Insurance Market Reform Project in Moldova

Project Development Objective (PDO)

This project aims to strengthen the legal and regulatory framework for insurance in Moldova, addressing gaps in the legal and regulatory frameworks relating to capital adequacy, reserve requirements, claim service, auditing, governance among other issues identified by the 2014 FSAP.  The enhancement of the legal and regulatory frameworks in line with the EU Insurance Directive and international standards together with improved supervisory capacity would serve as foundations for the sector growth in the long-term.


During the project preparation work, the Bank team reviewed the current regulatory and market practices in such core areas as capital adequacy (including reserving, reinsurance, and classes of assets supporting the reserves). Consistent with the 2014 FSAP, this review revealed considerable gaps in the regulatory requirements and supervision of insurers’ capital adequacy and ability to adequately service claims. The team also identified deficiencies with the auditing of insurance companies and insufficient fit-and-proper criteria for insurance companies’ shareholders, board members, and senior management (e.g., currently the sector suffers from the lack of transparency in its ownership structure). The National Commission for Financial Markets (NCFM) also emphasized the importance and timeliness of the Bank funded TA program for reviewing the current capital adequacy requirements, raising the standards for companies’ claims performance in MTPL, and preparing the market for the liberalization of the MTPL tariff.  The FSAP noted that transition to a more risk-based supervision (RBS) approach was needed but should be “gradual and carefully staged”.

Activities / Output

The expected activities include the following components:
Component 1: Actuarial review of MTPL insurance pricing practices
·        A sector report focusing on actuarial review and analysis of the insurance sector pricing, claim management practices, and supervisory capacity delivered
Component 2: Review of legal and regulatory framework in the insurance sector
·        Draft law(s) or amendment(s) or recommendations and proposed revisions to existing MTPL and Insurance law(s) provided
·        Draft regulation on fit-and-proper requirements which are in line with the IAIS standards and EU directives delivered
·        Policy recommendations or guideline on the minimum set of standards for the insurance audits delivered
Component 3: Risk management in insurance companies
·        Draft reinsurance regulation delivered Supervision manual for reinsurance delivered
Component 4: Claim management, reserving practices and their supervision
Claim inspection manual delivered

Expected Outcomes

The main expected outcomes of the project are as follows:
1.  Amendments to Insurance Law and MTPL Law enacted, in line with EU Insurance Directives