Hungarian National Bank Imposes Fines on Insurance Companies for Regulatory Noncompliance
Nine insurance providers face collective fines as the MNB addresses issues in credit insurance oversight and management.
The Hungarian National Bank (MNB) has issued a total fine of 103 million forints (approximately 270,000 euros) to nine insurance companies due to regulatory and management issues related to group credit insurance policies, as announced by the central bank on Tuesday.
The investigation focused on four types of credit insurance associated with personal loans, credit cards, baby home loans, and real estate mortgages.
The inspected companies collectively cover more than half of the market in terms of premium revenue and one-third from the perspective of insured parties.
Initiated on January 1, 2022, the investigation analyzed the responses of insurers to warnings from the European Insurance and Occupational Pensions Authority (EIOPA) regarding significant deficiencies in European credit insurance products.
The MNB determined that the market actors primarily offer products with a poor value-to-price ratio and have taken insufficient action to address these issues, despite the EIOPA's alerts.
The claims ratio of the examined credit insurance is notably low, averaging at 11.5%.
On a portfolio level, customers receive back only one-tenth of the premiums they have paid, while rejection rates for damage claims exceed 40% in some market segments.
The insurance companies under scrutiny include:
- CIG Pannónia Első Magyar Általános Biztosító Zrt.
- CIG Pannónia Életbiztosító Nyrt.
- Generali Biztosító Zrt.
- Groupama Biztosító Zrt.
- K&H Biztosító Zrt.
- NN Biztosító Zrt.
- Signal Iduna Biztosító Zrt.
- Union Vienna Insurance Group Biztosító Zrt.
- Uniqa Biztosító Zrt.
The MNB's investigation examined compliance with product oversight and management requirements for insurance providers and their distributors, particularly in regards to customer value.
The central bank's findings indicated that most of the inspected insurers lacked detailed internal regulations in their product oversight and management procedures.
The product review and monitoring were found to be inadequate and poorly documented.
Despite high commission fees paid to intermediaries for credit insurance, the insurers failed to assess the potential conflicts of interest arising from these arrangements.
Furthermore, several companies inadequately gauged customer needs, and there were instances where product descriptions were lacking.
Due to these identified issues, the MNB has mandated the companies to correct these shortcomings by submitting a written report on their actions by March 31, 2026. The MNB emphasized the importance of prompt action from market participants to fulfill these requirements, starting with the development of comprehensive internal regulations and guidelines to ensure effective product oversight and management processes.
A thorough analysis of the reasons behind the low claims ratio and rejected claims has also been deemed necessary, along with measures aimed at reducing these occurrences.
The investigation focused on four types of credit insurance associated with personal loans, credit cards, baby home loans, and real estate mortgages.
The inspected companies collectively cover more than half of the market in terms of premium revenue and one-third from the perspective of insured parties.
Initiated on January 1, 2022, the investigation analyzed the responses of insurers to warnings from the European Insurance and Occupational Pensions Authority (EIOPA) regarding significant deficiencies in European credit insurance products.
The MNB determined that the market actors primarily offer products with a poor value-to-price ratio and have taken insufficient action to address these issues, despite the EIOPA's alerts.
The claims ratio of the examined credit insurance is notably low, averaging at 11.5%.
On a portfolio level, customers receive back only one-tenth of the premiums they have paid, while rejection rates for damage claims exceed 40% in some market segments.
The insurance companies under scrutiny include:
- CIG Pannónia Első Magyar Általános Biztosító Zrt.
- CIG Pannónia Életbiztosító Nyrt.
- Generali Biztosító Zrt.
- Groupama Biztosító Zrt.
- K&H Biztosító Zrt.
- NN Biztosító Zrt.
- Signal Iduna Biztosító Zrt.
- Union Vienna Insurance Group Biztosító Zrt.
- Uniqa Biztosító Zrt.
The MNB's investigation examined compliance with product oversight and management requirements for insurance providers and their distributors, particularly in regards to customer value.
The central bank's findings indicated that most of the inspected insurers lacked detailed internal regulations in their product oversight and management procedures.
The product review and monitoring were found to be inadequate and poorly documented.
Despite high commission fees paid to intermediaries for credit insurance, the insurers failed to assess the potential conflicts of interest arising from these arrangements.
Furthermore, several companies inadequately gauged customer needs, and there were instances where product descriptions were lacking.
Due to these identified issues, the MNB has mandated the companies to correct these shortcomings by submitting a written report on their actions by March 31, 2026. The MNB emphasized the importance of prompt action from market participants to fulfill these requirements, starting with the development of comprehensive internal regulations and guidelines to ensure effective product oversight and management processes.
A thorough analysis of the reasons behind the low claims ratio and rejected claims has also been deemed necessary, along with measures aimed at reducing these occurrences.
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