Article 11 of this Law shall become effective January 1, 2014.

LAW

OF THE REPUBLIC OF TAJIKISTAN

ON INSURANCE ACTIVITY

This Law shall define the fundamental provisions concerning the performance of insurance as a

type of business activity, special considerations relating to establishment, licensing, regulation,

termination of activities of insurance (reinsurance) companies, insurance brokers, terms of activities

in the insurance market for other natural persons and legal entities, objectives of the state

supervision of the insurance market and principles of ensuring the supervision of the insurance

business. This Law is designed to protect natural persons’ and legal entities’ property right in the

event of the occurrence of an insured event.

CHAPTER 1. GENERAL PROVISIONS

Article 1. The Legislation of the Republic of Tajikistan Concerning Insurance and

Insurance Business

The Legislation of the Republic of Tajikistan concerning insurance and insurance business

shall be based on the Constitution of the Republic of Tajikistan and it shall consist of this Law and

other regulatory legal acts of the Republic of Tajikistan and international agreements ratified by the

Republic of Tajikistan.

Article 2. Basic Concepts

The following basic concepts shall be applied for the purposes of this Law:

- insurance agent – a natural person or a legal entity that carries on intermediary activities

with regard to concluding insurance contracts on behalf of and as instructed by insurers

in accordance with the authority granted;

- insurance actuary – a natural person that carry on activities associated with economic and

mathematical computations of amounts of obligations in insurance and reinsurance

contracts for the purpose of ensuring the appropriate level of solvency and financial

sustainability of the insurance (reinsurance) organization;

- premium deposit - a portion of the premium owned by reinsurer which is withheld by the

insurer (insurance company), which serves as a guarantee that the reinsurer will fulfill its

contractual obligations;- reinsurance - activities and relations associated therewith that emerge due to transfer of

all or a part of insurance risks under a contract of reinsurance made between an insurer

and a reinsurer;

- insurance broker – a legal entity which renders consulting services related to insurance

and reinsurance and carries on intermediary activities associated with the conclusion of

insurance and reinsurance contracts, acting in its own behalf and under the instructions of

the insured;

- insurance reserve - special monetary fund formed by insurance companies to secure the

undertaken insurance commitments under contracts of insurance and reinsurance;

- insurance rules - a document worked out by the insurance company that determines the

terms for performance of insurance with regard to every kind of insurance;

- ransom - an amount to be refunded to the insured when the contract of accumulative

insurance is terminated before the date;

- sum insured - a limit of the insurer’s liability which is established by the laws of the

Republic of Tajikistan and/or determined in the insurance contract and in addition a sum

of money, from which is calculated the insurance premium and the insurance indemnity

to be paid in the case of the occurrence of an insured event;

- insurance indemnity - an amount which is established by the laws of the Republic of

Tajikistan and/or determined in the insurance contract and paid by the insurer to the

insured, beneficiary in the case of the occurrence of an insured event;

- insurance portfolio – totality of all concluded contracts of insurance;

- insurance policy – a certificate issued by the insurer to the insured and confirming the

fact of execution of a contract of insurance;

- insurance - a type of relationships designed to protect the interests of natural persons and

legal entities when the insured event takes place;

- annuity insurance - a long-term insurance product with a series of equal payments;

- voluntary insurance - a kind of insurance exercised on the strength of a contract between

the insurer and the insured on a voluntary basis, pursuant to the procedure established by

the laws of the Republic of Tajikistan;

-co-insurance – a form of insurance in which multiple insurers share the risk of one

object, issuing one joint insurance policy or separate insurance policies, each for the sum

insured by the respective insurer;

- compulsory public insurance - a type of insurance financed at the expense of the state

budget;

- compulsory insurance - a type of insurance exercised according to the procedure

established by the laws of the Republic of Tajikistan at the expense of natural persons

and legal entities;- insurers (insurance company) – legal entities that carry on insurance business in

conformity with the laws of the Republic of Tajikistan and which were granted insurance

licenses issued by the Authorized Body;

-insured – natural persons or legal entities making insurance contracts with insurers and

paying insurance premiums who are entitled, by operation of law or under contract, to

receive the insurance indemnity upon occurrence of an insured event within the scope of

contractual liability coverage or the insurance amount set out in the contract of

insurance;

- insurance tariff - the cost of insurance premium as per insured amount unit over the

defined period of insurance;

- insurance business - activities of insurance companies in the filed of insurance,

reinsurance, and co-insurance and in addition activities of insurance brokers, insurance

actuaries providing services associated with insurance and reinsurance;

- beneficiary - a person indicated in the contract of insurance in whose favor such contract

was made;

- insurance contract - a written agreement between the insurer and the insured whereby the

insured undertakes to pay an insurance premium and the insurer undertakes that in case

of occurrence of an insured event under the insurance contract it shall pay the insured the

insurance money (indemnity);

- insurance premium - a sum of money which the insured must pay to the insurer for

undertaking the obligation to pay the insurance indemnity to the insured, beneficiary

indicated in the contract of insurance;

- an insured event - an event envisaged by the insurance contract or law, the occurrence of

which gives rise to the payment of an insurance indemnity by the insurer to the insured,

beneficiary or other third party;

- an accident - an unexpected, short-term occurrence not under control of an insured as a

result of an external mechanical, electrical, chemical or thermal factor and in addition the

affect of a natural hazard upon the organism of the insured caused harm to health, a

severe injury or death.

Article 3. Forms of Insurance

1. Insurance may be voluntary, compulsory and compulsory public insurance.

2. Voluntary insurance shall be understood as a kind of insurance exercised on the strength

of a contract of insurance and insurance rules which specify the general provisions and procedure

of voluntary insurance. The insurance rules governing voluntary insurance contain details of the

insurance entity, the object of insurance, the insured events, the insured risks, the method for

calculating the sum insured, the insurance tariff, insurance premium, the method for concluding,

implementing and ending the insurance contract, the rights and obligations of the parties, definition

of the size of loss or damage, the method for calculating the insurance indemnity, the circumstances

for refusal in insurance indemnity and other details.3. Insurance rules shall be worked out by the insurance company itself or the association of

insurance companies in conformity with the Civil Code of the Republic of Tajikistan and this law

and shall be registered with the State insurance supervisory authority.

4. Compulsory insurance is instituted by the laws of the Republic of Tajikistan with regard to

priority objects of insurance to protect natural persons’ and legal entities’ property interests.

5. The laws of the Republic of Tajikistan may provide for compulsory insurance of citizens’

life, health, and property from the respective budgets.

6. The conditions and rules for compulsory insurance shall be regulated by the laws of the

Republic of Tajikistan.

7. Compulsory public insurance shall be exercised solely and exclusively by public

insurance companies.

Article 4. Sectors, classes and types of insurance

1. Insurance is subdivided into forms, sectors, classes and types with the aim of organizing

and carrying out state supervision and licensing of insurance companies.

2. The “life insurance” sector comprises the following classes in the voluntary form of

insurance:

- life insurance;

- insurance by occurrence of a certain event in life;

- annuity insurance.

3. The “general insurance” sector comprises the following classes in the voluntary form of

insurance:

- insurance from accidents;

- disease insurance;

- motor vehicle insurance;

- rail transport insurance;

- aircraft insurance;

- marine transport insurance;

- freight insurance;

- property insurance from damage, except for the classes indicated in subparagraphs3) and

7)of this paragraph;

- insurance of civil law liability of owners of motor vehicles;

- insurance of civil law liability of owners of aircraft;

- insurance of civil law liability of owners of marine transport;

- insurance of civil law liability, except for the classes indicated in subparagraphs9) and

11)of this paragraph;

- loan insurance;

- mortgage insurance;

- guarantees and warranties insurance;

- insurance from other financial losses;- legal costs insurance.

4. Additional requirements to the terms of performance of a certain insurance class (type) in

the voluntary insurance form, within frameworks of certain insurance classes (types) shall be

established by legal regulations of the Authorized Body.

5. A type of insurance represents an insurance product which is elaborated by the insurance

company in the form of a regulatory act and sold to the ensured within the bounds of one or several

insurance classes, by way of concluding contracts of insurance. An insurance company shall have

the right to carry on activities associated with conclusion of insurance contracts in the form of an

adhesion agreement with issuing to the ensured of an insurance policy only after coordinating its

insurance rules with the State insurance supervisory authority and obtaining a special licence.

6. Each type of mandatory insurance shall be recognized as a certain insurance type. The

contents of each class in the mandatory insurance form and additional requirements to the terms of

its performance shall be established by the law regulating mandatory insurance.

7. The combination of sectors and classes of insurance shall be regulated by legal

regulations issued by the State insurance supervisory authority.

8. The Contents of the Insurance Classes:

- Life insurance shall constitute a totality of insurance types providing for the payout of an

insurance benefit when the insured passes away as well as when the insured reaches the

date of expiry of the contract and/or reaches the age stipulated by the insurance contract;

- Insurance by occurrence of a certain event in life shall constitute a totality of

accumulative insurance types providing for the payout of an insurance benefit in a fixed

amount in cases of occurrence of the event in life stipulated in advance (marriage or

child birth) of the insured;

- Annuity insurance shall constitute a totality of personal insurance providing for the

payout of periodical insurance benefits in the form of a pension or a rent in cases of

reaching by the ensured of a certain age, disablement (because of age, invalidity,

disease), death of breadwinner, unemployment and other cases causing a decrease or loss

of personal income by the insured;

- Accident insurance shall constitute a totality of insurance types providing for the payout

of an insurance benefit in a fixed amount and/or in an amount of full or partial

compensation of person’s expenses in cases of death, disability (full or partial) (general

or professional) or other inflicting of harm to health of the insured as a result of an

accident, professional disease, except for insurance of risks indicated in subparagraph 3)

of paragraph 2 of this Article;

- Disease insurance shall constitute a totality of insurance types providing for the payout

of an insurance benefit in a fixed amount and/or in an amount of partial and full

compensation of person’s costs in connection with a disease or another disturbance of

health, except for insurance of classes indicated in subparagraph 1) of paragraph 3 of this

Article;

- Insurance of transport vehicles listed in subparagraphs3) and 6)of paragraph 3 of this

Article shall constitute a totality of insurance types providing for the payout of an

insurance benefit in an amount of partial or full compensation of damage inflicted toperson’s property interests related to possession, use, disposal of the transport vehicle,

including hijacking or stealing, as well as because of its damage or destruction;

- Freight insurance shall constitute a totality of insurance types providing for the payout of

an insurance benefit in an amount of partial or full compensation of damage inflicted to

person’s property interests related to possession, use, disposal of freight, including

luggage, goods, and all other types of products because of their damage, destruction, loss

irrespective of the transportation technique;

- Property insurance shall constitute a totality of insurance types providing for the payout

of an insurance benefit in an amount of partial or full compensation of damage inflicted

to person’s property interests related to possession, use, disposal of property because of

its damage or destruction, stealing, except for the property listed in subparagraphs 3) and

7) of paragraph 3 of this Article;

- Insurance of civil law liability of owners of transport vehicles stipulated by

subparagraphs9) and 11)of paragraph 3 of this Article shall constitute a totality of

insurance types providing for the payout of an insurance benefit in an amount of partial

or full compensation of damage inflicted to person’s property interests related to his

liability to compensate the damage inflicted to third persons in connection with the use

by him of the transport vehicle, including civil law liability of the carrier;

- Insurance of civil law liability shall constitute a totality of insurance types providing for

the payout of an insurance benefit in an amount of full or partial compensation of

damage inflicted to person’s property interests related to his liability to compensate the

damage inflicted to third parsons because of insurance of all the risks except for ones

listed in subparagraphs9) and 11)of paragraph 3 of this Article;

- Loan insurance shall constitute a totality of insurance types providing for the payout of

an insurance benefit in case of occurrence of creditor’s losses as a result of non

performance by the insured (borrower) of obligations to the creditor;

- Mortgage insurance (insurance of pledged immovable property) shall constitute an

insurance type providing for the payout of an insurance benefit in an amount of full or

partial compensation of damage inflicted to creditor’s property interests as a result of

non-fulfillment by the borrower of obligations under the mortgage housing loan

agreement, in case of a decrease in the market value of the dwelling being pledged

property under the mortgage housing loan;

- Guarantees and warranties insurance shall constitute a totality of insurance types

providing for the payout of an insurance benefit in an amount of full or partial

compensation of damage inflicted to person’s property interests issued a guarantee or a

warranty as a result of his liability to fulfill the issued guarantee;

- Insurance from other financial losses shall constitute a totality of insurance types

providing for the payout of an insurance benefit in occurrence of losses as a result of the

loss of job, loss of income, unfavourable natural phenomena, continuous, unpredictable

expenses, loss of the market value and other losses as a result of carrying out financial

and economic activities, except for insurance of the risks indicated in subparagraph 12)

and 15) of paragraph 3 of this Article;

- Legal costs insurance shall constitute a totality of insurance types providing for the

payout of an insurance benefit in case of losses of the insured as a result of expenses

incurred by him in connection with legal proceedings;- Under contracts of insurance of the risks indicated in subparagraph 11) and 13) of

paragraph 3 of this Article, there may be insured a risk of the insured himself only and in

his favour only.

Article 5. Objects of Insurance

1. The objects of personal insurance may be property interests relating to:

- a citizen reaching a certain age or living for a certain period, death, certain events

affecting the life of a citizen (life insurance);

- the occurrence of harm to the life and/or health of a citizen resulting in medical treatment

(personal accident and illness insurance, or medical insurance).

2. The objects of property insurance may be property interests in particular relating to:

- the ownership, use or disposal of property (property insurance);

- the obligation to compensate another person for damage done (liability insurance);

- the fulfillment of the entrepreneurial activity (the insurance of commercial risks).

3. Combined insurance of different types of property and/or personal insurance is permitted

where such insurance is not forbidden by the laws of the Republic of Tajikistan (combined

insurance).

4. Only insurance companies duly registered as legal entities in the Republic of Tajikistan

are permitted to ensure interests located on the territory of the Republic of Tajikistan.

5. Concerning the insurance of objects which is financed from government investment

programs, only insurance companies duly registered as legal entities in the Republic of Tajikistan

shall be entitled to undertake the insurance with respect to a portion of the investment funded by the

government of the Republic of Tajikistan.

Article 6. Participants Whose Relationships are Regulated by This Law

1. The participants whose relationships are regulated by this Law include:

- the insured, beneficiaries;

- insurers(insurance companies);

- insurance agents;

- insurance brokers;

- insurance actuaries;

- A Special Authority with the legal authority to supervise and regulate the activity of

providers of insurance services (henceforth - the State insurance supervisory authority).

2. Insurers (insurance companies), insurance brokers and insurance actuaries shall be

understood as providers of insurance services.

3. Providers of insurance services are required to be entered on a combined single register of

providers of insurance services according to the procedure established by the law of the Republic of

Tajikistan “On licensing of separate types of activity”.4. The name (business name) of a provider of insurance services duly registered as a legal

entity must contain a description of the type of business it undertakes: “insurance”, “reinsurance”,

“insurance broker” or some similar word or form of words.

5. A provider of insurance services duly registered as a legal entity shall not have the right to

use full or short name (business name) which repeats either in part or in full the name (business

name) of another provider of insurance services.

6. Insurers (insurance companies) may not carry on business other than insurance activity.

Article 7. Insured

Insured shall be understood as natural persons and legal entities making insurance contracts

with insurers (insurance companies) or having this status by force of law.

Article 8. Insurers (Insurance Companies)

1. Insurers calculate the insurance risk, receive insurance premiums, form insurance

reserves, invest assets, estimate the size of loss or damage, pay the insurance benefit, and carry on

other activities involved with the fulfillment of their obligations under the insurance contract.

2. Where an insurance company is formed by means of a financial contribution from foreign

investors, the following requirements shall be met:

- A foreign investor is obliged to submit a document confirming its solvency: a foreign

bank confirmation where it is a natural person or an audited Balance Sheet of last year

where it is a legal entity.

- Not less than half of the members of the collective managing body of the insurance

company with the foreign participation must be citizens of the Republic of Tajikistan.

Foreign investors being members of the managing body of the insurance company shall

have at least two-years’ working experience in insurance and/or finance;

- - An insurance company with the foreign shareholding in its statutory capital shall be

obliged to notify in advance the State insurance supervisory authority in case it intends to

increase its statutory capital by means of a financial contribution from foreign

investors, or to transfer its shares (stakes in the statutory capital) to a foreign investor

(including the sale of shares to foreign investors), or buy shares (stakes in statutory

capital) possessed by foreign shareholders;

- The payment by foreign investors for shares (stakes in statutory capitals) owned by them

in the insurance companies shall be carried out exclusively in a monetary form in the

currency of the Republic of Tajikistan;

- All persons performing the functions of a director and a chief accountant of insurance

companies shall be citizens of the Republic of Tajikistan.Article 9. The Requirements Made to an Insurer (Insurance Company) with Regard to

Informing its Insured

1. In the event that an insurance company duly registered as a legal entity, is reorganized,

changes its name or address, or introduces any other changes into its statutes, the insurance

company shall be obliged to submit the application on re-issue of the documents confirming

possession of a licence enclosing documents confirming such changes to the Authorized Body

within a term not exceeding 15 (fifteen) days from the date when such change come into effect, in

compliance with the laws of the Republic of Tajikistan.

2. In the event that an insurance company changes the address of its permanently working

body, or its name, the insurer (insurance company) not later than 1 (one) month shall be obliged to

notify its insured thereof by way of publishing an announcement in two national newspapers.

3. In the event that an insurance company changes the address of its separate subdivision the

insurer (insurance company) not later than 1 (one) month shall be obliged to notify its insured

thereof by way of publishing an announcement in one national newspaper and in appropriate

province newspapers.

4. An insurance company shall be obliged to place a notarized copy of its licence for the

right to carry on insurance business where it is accessible for viewing and perusal thereof.

5. When concluding insurance contracts the insured shall have the right to require from the

insurance company its annual financial statements consisting of the Balance Sheet and Profit and

Loss Statement.

Article 10. Insurance Agents and Insurance Brokers

1. Insurance agents are either natural persons or legal entities permanently residing on the

territory of the Republic of Tajikistan and carrying on their business on the strength of a civil law

contract who represent insurers (insurance company) in their relationship with the insured and act

on behalf or as instructed by insurers within the authority they have been given.

2. Insurance brokers are legal entities of the Republic of Tajikistan possessing a licence from

the Authorized Body who act in the interests of the insured or insurers and carry on activities

related to concluding of insurance (reinsurance) contracts between the insured and insurers and

performance of such contracts (henceforth provision of insurance broker’s services).When

providing services related to concluding of contracts of insurance (reinsurance), insurance brokers

shall have the right to represent either the insured or the insurer.

3. Insurance brokers have the right to carry on other forms of business connected with

insurance when not contrary to the law, except for activity as insurance agents and insurers.

4. The activity of insurance agents and insurance brokers related to conclusion and

performance of insurance contracts (except for reinsurance contracts) with a foreign insurer

(insurance companies) and/or a foreign insurance broker who is not duly registered and properly

licensed to carry on insurance activity as required by the law of the Republic of Tajikistan on the

territory of the Republic of Tajikistan is forbidden.Article 11. The Requirements Made to Insurance Actuaries

1. Insurance actuaries shall possess attested qualifications which operate either under a

labour contract or under a civil law contract with the insurer (insurance company) carrying on

insurance business to calculate insurance tariffs, the insurance reserves of insurers, the value of

investments using actuarial methods of calculation.

2. Insurers (insurance companies) shall be obliged within the results of each financial year to

carry on an actuarial valuation of their insurance obligations (insurance reserves). The results of the

actuarial valuation must be contained in a report, to be submitted to the State insurance supervisory

authority.

3. The requirements concerning the procedure for the organizing qualifying examinations

for insurance actuaries, issuing and annulling qualification certificates shall be established by the

Authorized Body.

Article 12. Insurance Risk and Insured Event

1. An insurance risk shall be understood as a certain probable occurrence which is insured

against.

2. To be considered an insurance risk, an event must have the qualities of probability and

accident.

3. An insured event shall be understood as an event which is envisaged by the contract of

insurance or by law, upon the occurrence of which there is an obligation on the insurer to pay an

insurance benefit to the insured, beneficiary or other third persons.

Article 13. Sum Insured and Insurance Benefit

1. When insuring property, the insured sum shall be determined within the limits of the

actual value of this property at the moment of concluding the contract of insurance.

2. For personal insurance, the insured sum shall be agreed between the insurer and the

insured.

3. The parties may not dispute the insured value of property, set out in a contract of

insurance, except when the insurer can prove that the insured deliberately acted to mislead the

insurer.

4. Insurance benefits (compensations) according to a contract of insurance shall be made in

the currency of the Republic of Tajikistan, except as otherwise provided by the law of the Republic

of Tajikistan “On currency regulation and currency control”.

5. A contract of property insurance within the insured sum shall be permitted to contain

clauses concerning insurance benefits which permit the replacement of damaged property with

similar property.6. In the event of loss or damage to property an insured or a beneficiary shall have the right

to pass on their legal rights over the property to the insurer in order to obtain from the insurer

insurance benefit in the full amount of the sum insured.

7. With regard to personal insurance, insurance benefit (sum insured) made to the insured or

to any other person with the right to receive such benefit according to the contract of insurance

shall not be affected by amounts due under other contracts of insurance and also with regard to

compulsory social insurance, welfare protection, payments made to compensate damage,

compulsory insurance and compulsory public insurance.

8. With regard to life insurance, a life insurer (insurance company) may pay in addition to a

sum insured income arising out of investments.

9. In the event of the termination of a contract of accumulative insurance a ransom shall be

refunded to the insured in the amount specified by the contract of accumulative insurance.

10. Natural persons and legal entities are required to provide documents and conclusions to

insurers, upon their request, relating to the occurrence of the insured event and needed to decide on

insurance benefits in accordance with the laws of the Republic of Tajikistan.

Article 14. Insurance Premiums and Insurance Tariffs

1. Insurance premium indicates the sum the insured must pay to the insurer (insurance

company) under the contract of insurance.

2. Voluntary insurance premium rates shall be determined based on the actual value of the

property or the amount as agreed between the insured and insurer (insurance company).

3. Compulsory insurance premium rates shall be established by the laws of the Republic of

Tajikistan.

4. The insurance tariff shall be understood as the basis of insurance premium which is

defined by insurers (insurance companies) themselves taking into account the nature of the insured

object and the nature of the risk.

5. The limits of insurance tariff rates shall be established using actuarial methods of

calculation and submitted for approval to the State insurance supervisory authority.

Article 15. Coinsurance

An object of insurance can be insured by a number of insurers (insurance companies) duly

registered as legal entities in the Republic of Tajikistan under one contract of insurance.

Article 16. Reinsurance

1. Reinsurance business on the territory of the Republic of Tajikistan shall be carried out on

the basis of a licence to carry on insurance activity within the territory of the Republic of Tajikistan

issued by the Authorized Body.2. In addition to the contract of reinsurance, agreement between the insured and the insurer

may be made in other documents according to normal business practice.

3. Where there are domestic insurance companies assuming reinsurance risks, insurers

(direct insurers) on the territory of the Republic of Tajikistan including foreign insurance

companies and insurance companies with foreign ownership shall be obliged to reinsure with such

companies not less than 5% of all insurance commitments under main contracts of insurance.

4. Compulsory public insurance shall not be subject to reinsurance.

5. Foreign reinsurance companies shall be permitted to undertake reinsurance business on

the territory of the Republic of Tajikistan only upon availability of an adequate rating by any

international rating agency. Rating requirements shall be established by the Authorized Body.

6. The activities of reinsurance carried out on the territory of the Republic of Tajikistan shall be

regulated by the legal regulations issued by the Authorized Body.

CHAPTER 2. SECURING THE INSURER’S FINANCIAL STABILITY

Article 17. Conditions to ensure the financial stability of insurers (insurance companies)

1. The conditions that ensure the financial stability of insurers are as follows:

- economically justified insurance tariffs;

- sufficient insurance reserves to cover obligations arising out of contracts of insurance,

coinsurance and reinsurance;

- shareholders’ funds;

- reinsurance.

2. Insurance reserves and shareholders’ funds shall be secure assets, held on the basis of

diversification, liquidity, age and cost.

3. Shareholders’ funds of insurers (insurance companies) shall include authorized capital,

capital reserves, supplementary capital and unappropriated balance.

4. Insurers (insurance companies) should possess paid up authorized capital, the amount of

which should not be lower than the minimum level of authorized capital set for newly-established

insurance companies.

5. The minimum authorized capital for insurance companies on the territory of the Republic

of Tajikistan shall be established by the government of the Republic of Tajikistan.

6. The minimum authorized capital of newly-created insurance companies, insurance

companies with foreign ownership, except for joint-stock insurance companies, shall be subscribed

in full by their founders before the date of issuing a licence to carry on insurance business

exclusively in a monetary form in the national currency of the Republic of Tajikistan.7. The authorized capital of joint stock insurance companies shall be formed pursuant to the

requirements of the law of the Republic of Tajikistan “On joint stock companies”.

8. Borrowed assets and mortgaged property may not be included in authorized capital.

9. Changes in the minimum level of authorized capital for insurers (insurance companies)

can be made exclusively by the government of the Republic of Tajikistan not more than once every

two years.

10. Insurers (insurance companies) must fulfill the requirements of this law and the legal

regulations required by the State insurance supervisory authority for financial security in respect of

the formation of their insurance reserves, the formation and structure of their assets out of which

insurance reserves are created, quotas for reinsurance, the required ratio between shareholders’

funds and assumed obligations, the formation and structure of assets constituting the shareholders’

funds and types of bank guarantees.

11. Insurers (insurance companies) may transfer the obligations undertaken under contracts

of insurance (insurance portfolio) to another insurer or to a number of insurers (substitute insurers)

which have licenses to carry on the classes of insurance included in the transferred portfolio and

which have sufficient free assets to comply with the solvency requirements following the

acceptance of the transferred obligations. The transfer of an insurance portfolio shall be carried out

using the procedure established by the Authorized Body.

12. An insurance portfolio shall not be transferred in the event that:

- the insurance contract to be transferred have been entered into contrary to the procedure

established by the Authorized Body;

- the insurer which is accepting the insurance portfolio does not satisfy the provisions for

financial stability established by Items 1-5 of this Article;

- all insured have not given written consent to the replacement of the insurer (insurance

company);

- the licence of the insurer accepting the insurance portfolio does not cover the type of

insurance for which the contracts of insurance have been concluded;

- the insurer ceding the insurance portfolio has insufficient funds to provide proper

insurance reserves except when it is insolvent (bankrupt).

13. At the same time that an insurance portfolio is transferred, sufficient assets shall also be

transferred as insurance reserves to cover the insurance obligations being transferred.

14. If there is a discrepancy between the insurance contract wording of the insurer which is

accepting an insurance portfolio and the insurance contract wording of the insurer which is

transferring the insurance portfolio, alterations in the terms of the contracts of insurance shall be

agreed with the insured.

Article 18. The Required Ratio Between the Scope of Contractual Obligations and the Sum

of Shareholders’ Equity and Insurance Reserves1. The required maximum amount of the obligations of the insurer under one contract of

insurance or reinsurance shall be established by the State insurance supervisory authority, allowing

for the amount of shareholders’ funds of the insurer (insurance company).

2. Insurers (insurance companies) shall have the right to undertake insurance or reinsurance

obligations exceeding the required maximum amount specified in Item 1 of this Article provided

that the excess part of the risks for undertaken obligations has been reinsured.

Article 19. Insurance Reserves

1. To provide security for the performance of insurance and reinsurance obligations,

insurers (insurance companies) shall maintain insurance reserves to the amount calculated by the

actuary and submit thereof for approval to the State insurance supervisory authority.

2. Insurance reserve funds shall be used exclusively for paying insurance benefits by

insurers with regard to the performance of their insurance and reinsurance obligations.

3. The requirements for formation and calculation procedures for insurance reserves shall be

established by legal regulations issued by the Authorized Body.

4. Improper use of insurance funds shall be prohibited.

5. Insurers (insurance companies) shall have the right to invest insurance reserves according

to the procedure established by the legal regulations of the Republic of Tajikistan.

6. Insurance reserves shall be placed allowing for diversification, security, profitability and

liquidity criteria.

7. Insurers (insurance companies) shall have the right to check the proper use of funds

allocated to the insured to finance measures for the prevention of insured events.

8. In the event of improper use by the insured of the funds allocated to finance measures for

the prevention of insured events the insured and the insurer shall be obliged to compensate for such

losses at the expense of personal funds of the insured for further proper use thereof for preventive

measures.

Article 20. Insurer’s Accounting and Reporting Specifics

1. Insurers (insurance companies) shall do their bookkeeping, draw up accounting and

statistical reports in conformity with the chart of accounts, bookkeeping regulations, and using

accounting and reporting formats adopted by the Authorized Body according to legal regulations.

2. Accounts of insurance transactions covering objects of personal insurance shall be kept

separately from the accounts of all other types of insurance.

3. Insurers (insurance companies) shall file accounting and statistical reports and other

information with the State insurance supervisory authority, using the format and in keeping with the

procedures adopted by the Authorized Body.

4. Insurance brokers shall provide the State insurance supervisory authority with the information on

their activity as insurance brokers, in keeping with the procedures adopted by the Authorized Body.Article 21. Publication of Annual Accounting Reports by Insurers

1. Insurers (insurance companies) shall publish annual accounting reports using the

procedure and within the timescale established by legal regulations of the Republic of Tajikistan,

after the authenticity and completeness of said reports was confirmed by auditors.

2. The annual accounting reports shall be published in official publications and in mass

media covering the territory where the insurer is carrying on business. The insurer shall provide

details to the State insurance supervisory authority on the auditor’s report and on the publication of

the annual report.

CHAPTER 3. STATE SUPERVISION OF INSURANCE BUSINESS

IN THE REPUBLIC OF TAJIKISTAN

Article 22. State Supervision of Insurance Business in the Republic of Tajikistan

1. State supervision of the activities of providers of insurance services (henceforth

insurance supervision) shall have as its objectives: to ensure correct observance of insurance

legislation; to prevent participants in the relationships covered by this law from committing

offences and if these offences are committed, to halt them; to ensure the protection of the rights and

lawful interests of insurers, of other relevant persons, and of the state; to help in the successful

development of insurance business.

2. Insurance supervision shall be based on the principles of legality, transparency and

consistency.

3. The objectives of the insurance supervision shall be:

- implementing a unified State insurance policy;

- establishing insurance principles;

- creating the insurance mechanisms which ensure the economic security of the insured

and business entities on the territory of the Republic of Tajikistan.

4. Insurance supervision shall be carried on by the State insurance supervisory authority.

The State insurance supervisory authority shall provide the providers of insurance services with the

following information:

- official commentaries and explanations of the issues within responsibility of the State

insurance supervisory authority;

- information on the restriction, suspension and reinstatement of licenses to carry on

insurance business;

- acts of revocation of licenses to carry on insurance business;

- other information concerning control and supervision over insurance activity;

- legal regulations adopted by the Authorized Body.5. Insurance supervision shall consist of the following:

- the licensing of the activities of providers of insurance services and the maintenance of

the combined state register of the providers of the insurance services;

- the monitoring of the observance of insurance legislation including on-site inspection of

the activities of providers of insurance services and the verification of the reports

submitted by them, and the monitoring of insurers’ compliance with the rules ensuring

their stability and solvency;

- issuing within 30 days in cases stipulated in this law the following permissions: for

insurance organizations to increase their authorized capital at the expense of foreign

investors, for foreign insurance and reinsurance brokers and other organizations involved

in insurance business to open representative offices;

- supervision over observance of the procedures and rules of formation of insurance

reserves (funds) by insurers (insurance companies) for all types of insurance;

- supervision over observance of the required ratio between shareholders’ funds and the

scope of contractual obligations of the insurer (insurance company);

- supervision over the financial and operational activities by insurers with regard to the

requirements of insurance legislation;

- supervision over legality of actions by the insurer and the insured entered into the

contract of insurance.

6. The providers of insurance services shall be obliged to:

- submit the required reports on their activity and information on their financial state to the

State insurance supervisory authority;

- observe the provisions of insurance legislation, comply with any orders made by the

State insurance supervisory authority aimed at eliminating breaches of the insurance

legislation and submit written information on timely fulfillment of accepted orders to the

State insurance supervisory authority;

- provide information required for the purposes of insurance supervision, at the request of

the State insurance supervisory authority.

Article 23. Insurance Licensing

The licensing of the providers of insurance services shall be effected in compliance with the

law of the Republic of Tajikistan “On licensing of separate types of activity”.

Article 24. Qualifications and Other Requirements

1. The director of a provider of insurance services duly registered as a legal entity, shall have

received an education in economics or finance at higher education level as confirmed by a

document recognized in the Republic of Tajikistan certifying the successful completion of a highereducation course in economics or finance. In addition at least two years’ working experience in the

field of insurance and/or finance is required.

2. The chief accountant of an insurer (insurance company) or an insurance broker shall have

received an education in economics or finance at higher education level as confirmed by a

document recognized in the Republic of Tajikistan certifying the successful completion of a higher

education course in economics or finance. In addition at least two years’ working experience in an

insurance organization and/or in an insurance broker is required.

3. An insurance actuary shall have received an education at higher education level in

mathematics, technology or economics as confirmed by a document recognized in the Republic of

Tajikistan certifying the successful completion of a higher education course in mathematics,

technology or economics and in addition shall have received a qualification certificate confirming

its knowledge of actuarial calculations.

4. The director and chief accountant of a provider of insurance services duly registered as a

legal entity shall be citizens of the Republic of Tajikistan.

Article 25. Confidentiality of Commercial and Other Legally Protected Secrets

Officials of the State insurance supervisory authority shall not be entitled to disclose in any

form whatsoever, the information of providers of insurance services that is qualified as commercial

or other legally protected secrets, except for the cases set out in the laws of the Republic of

Tajikistan.

Article 26. Insurance Taxation

The taxation of providers of insurance services on the territory of the Republic of Tajikistan

shall be effected in accordance with the Tax Code of the Republic of Tajikistan.

Article 27. Terminating the Insurer’s Activity

1. The termination of the activity of an insurer (insurance company) shall be effected in the

manner established by the laws of the Republic of Tajikistan.

2. A special liquidation commission shall be formed with the participation of the State

insurance supervisory authority for the purposes of liquidating an insurer (insurance company).

CHAPTER 4. CONCLUDING PROVISIONS

Article 28. Consideration of Disputes

Disputes arising from or in conjunction with insurance shall be settled by arbitration.

Article 29. Responsibility for Violation of This Law

Natural persons and legal entities shall be liable for the violation of this Law in accordance with the

procedures of the legislation of the Republic of Tajikistan.Article 30. Concerning the Annulment of the Law on Insurance of the Republic of

Tajikistan

The law dated July 20, 1994 “On insurance” of the Republic of Tajikistan shall henceforth

be legally void (Republic of Tajikistan Supreme Soviet Bulletin, 1994, No.14, Item 207; Akhbori

Majlisi Oli of the Republic of Tajikistan (News of the Parliament), 1997, No.9, Article 117, Item

XXII, No.23-24, Article ЗЗЗ, Item XVI, 1999, No.5, Article 73; 2001, No.4, Article 179; 2005,

No.12, Article 635; 2008, No.3, Article 197).

Article 31. On Entering This Law into Effect

1. This Law except for Article 11 shall come into force since the day of its official

publication.

2. Article 11 of this Law shall become effective January 1, 2014.

President of the Republic of Tajikistan Emomali Rakhmon

City of Dushanbe, December 29, 2010

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