Article 53-1. Supervisory response measures of the Insurance Law

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 1. In order to protect the legitimate interests of policyholders (insured, beneficiaries) of an insurance (reinsurance) organization, ensure the financial stability of an insurance (reinsurance) organization and an insurance group, prevent deterioration of their financial situation and increase the risks associated with insurance activities, the authorized body applies to an insurance (reinsurance) organization, insurance broker, participant, shareholder of an insurance broker, insurance holding company, organization guaranteeing insurance payments, their senior staff, organizations, members of an insurance group, major participants in an insurance (reinsurance) organization, persons who have the characteristics of a major participant in an insurance (reinsurance) organization or insurance holding company, an actuary licensed to carry out actuarial activities in the insurance market, and supervisory response measures.

2. The grounds for the application of supervisory response measures are:

1) violation of the legislation of the Republic of Kazakhstan on issues within the competence of the authorized body;

2) deficiencies and (or) risks in the activities of an insurance (reinsurance) organization, an insurance broker, an insurance holding company, an organization guaranteeing insurance payments, organizations that are part of an insurance group, an actuary licensed to carry out actuarial activities in the insurance market, identified by the authorized body within the framework of control and supervision functions, including through the use of motivated judgment, which may lead to the creation of a situation that threatens the stable functioning of an insurance (reinsurance) organization, and (or) the interests of its policyholders (insured, beneficiaries), and (or) the stability of the insurance system of the Republic of Kazakhstan;

3) identification of illegal actions or inaction of senior employees of an insurance (reinsurance) organization, insurance broker, insurance holding company, organization guaranteeing insurance payments that may threaten their stable functioning and (or) the interests of policyholders (insured, beneficiaries);

4) sufficient data to recognize the actions (inaction) of a senior employee, official (senior employees, officials) as not complying with the requirements of the legislation of the Republic of Kazakhstan on matters within the competence of the authorized body, and (or) indicating damage to an insurance (reinsurance) organization, insurance broker, organization guaranteeing insurance payments, and (or) policyholders (insured, beneficiaries);

5) the commission of actions by a person who has the characteristics of a major participant in an insurance (reinsurance) organization or insurance holding company, as well as a major participant in an insurance (reinsurance) organization (including organizations over which a major participant has control), an insurance holding company or organizations that are part of an insurance group, as a result of which the insurance (reinsurance) damage has been caused or may be caused to the organization;

6) the precarious financial situation of persons who have the characteristics of a major participant in an insurance (reinsurance) organization or insurance holding company, as well as major participants in an insurance (reinsurance) organization (including organizations over which a major participant in an insurance (reinsurance) organization has control), an insurance holding company or organizations that are part of an insurance group;

7) failure to comply with the supervisory response measures previously applied in accordance with this Law;

8) failure to submit to the authorized body or the National Bank, or submission of false reports or information, as well as other information requested by the authorized body or the National Bank;

9) obstruction by an insurance (reinsurance) organization, an insurance broker, an insurance holding company, an insurance group, organizations that are part of an insurance group, large participants in an insurance (reinsurance) organization, persons with signs of a large participant in an insurance (reinsurance) organization or an insurance holding company, an organization that guarantees insurance payments, an actuary with a license to carry out actuarial activities in the insurance market, to conduct an audit, which caused the impossibility of carrying it out within the established time frame;

10) failure by an insurance (reinsurance) organization, an insurance holding company, an organization that is part of an insurance group, an insurance broker, an organization that guarantees insurance payments, deficiencies that affect the financial condition of an insurance (reinsurance) organization or an insurance group, an insurance broker, an organization that guarantees insurance payments specified in the audit report, within the time limits stipulated by paragraph 10 of Article 20 of this Law;

11) non-payment, late payment, or payment of mandatory or emergency contributions, as well as initial one-time and additional contributions in incomplete amounts to an organization that guarantees insurance payments to policyholders (insured, beneficiaries) in the event of liquidation of insurance organizations;

12) non-payment, late payment, or incomplete payment of mandatory contributions by insurance organizations to the office of the insurance Ombudsman within the time period established by the methodology for calculating the amount of mandatory contributions, the procedure and deadlines for payment of mandatory contributions by insurance organizations to the office of the insurance Ombudsman, approved by the authorized body;

13) failure by the insurance company to comply with the decision of the Insurance Ombudsman within the time limit set by him;

14) non-fulfillment or improper fulfillment of the requirements for providing information to the database, including its distortion and (or) incomplete and (or) late provision;

15) failure to submit within the prescribed time the action plan provided for in paragraphs 3 and 4 of Article 53 of this Law, its disapproval by the authorized body, non-fulfillment or late execution of the measures of this plan, failure to eliminate the factor (s) influencing the deterioration of the financial situation of the insurance (reinsurance) organization (insurance group), within the time limits established by the action plan;

16) non-fulfillment or late execution of the measures of the plan provided for in subparagraph 2) paragraph 2 of Article 38-1 of this Law.

3. When determining the appropriateness of applying supervisory response measures and choosing a supervisory response measure, the following factors are taken into account::

1) the level of risk, the nature of violations and (or) deficiencies and their consequences;

2) the scale and significance of the violations and (or) deficiencies and their consequences;

3) the systematic nature and duration of violations and (or) deficiencies;

4) the impact of violations and (or) deficiencies on the financial condition;

5) the ability to correct the situation as a result of the chosen supervisory response measure;

6) availability and effectiveness of previously applied supervisory response measures;

7) adequacy of the applied supervisory response measure to the grounds for its application;

8) the reasons that led to the occurrence of the identified violations and (or) deficiencies and (or) risks;

9) acceptance by an insurance (reinsurance) organization, an insurance broker, an insurance holding company, organizations that are part of an insurance group, a major participant in an insurance (reinsurance) organization, a person who has the characteristics of a major participant in an insurance (reinsurance) organization or an insurance holding company, an organization that guarantees insurance payments, an actuary licensed to perform actuarial activities in the insurance market, independent measures aimed at eliminating violations, risks and (or) deficiencies identified in the activities, the effectiveness of such measures and/or the willingness to take them.

4. The authorized body applies the following supervisory response measures:

1) advisory supervisory response measures in accordance with Article 53-2 of this Law;

2) measures to improve the financial condition and/or minimize risks in accordance with Article 53-3 of this Law;

3) compulsory supervisory response measures in accordance with Article 53-4 of this Law.

5. The authorized body has the right to apply to an insurance (reinsurance) organization, an insurance broker, an insurance holding company, an organization that guarantees insurance payments, organizations that are part of an insurance group, large participants in an insurance (reinsurance) organization, persons who have the characteristics of a large participant in an insurance (reinsurance) organization or insurance holding company, an actuary licensed to actuarial activity in the insurance market, any of the supervisory response measures defined in paragraph 4 of this article, regardless of the supervisory response measures previously applied to them.

6. The procedure for the application of supervisory response measures is established by a regulatory legal act of the authorized body.

The Law of the Republic of Kazakhstan dated December 18, 2000 No. 126.

President

Republic of Kazakhstan

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