The bankruptcy of Cyprus-based Olympic Insurance Company has become the focus of attention and a Sofia's regulator has resigned after 200,000 Bulgarians were left without insurance.
Olympic Insurance’s branch in Bulgaria was blocked from signing new contracts in May, following information provided by Cyprus’ Insurance Companies Control Service pointing to problems with the insurer, according to media reports.
A provisional liquidator for Olympic Insurance was then appointed following the revocation of the company’s insurance operating licence due to failing to meet minimum capital requirements.
Ralitsa Agayn, deputy chair of Bulgaria’s Financial Supervision Commission, had maintained that compensation due under terminated policies was secured through a state guarantee fund.
Cypriot law calls for Motor Insurers Fund to step in but compensation covers only vehicles typically parked in the Republic of Cyprus
But Bulgarian lawmakers criticised Agayn, saying she did not execise her supervisory duties diligently.
They also demanded her resignation and she stepped down just before legislators cut their holidays short to join a special session on Olympic and its impact on 200,000 Bulgarian customers.
The foreign ministries of the two countries have been holding consultations over the last few days, according to media reports, in an effort to evaluate the situation and discuss a possible course of action.
But it is not clear who should compensate customers in Bulgaria, who are now left without mandatory third-party car insurance and also lost their premiums.
Cypriot law calls for the Motor Insurers Fund to compensate customers when the insurer goes bankrupt.
But the permanent secretary of the MIF, Akis Papachristodoulou, says compensation covers only vehicles that are typically parked in the Republic of Cyprus, essentially referring to Cypriot cars.
Only 2000 Bulgarian nationals appear to be eligible for compensation in Cyprus, leaving out 197,000 customers in Bulgaria with a total insurance cost estimated at €40 million.
A number of high-level meetings between the two countries are currently in the works.