4 submitted to Parliament a draft of the Act on Insurance Activity. The new insurance law is scheduled to come into force on Jan. 1, 2003. According to the provisions of the new law, the management board of a domestic (seated in Poland) insurance company should include at least three members. Each member of the management board must satisfy the following requirements: " Have full legal capacity
" Have completed higher education
" Have not been convicted under a valid court verdict for an intentional offense
" Give warranty to carry on the matters of an insurance company properly Moreover, the following requirements must also be met:
" Half of the management board members shall have a record of employment of five years at managerial positions within financial institutions.
" At least two members of the management board, including the president of the management board, should speak Polish fluently; if any members of the management board are foreigners, they must prove their knowledge of Polish by passing an exam according to the procedure provided in the Act on Polish Language.
" The president of the management board shall have a record of employment of two years as a member of the management board of an insurance company (in addition to five years' employment in financial institutions).
It should be stressed that the appointment of two members of the management board (including the president) must be approved by the supervision office prior to the governing body of the insurance company passing a proper decision on their election. The enactment of the provisions of the new insurance law should be positive; however, it is disputable whether the requirements mentioned above will lead the insurance market to be safer for individuals.
Zbigniew Jahns, who focuses on the legal aspects of insurance companies, is a legal adviser at the law firm White & Case.
