Information regarding NOVIS

With a news item posted on 15 January 2025, the Central Bank of Iceland drew attention to EIOPA's press release to NOVIS policyholders, which was published on the same day. It contains useful questions and answers for those who still have NOVIS contracts in force.

The press release states, among other things, that there is uncertainty about whether and when a liquidator will be appointed to NOVIS, as there is no statutory deadline for courts in Slovakia to appoint a liquidator, which could undermine the interests of those who have NOVIS contracts in force. The benefits of terminating contracts with NOVIS must be assessed in comparison to continuing to make payments to the company, but it is not possible to guarantee that premiums paid to NOVIS will be fully recovered if the company is placed into winding-up proceedings. The press release can be accessed in its entirety here.

In light of the lack of reliable information on NOVIS' financial position, the Central Bank of Iceland considers that it cannot be asserted that NOVIS' financial position is sufficiently secure to recommend that policyholders continue to pay premiums to the company.

The Central Bank of Iceland has posted common questions and answers following the revocation of NOVIS' operating licence, which have been updated twice, most recently on 15 January 2025. They are available below.

**The Central Bank of Iceland's Financial Supervisory Authority continues to closely monitor developments and provides policyholders with information as appropriate.**

Updated on 15 January 2025

• Following the revocation of NOVIS' operating licence, the NBS (Central Bank of Slovakia) filed a request with the Slovak courts for the appointment of a liquidator.
• In October 2023, NOVIS applied to the courts in Slovakia, demanding the annulment of the NBS's decision to revoke its operating licence.
• In August 2024, a court in Slovakia postponed the appointment of a liquidator for NOVIS until NOVIS' litigation against the NBS regarding the legitimacy of the revocation of the company’s operating licence has been resolved. There is therefore some uncertainty about whether and when a liquidator will be appointed, which could result in the interests of those who have contracts with NOVIS being harmed.  (January 2025)
• The NBS decision to revoke NOVIS' operating licence remains unchanged despite NOVIS’s request for its annulment in court.
• After NOVIS' operating licence was revoked, the NBS has had limited supervision of NOVIS' operations.
• NOVIS' operations are currently limited to collecting premiums and settling claims. The company cannot issue new insurance contracts, since the company does not have an operating licence to engage in insurance activities. There is also no reliable information available about NOVIS' financial position, including whether the company has sufficient assets to meet its obligations and whether premiums are invested in accordance with applicable insurance contracts. (January 2025)
• Policyholders could be at risk of financial loss if they continue to make payments to NOVIS since a liquidator has not yet been appointed. (January 2025)

NOVIS’ website contains certain statements about the status of the company's winding-up proceedings, more specifically about the court proceedings regarding the appointment of a liquidator. The Central Bank considers it appropriate to provide information and facts to Icelandic policyholders:

• It has been reported in the Slovak media that NOVIS has requested that the legal effects of the NBS decision to revoke its operating licence be suspended (i.e. that the company be allowed to continue full operations until a decision is reached in the annulment case). Under Slovak law, a court has six months to rule on such a request, but NOVIS filed the request in August 2023, i.e. eight months ago. The NBS decision remains unchanged.
• In addition to the above, NOVIS has filed a lawsuit in court demanding the annulment of the decision of the NBS to revoke the operating licence. The court proceedings regarding the appointment of a liquidator have been temporarily suspended until a decision is made on NOVIS'  annulment request. The Central Bank of Iceland is concerned that there will be further and potentially prolonged delays in the appointment of a liquidator for NOVIS. While such litigation is ongoing, policyholders will continue to be uncertain about what will happen next.
• The NBS press release published on 21 March 2024 states that pending court proceedings and procedural decisions do not affect the NBS's decision to revoke NOVIS' operating licence. It also states that it is not possible to conclude that the court cases and the delay in appointing a liquidator have a predictive value regarding the court's ruling on NOVIS' annulment request.

• It is generally assumed that a liquidator is appointed immediately after the revocation of an operating licence. The function of the liquidator is to take over the management of the company and assess whether the company should be declared bankrupt or whether there are sufficient assets to settle its obligations. Since the appointment of a liquidator has been delayed beyond expectations, the situation of NOVIS and therefore its policyholders, is unusual and unfortunate.
• The NBS has limited authority to supervise NOVIS after the company’s operating licence was revoked. This fact increases the uncertainty of policyholders in the opinion of the Central Bank of Iceland.
• Until a liquidator is appointed to NOVIS, the company operates without a licence in a kind of vacuum, which leads to uncertainty for policyholders and other stakeholders. There is no statutory deadline for the Bratislava courts to appoint a liquidator for NOVIS, so it is uncertain whether and when this will be done.

• The Central Bank of Iceland would like to point out that it is not in a position to provide policyholders with advice on individual contracts and/or whether it is appropriate to utilise the remedies specified below. Furthermore, the Central Bank is not a supervisor of NOVIS, which had an operating licence from the Central Bank of Slovakia.
• In light of the uncertainty that exists following the revocation of NOVIS' operating licence, policyholders are encouraged to familiarise themselves with the options available to them. Policyholders should therefore familiarise themselves with the terms of the products they have purchased and make an informed decision about their next steps.
• The main options available to policyholders are as follows:
  • Premium break: Policyholders take a break from paying premiums in accordance with the applicable contract for an agreed period, generally a maximum of 6 months at a time and for up to three times during the contractual period, without the insurance coverage being reduced.
  • Partial Surrender: The policyholder receives a certain amount paid out without the contract being terminated.
  • Surrender of contract: The policyholder will receive the amount owed to him/her in accordance with the applicable contract(s) and the contract will be terminated.
  • Status quo: The policyholder continues to pay premiums in accordance with the applicable contract(s).
• When assessing what is considered to be the best solution for a policyholder, one must bear in mind that the contracts and circumstances of the policyholder are different in each case, i.e. the same solution may not be suitable for all policyholders.
• Policyholders who still pay regular premiums to NOVIS are advised to assess their own situation in light of the risk of continuing to pay to NOVIS, which does not have an operating licence, since there can be no guarantee that premiums will be fully recovered. Policyholders should therefore compare the option of terminating their contracts with NOVIS and receiving the potential surrender value (see further discussion below) of their contract, versus continuing to pay, and receiving the amount resulting from the potential winding-up proceedings of NOVIS. (January 2025)
• Policyholders are advised to seek assistance from experts in assessing their options, such as financial experts, lawyers or consumer organisations. (January 2025)

NOVIS[1] is an insurance company founded in Slovakia in 2014 and is regulated by the Central Bank of Slovakia (NBS).  NOVIS has been operating in its home country of Slovakia, as well as having branches in Austria, the Czech Republic and Germany and providing cross-border services in Finland, Hungary, Iceland, Italy, Lithuania, Poland and Sweden.  NOVIS products have been sold to Icelandic consumers through distributors (insurance brokers) in Iceland since 2018.

• On 5 June 2023, NBS revoked NOVIS’ operating licence following an investigation that revealed NOVIS' violation of Solvency II legislation regarding solvency, risk management and in connection with the company's changes to customer insurance terms.
• The revocation of an operating licence is the most severe penalty that the NBS can impose on a regulated entity. Given the burdensome nature of a decision to revoke an operating licence, such a decision is only taken in the most serious cases.
• NBS has taken various measures against NOVIS which have not been publicly announced. In several cases, NBS has also imposed sanctions on NOVIS that have been announced on the NBS website. In light of the fact that none of these measures or the application of sanctions led to improvements on the part of NOVIS, the NBS decided to revoke the company’s operating licence.

• The revocation of NOVIS' operating licence does not in itself affect the validity of the company's current insurance contracts or insurance coverage based on them.
• Insurance policyholders are advised to familiarise themselves with the terms of their insurance contracts before making a decision to stop paying premiums, cancel a contract, partially cancel a contract, reduce premium payments or take other actions.
• The terms and conditions of NOVIS insurance contracts contain information on costs and fees that are deducted from the policyholder's balance if the contract is terminated before the scheduled end of the contract. The terms and conditions also contain information on conditions for partial termination, exemption from the obligation to pay premiums and changes to insurance contracts.
• After a thorough examination of the terms of the insurance contract, particularly the provisions that deal with costs, fees and potential losses of entitlements, the policyholder can make an informed decision. Different points of view can be considered in such a decision, e.g. how long the contractual relationship has lasted, the amount of credit on the insurance account and whether it is possible to obtain comparable insurance coverage from another company.
• Policyholders are advised to contact the insurance broker who arranged the contract for more information about the insurance contract, relevant terms and possible next steps.

• Before the policyholder decides to terminate the insurance contract in whole or in part, it is good to keep in mind the costs that are deducted from the premiums paid as well as the yield when calculating the surrender value of the insurance contract when it is terminated before the expected end of the contract.
• Surrender value refers to the amount that the policyholder can expect to be paid if the contract is terminated before the scheduled end of the contract.  See further explanations below by type of contract.
• Partial termination refers to the authorisation of the policyholder to request a certain amount of payment from the insurance contracts without terminating the contract.

• Information on the surrender value, costs and fees can be found in Article 12 of the general terms of the Wealth Insuring and Life Savings Plan products.  By studying the content of the article, the policyholder can better understand the costs or curtailments of rights which the termination of the contract entails. The article states, among other things, that for the first 5 years of the contract, the policyholder pays 35% of the premium for costs.  If the policyholder terminates the contract before 5 years of the contractual period have elapsed, the cost is deducted from the surrender value of the contract, which amounts to 35% of the unpaid premiums until the end of the 5-year period. Further information about the surrender value, costs and fees paid by the policyholder can be found in the article. The terms of the products can be accessed here.
• Information on partial termination can be found in Article 13 of the general terms of the Wealth Insuring and Life Savings Plan products. The terms of the products can be accessed here.
• The policyholder can request a reduction in the agreed premium payments if certain conditions are met. Further information regarding amendments to the insurance contract, including reductions in premium payments can be found in Article 16 of the general terms of the Wealth Insuring and Life Savings Plan products. The terms of the products can be accessed here.

• Information on the surrender value, costs and fees can be found in Article 13 of the general terms of the Flexible Savings Plan product. By studying the content of the article, the policyholder can better understand the costs or curtailments of rights which the termination of the contract entails. The article states, among other things, that for the first 3 years of the contract, the policyholder pays 35% of the premium for costs. If the policyholder terminates the contract before 3 years of the contractual period have elapsed, the cost is deducted from the surrender value of the contract, which amounts to 35% of the unpaid premiums until the end of the 3-year period. Further information on the surrender value, costs and fees paid by the policyholder can be found in the article. The terms of the product can be accessed here.
• Information on partial termination can be found in Article 14 of the general terms of the Flexible Savings Plan product. The terms of the product can be accessed here.
• The policyholder can request a reduction in the agreed premium payments if certain conditions are met.  Further information about amendments to the insurance contract, including the reduction of premium payments can be found in Article 17 of the general terms of the Flexible Savings Plan product. The terms of the product can be accessed here.

• The NBS has submitted a request to its country’s court for the appointment of a liquidator for NOVIS. The liquidator will handle the winding-up proceedings of NOVIS and assume all the competencies of the Board of Directors and management of the company. The liquidator will contact the policyholders of NOVIS, including Icelandic policyholders, and provide more information about their rights, including the filing of insurance claims based on the company's insurance contracts.  The liquidator will take a position on whether the company should file for bankruptcy or whether the assets are sufficient to meet its obligations.
• It should be reiterated that neither the revocation of NOVIS’ operating licence nor the appointment of a liquidator for the company leads to the automatic termination of its insurance contracts.  Notwithstanding the above, the NOVIS insurance contracts and insurance coverage based on them therefore remain unchanged at this time.

• NOVIS policyholders can send inquiries to the company (and to the liquidator when he/she has been appointed) or the insurance broker who mediated the agreement for more detailed information and/or instructions.
• NBS, which is NOVIS’ home regulator, has compiled and published on its website frequently asked questions and answers in connection with the bank's decision to revoke NOVIS’ licence. The information is in English and can be accessed here. You can also send a query to NBS at the following email address: info@nbs.sk
• The Central Bank of Iceland also accepts inquiries at the following email address: sedlabanki@sedlabanki.is

The Central Bank of Iceland continues to monitor the case and will update information for Icelandic consumers on its website.

[1] The full name of the company is NOVIS Versicherungsgesellschaft, NOVIS Compagnia di Assicurazioni, NOVIS Poisťovňa a.s.