REPUBLIC OF LITHUANIA
LAW
ON INSURANCE
Chapter 1
General Provisions
Article 1. Relations Regulated by the Law on Insurance
in the Republic of Lithuania
This Law shall regulate relations between insurance
agencies, between said agencies and the insured, and the
procedure for the founding, operation, and liquidation of
insurance agencies.
This law shall also regulate activities of organisations
performing operations of insurance and reinsurance as a business
in addition to their principal business activity.
Article 2. The Insured
The insured shall include the following natural and legal
persons bound by an insurance contract to pay insurance premiums,
of other wise obligated to pay same pursuant by law:
1) all legally capable citizens of Lithuania, foreign nationals,
as well as persons without citizenship, provided they are 16
years of age and over; and
2) firms, offices, and organisations located on the territory of
the Republic of Lithuania or beyond its borders. Where permitted
under the insurance regulations, the insured shall have the right
to conclude insurance contracts in the name of a third person.
Article 3. Insurance Agencies
The following insurers shall have the right to conclude
insurance contracts in the Republic of Lithuania:
1) the State Insurance Agency;
2) joint stock insurance companies;
3) insurance societies; and
4) mutual insurance societies.
Insurance agencies shall have the status of legal persons,
and shall function in accordance with their respective by-laws
and the laws of the Republic of Lithuania.
Insurance agencies shall make payments to the appropriate
budgets according to the procedures established under the laws of
the Republic of Lithuania.
Article 4. Insurance Council
For the coordination of matters related to insurance, the
Insurance Council shall be formed under the auspices of the
Ministry of Finance.
The composition of the Insurance Council shall be as
follows:
one-third of its members shall be representatives of the
Ministry of Finance, the Ministry of Internal Affairs, and other
bodies having an interest in insurance-related activity;
one-third of its members shall be representatives of other
insurance agencies and of various insured persons.
The activities of the Insurance Council shall be regulated
by rules and regulations approved by the Government of the
Republic of Lithuania.
Article 5. Licence to Engage in the Insurance Business
Licences to engage in the insurance business shall be issued
by the Insurance Council.
When applying for a licence to engage in the insurance
business, an insurance agency must file its underlying agreement
and its by- laws with the Council.
The Insurance Council shall consider the submitted
instruments within a month, and then issue a licence, provided
the financial terms and conditions of the agency guarantee the
discharge of its obligations to the insured, and provided its by-
laws do not contradict the laws of the Republic of Lithuania.
A licence to engage in the insurance business, when issued
to foreign natural and legal persons, shall become valid only
after it has been approved by the Government of the Republic of
Lithuania.
Upon receipt of the licence to engage in the insurance
business, the insurance agency's by-laws shall be registered
with:
the Government of the Republic of Lithuania, if the
insurance agency plans to operate in more than one town or region
of the Republic;
or the appropriate municipal or regional board, if the
insurance agency plans to operate in only one town or region of
the Republic.
Amended by-laws of insurance agencies must be coordinated
with the Insurance Council prior to registration.
Article 6. Property Insurance
The subject matter of a property insurance contract may be
property that is owned by a person outright, is leased, is in
someone's custody, or is held for sale or repair, as well as any
other property, civil liability, credits or other financial
resources, provided the insurance contract contains provisions
therefor.
Article 7. Personal Insurance
Personal insurance is insurance on human lives and insurance
of human beings against the happening of particular events, as
specified by insurance contracts.
Article 8. Compulsory Insurance
The objects of compulsory personal and property insurance,
and contractual conditions thereof shall be established by the
Supreme Council of the Republic of Lithuania.
Article 9. Voluntary Insurance
Contractual conditions of voluntary insurance shall be
defined in the regulations of insurance agencies, which must be
defined in the regulations of Insurance agencies, which must be
filed with the Insurance Council, or in insurance policies, i.e.
agreements of effecting insurance.
Article 10. Insurable Events
Insurable events shall be events specified by legislative
acts on compulsory insurance, or by provisions of voluntary
insurance contracts, upon happening of which the insurance agency
must pay the insurance indemnity, or the insured sum, or the
amount of the supplemental pension insurance, or other payments
provided by insurance contracts.
Article 11. Insurance Contracts
Upon agreement between the insured and an insurance agency,
a written contract of voluntary insurance shall be concluded. The
contract shall state the names of the insured and the insurer,
the insured sum or the amount of the supplementary pension
insurance, the term of the contract, definition of the insurable
event, as well as other significant insurance provisions.
Concluding an insurance contract with the insured, the
representative of an insurance agency shall have no right to
exceed his powers, or to change the insurance provisions that are
prescribed by law or regulations.
Article 12. Term of Insurance Contract
Insurance contract may be concluded for a specified period
or for an indefinite period of time.
The beginning, duration and expiration of the insurance
period shall be established by the insurance regulations. The
insurance period and the period of enforceability of the
insurance contract may not coincide in time. If the insurance
contract prescribes that the insurer shall have to pay the
insured sum or the amount of the supplemental pension insurance
upon the expiration of the insurance period, the insurance
contract shall remain valid until the insurer discharges his
obligations.
Article 13. Termination of Insurance Contract
An insurance contract shall be terminated, if:
the insurance agency has discharged all its obligations;
the insured has not timely paid the insurance premiums; or
there are no persons to whom the insured, who has terminated
his activities, could assign his rights and obligations.
Upon the termination of an insurance contract, paid
insurance premiums or a portion thereof may be refunded to the
insured - by paying said sums to the insured or to the person
assigned by him, or to his heirs - provided the insurance
regulations contain provisions there for. Upon the termination
of an insurance contract, disputes related to the amounts payable
to the insured shall be resolved in court or by arbitration.
In the event the court declares the insured legally
incapable or partially incapable, the rights and obligations of
the insured may be assigned to his guardian or trustee.
Article 14. Unenforceable Insuran