Currency conversion to euro for insurance services

The 'date of the introduction of the euro' in the Republic of Bulgaria shall be the date specified in the Decision of the Council of the European Union on the adoption of the euro by the Republic of Bulgaria, adopted in accordance with Article 140(2) of the Treaty on the Functioning of the European Union, hereinafter referred to as the 'Decision on the adoption of the euro', and the Council Regulation of the European Union adopted in accordance with Article 140(3) of the Treaty on the Functioning of the European Union. As of that date, the euro will become the official national currency and legal tender in the Republic of Bulgaria.

In this regard, and in order to facilitate users (consumers) of insurance services and ensure that the transition to the new currency is easy, clear, and understandable for them, this notice provides information about the rules that insurers will follow when converting monetary amounts from Bulgarian leva to euro in all documents provided to consumers.

Currency Conversion

Upon the adoption of the euro as the national currency in the Republic of Bulgaria, insurers will convert prices of insurance services, as well as all other monetary values related to insurance relationships, from Bulgarian leva into euro. The change of the monetary unit from leva to euro is referred to as currency conversion.

Insurers are required to perform this conversion using the official exchange rate of the lev to the euro, which will be set in the decision on the introduction of the euro. During the conversion, the current amount in leva will be divided by the full six-digit numerical value of the official exchange rate. The resulting value is then rounded to the second decimal place based on the third digit after the decimal point, as follows:

• If the third digit after the decimal point is less than five, the second digit remains unchanged;
• If the third digit after the decimal point is equal to or greater than five, the second digit is increased by one.

It is important to note that as a result of the conversion of prices and other values from leva to euro, insurance service consumers must not be placed in a financially less favorable position than they would be if the euro had not been introduced as the national currency. This means that the conversion itself will not lead to an increase in the prices of insurance services.

Each user of insurance services will have the right, for a period of one year following the date of the euro’s introduction, to request and receive from the insurer—with whom they have or had insurance relationships as of that date—information about the monetary values in leva of their property rights and/or obligations. Insurers are obliged to provide this information free of charge, within 7 days of the request.

Dual Display of Prices in Leva and Euro

For a period starting one month after the date on which the decision to adopt the euro enters into force and ending 12 months after the official introduction of the euro in the Republic of Bulgaria, insurers will implement dual price display in both euro and Bulgarian leva. This means that during the specified period, insurers will display both the euro and lev equivalent of the final amount payable by the consumer for an insurance service.

This dual display will be mandatory only for pricing information intended for and provided to consumers.

During the dual display period, insurers must indicate in both euro and leva:

•The total final amount payable by the policyholder under the insurance contract;
•The amount of installments in case of payment by installments.

If the insurer has tariffs for other insurance-related services (not directly related to the conclusion of an insurance contract), then during the dual display period, the total price of the services included in those tariffs must also be displayed in both euro and leva. This information must be made publicly available in insurer offices and on their websites and provided free of charge to customers upon request, either in paper format or on another durable medium.

Taxes and fees, contributions to the Guarantee Fund, and other converted monetary values not related to the price of the insurance service—about which the consumer receives information from the insurer:

•before entering into an insurance contract and/or
•at the time of concluding the insurance contract and/or
•in relation to the settlement of claims and compensation under an insurance policy,

In all cases, the euro and lev amounts must be presented next to each other, clearly, legibly, unambiguously, and in a manner that is easily understood. Both values must use the same font size, and the currency must be clearly indicated with the respective currency symbol, sign, or abbreviation to ensure easy identification.

During the dual display period, the total final price of the insurance service must be shown in both euro and leva on any issued receipt or other payment document, along with the official exchange rate of the lev to the euro.

When commercial communications and advertisements in audio or video format are made to promote insurance services during this period, prices may be stated orally in leva only until the date of euro introduction, and in euro only after that date.

Currency conversion and dual display do not apply to prices and monetary amounts related to insurance products that are developed and offered directly in euro or in a third currency.

Dual (Simultaneous) Circulation of the Euro and the Lev

For a period of one month following the introduction of the euro in the Republic of Bulgaria—referred to as the period of dual circulation of the lev and the euro—banknotes and coins denominated in leva will continue to be legal tender within the territory of the Republic of Bulgaria.

During this period, if an insurer receives a cash payment in either leva or euro, any change due must be returned entirely in euro. If the employee receiving the payment does not have sufficient euro cash on hand, the change will be returned entirely in leva.

Additionally, during this period, if an insurer receives a cash payment, they may refuse to accept more than 50 coins in leva, including stotinki (cents).
If during the dual circulation period a consumer cancels an insurance service or terminates an insurance contract (in cases allowed by law) and is entitled to a refund, the insurer will be obligated to return the amount entirely in euro. If the refund is made in cash and the respective employee does not have sufficient euro available, the amount will be refunded entirely in leva.

The rules outlined in this notice are based on the Law on the Introduction of the Euro in the Republic of Bulgaria, coordinated with the Financial Supervision Commission, and adopted by the industry organization Association of Bulgarian Insurers, for use and implementation by its members.