Opinion of the European Central Bank of 19 September 2016 on the role of Národná banka Slovenska in reporting on insurance premium levy (CON/2016/45)
Date: 2016-09-19
Institutions: European Central Bank
Subjects: Slovakia, central bank, insurance company, insurance premium, motor vehicle insurance, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 19 September 2016 

on the role of Národná banka Slovenska in reporting on insurance premium levy 

(CON/2016/45) 

Introduction and legal basis 

On 16 August 2016 the European Central Bank (ECB) received a request from the Ministry of Finance of 

the Slovak Republic (hereinafter the ‘Ministry of Finance’) for an opinion on a draft law amending Law No 

39/2015 on insurance and on amendments of certain laws (hereinafter the ‘draft law’).  

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the third indent of Article 2(1) of Council Decision 98/415/EC1, as 

the  draft  law  relates  to  Národná  banka  Slovenska  (NBS).  In  accordance  with  the  first  sentence  of 

Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted 

this opinion. 

1.  

Purpose of the draft law 

1.1  Under  the  current  legal  framework,  insurance  undertakings  established  in  Slovakia  and  other 

Member States and branches of third-country insurance undertakings (hereinafter jointly referred to 

as ‘insurance undertakings’) are required to make annual partial premium transfers in the amount 

of  8%  of  the  premiums  received  from  compulsory  motor  vehicle  liability  insurance  in  respect  of 

activities carried out in the Slovak Republic in the previous year. The transfers must be made to a 

separate  account  of  the  Ministry  of  Interior  of  the  Slovak  Republic  (hereinafter  the  ‘Ministry  of 

Interior’).  The  insurance  undertakings  must  report  the  partial  premium  transfers  to  NBS,  the 

Ministry of Finance and the Ministry of Interior within three working days of the date of transfer. In 

addition, the insurance undertakings are required to provide NBS with data that supports the items 

used in the calculation of the base for the annual premium transfers. The funds collected from the 

premium  transfers  are  allocated  by  the  Ministry  of  Interior,  after  having  consulted  the  Ministry  of 

Finance, to cover certain pre-defined expenses, such as those of fire brigades and relevant units of 

the Ministry of Interior in relation to traffic and accidents.  

1.2  The  draft  law  extends  the  mandatory  premium  transfers  to  all  classes  of  non-life  insurance 

products and provides for the premium transfers to take place on a quarterly basis. Consequently, 

the insurance undertakings will have to report quarterly to the relevant Ministries and NBS and also 

provide to NBS on a quarterly basis the data that supports the items used in the calculation of the 

1   Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national authorities 

regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 

 
 
 
 
                                                 
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base  for  the  premium  transfers.  Under  the  draft  law,  the  additional  financial  resources  will  be 

transferred to the Ministries of Health, Environment and Finance, which will use the funds for a set 

of  pre-defined  purposes,  in  particular  for  a  renewal  and  modernisation  of  the  healthcare 

infrastructure, 

implementation  of 

flood  management  measures,  and 

to  cover  unforeseen 

expenditures of the central government. 

2. 

General observations 

2.1  The  draft  law  imposes  on  the  insurance  undertakings  a  new  substantial  quarterly  reporting 

requirement  vis-à-vis NBS, which  will considerably  increase the  amount of data to be reported to 

and processed by NBS.  As a result, the  draft law significantly  expands  the substance of the task 

currently performed by NBS.  

2.2  The ECB underlines that, in the context of a proposed conferral of tasks on a European System of 

Central Banks (ESCB) member, it is necessary to assess such conferral against the prohibition of 

monetary  financing  under  Article  123  of  the  Treaty.  The  ECB  has  developed  the  following 

guidance, in  the form of general and specific considerations, on the  basis of  which the ECB may 

decide whether a new task conferred on an ESCB national central bank (NCB) is to be considered 

a central banking task or a government task for the purposes of the monetary financing prohibition. 

2.2.1  General considerations 

First,  the  systematic  categorisation  of  tasks  assigned  to  NCBs  as  central  banking  or  government 

tasks applies to genuinely new tasks that did not exist in the past or did not form an integral part of 

the  central  banking  tasks  already  assigned  to  the  NCB.  In  recognition  of  the  different  Member 

States’  legal  frameworks,  central  banking  traditions  and  national  set-ups,  the  tasks  currently 

discharged by an NCB as central banking tasks are not reviewed and re-categorised, but may be 

reassessed if they are subject to legislative amendments of substance. 

Second, the principle of financial independence requires that the Member States may not put their 

NCBs  in  a  position  where  they  have  insufficient  financial  resources  to  carry  out  their  ESCB-  or 

Eurosystem-related tasks, as applicable.  

Third, central banking tasks comprise in particular those tasks that are related to the tasks listed in 

Article 127(2), (5) and (6) of the Treaty. 

Fourth,  new  tasks  conferred  on  an  NCB  which  are  atypical  of  NCBs’  tasks,  or  which  are  clearly 

discharged on behalf of and in the exclusive interest of the government or of other public entities, 

should be considered as government tasks. In that context, a distinction should be drawn between 

liquidity-  and  solvency-related  tasks  of  NCBs.  While,  for  purposes  of  the  monetary  financing 

prohibition, solvency support is a government task, liquidity-related tasks, the ultimate objective of 

which are to finance the economy, are central banking tasks. 

2.2.2  Specific considerations 

An important criterion for classifying a new task as a government task is, therefore, the impact of 

the  task  on  the  institutional,  financial  and  personal  independence  of  the  NCB.  In  particular,  the 

following should be taken into account. 

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First,  it  should  be  assessed  whether  the  performance  of  the  new  task  creates  inadequately 

addressed  conflicts  of  interests  with  existing  central  banking  tasks,  and  does  not  necessarily 

complement  those  existing  central  banking  tasks.  If  a  conflict  of  interest  arises  between  existing 

and  new  tasks,  there  should  be  sufficient  mitigation  in  place  to  adequately  address  that  conflict. 

Complementarity between the new task and existing central banking tasks should not, however, be 

interpreted  extensively,  so  as  to  lead  to  the  creation  of  an  indefinite  chain  of  ancillary  tasks. 

Complementarity should also be examined from the point of view of the financing of those tasks. 

Second,  it  should  be  assessed  whether  without  new  financial  resources  the  performance  of  the 

new task is disproportionate to the financial or organisational capacity of the NCB concerned, and 

may negatively impact its capacity to properly perform existing central banking tasks. 

Third,  it  should  be  assessed  whether  the  performance  of  the  new  task  does  not  fit  into  the 

institutional  set-up  of  the  NCB  in  the  light  of  central  bank  independence  and  accountability 

considerations. 

Fourth,  it  should  be  assessed  whether  the  performance  of  the  new  task  harbours  substantial 

financial risks. 

Fifth, it should be assessed whether the performance of the new task exposes the members of the 

NCB’s decision-making bodies to political risks which are disproportionate and may also impact on 

their  personal  independence  and,  in  particular,  the  guarantee  of  the  term  of  office  under 

Article 14.2 of the Statute of the European System of Central Banks and of the European Central 

Bank. 

2.2.3  Any  final  assessment  on  the  qualification  of  a  task  given  to  an  NCB  as  either  falling  within  the 

scope of a central banking task or a government task will be guided by the objective of ensuring the 

consistent application of the prohibition of monetary financing within the Eurosystem and the ESCB 

to the extent that it applies to its members. 

3. 

Specific observations 

3.1  Collection of additional insurance data for taxation purposes   

Under Law No 39/2015 on insurance and on amendments of certain laws (hereinafter the ’law on 

insurance’),  NBS  receives  from  insurance  undertakings  data  that  supports  the  items  used  in  the 

calculation  of  the  base  for  the  annual  premium  transfers  in  respect  of  compulsory  motor  vehicle 
liability  insurance 2.  However,  the  draft  law  substantially  extends  the  scope  of  the  data  to  be 

reported to NBS by covering all non-life insurance products and increases the reporting frequency 

by requiring quarterly reporting. Although neither the law on insurance nor the draft law are clear on 

how and for which purposes the data is to be processed by NBS, the draft law significantly expands 

the substance of the task initially conferred on NBS, which should therefore be assessed against 

the prohibition of monetary financing.  

3.2  Tasks not related to basic central banking tasks listed in Article 127(2) and (5) of the Treaty 

2   The ECB has not been consulted on the assignment of the new task under the law on insurance. 

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The  collection,  maintenance  and  processing  of  the  data  that  supports  the  items  used  in  the 

calculation  of  the  base  for  quarterly  partial  premium  transfers  is  not  linked  to  any  of  the  central 

banking  tasks  listed  in  Article  127(2)  and  (5)  of  the  Treaty.  In  addition,  such  new  tasks  are  not 

complementary  to  the  existing  supervisory  tasks  of  NBS.  Although  NBS  is  responsible  for  the 

supervision  of  insurance  undertakings,  the  objectives  of  its  supervisory  tasks  substantially  differ 

from  the  objectives  of  the  new  tasks  conferred  on  NBS  under  the  draft  law.  While  the  main 

objective  of  the  prudential  supervision  over  insurance  undertakings  is  the  protection  of 
policyholders and beneficiaries 3, the objective of the new tasks conferred on NBS under the draft 

law  is  linked  to  the  financing  of  certain  pre-defined  expenses  incurred  in  the  performance  of 

government tasks. In the  ECB’s  view, the fact that such expenses are related to  losses or to the 

negative  effects  of  losses,  which  would  potentially  be  covered  by  non-life  insurance  products 

offered  by  the  insurance  undertakings,  does  not  form  a  sufficient  rationale  to  consider  the  new 

tasks conferred on NBS under the draft law as complementary to NBS’s supervisory tasks. 

3.3  Discharge of tasks on behalf of and in the exclusive interest of the government 

The  proceeds  of  the  partial  premium  transfers  are  to  be  used  by  the  relevant  Ministries  of  the 

Slovak government for specific pre-defined purposes and contribute to the financing of government 

tasks,  e.g.  to  finance  expenses  of  fire  brigades,  renewal  and  modernisation  of  the  healthcare 

infrastructure, 

implementation  of 

flood  management  measures  and 

to  cover  unforeseen 

expenditures  of  the  central  government.  The  collection,  maintenance  and  processing  of  the  data 

that  supports  the  items  used  in  the  calculation  of  the  base  for  the  quarterly  partial  premium 

transfers are, therefore, also in the interest of the Slovak government. 

3.4  Atypical tasks  

No ESCB NCB currently performs a task that would  be comparable to the task introduced by the 

draft  law.  The  task  conferred  on  NBS  by  the  draft  law  must  be  distinguished  from  the  tasks 

performed  by  other  ESCB  NCBs  related  to  the  supervision  of  insurance  undertakings,  financial 

stability or collection of statistical data. In particular, some ESCB NCBs collect data from insurance 

undertakings in order to obtain sufficient information about their financial situation or to collect fees 

which ultimately finance the supervisory tasks of the relevant ESCB NCBs. Some ESCB NCBs are 

involved in the process of computing and imposing fees and contributions on financial institutions 

for the purpose of e.g. deposit guarantee funds, resolution funds, investor compensation funds or 

insurance compensation funds. Unlike the task conferred on NBS under the draft law, these tasks 

are either complementary to the ESCB NCBs’ supervisory mandates or related to financial stability. 

Therefore, it can be concluded that the new task under the draft law is an atypical central banking 

task. 

3.5  Extent to which the performance of tasks poses substantial or disproportionate financial burden 

The  principle  of  financial  independence  requires  NCBs  to  have  sufficient  means  to  carry  out  not 

only their ESCB-related tasks, but also their national tasks from both an operational and financial 

point  of  view.  Allocation  of  specific  non-ESCB  related  tasks  to  NCBs,  e.g.  collection  of  data  that 

3   See Article 79(2) of the law on insurance. 

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supports  the  items  used  in  the  calculation  of  the  base  for  insurance  premium  transfers,  also 

requires  an  allocation  of  additional  human  and  financial  resources  for  these  tasks  in  order  to 

ensure that they are carried out in a manner that will not affect the NCB’s operational capacity to 
perform  its  ESCB-related  tasks4.  The  draft  law  does  not  address  in  any  way  the  additional 

expenses  resulting  from  the  conferral  on  NBS  of  the  new  task. The  draft  law  is  not  clear  on  how 

NBS  should  treat  and  process  the  data  received.  Therefore,  it  is  difficult  to  assess  whether  the 

performance of the new task is disproportionate to the financial or organisational capacity of  NBS 

and  whether  it  may  negatively  impact  NBS’s  capacity  to  properly  perform  its  existing  central 

banking tasks.   

3.6  Extent  to  which  the  performance  of  tasks  poses  substantial  financial  or  disproportionate  political 

risks 

In  the  absence  of  any  provision  in  the  draft  law  which  would  exclude  the  liability  of  NBS  for  the 

exercise  of  the  tasks  under  the  draft  law,  NBS  would  ultimately  be  liable  for  damages  in 

accordance  with  the  Slovak state  liability  rules.  Therefore,  the  new  task  conferred  on  NBS  under 

the  draft  law  would  entail  additional  financial  risks,  which  would  have  to  be  assumed  by  NBS  in 

relation to tasks performed in the interest of the Slovak government.  

3.7  Conclusion 

The ECB considers the new task conferred on NBS under the draft law to be a government task. 

Therefore the ECB expresses its general concern regarding the proposed conferral of such task on 

NBS.  With  a  view  to  dispelling  the  monetary  financing  concerns  associated  with  carrying  out  a 

government task, it should be ensured that NBS has sufficient resources to perform the new task 

without affecting its capacity to carry out its central banking tasks. To this end, it is necessary that 

NBS is fully reimbursed for any additional costs associated with performing the new task and, in the 

case  of  application  of  the  Slovak  state  liability  rules,  the  Slovak  Republic  has  no  indemnification 

rights.  

This opinion will be published on the ECB’s website. 

Done at Frankfurt am Main, 19 September 2016. 

[signed] 

The President of the ECB 

Mario DRAGHI 

4   See  for  example  paragraph  3.1.2  of  Opinion  CON/2016/6  and  paragraph  3.1.1  of  Opinion  CON/2016/16.  All  ECB 

opinions are published on the ECB’s website at www.ecb.europa.eu. 

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