Under the Insurance Tax Act, an insurance company is not entitled to unilaterally increase the agreed premium by the amount of tax in relation to policyholders if, in doing so, it acts in contravention of Section 53 of the Civil Code

On 29th April 2026, The Supreme Administrative Court of the Slovak Republic, by judgment Case No. 3Stk/18/2025, dismissed the appeal in cassation brought by the insurance company KOMUNÁLNA poisťovňa, a. s., Vienna Insurance Group (hereinafter referred to as ‘the insurance company’) against the judgment of the Administrative Court in Bratislava (hereinafter referred to as ‘the Administrative Court’) in the case concerning the review of the legality of a decision by the National Bank of Slovakia (hereinafter referred to as ‘NBS’), which had imposed a fine on the insurance company for a breach of its obligations in the area of financial consumer protection. The essence of the insurance company’s breach of duty lay in its unilateral increase in the insurance premium to include insurance tax without any legal or contractual basis.

The Administrative Court dismissed the administrative action against the decision of the National Bank of Slovakia (NBS), which had imposed a fine on the insurance company, prohibited the use of unfair commercial practices, and ordered measures to remedy and rectify the identified shortcomings. The nature of the insurance company’s breach of duty lay in the application of Act No. 213/2018 Coll. on Insurance Tax and on Amendments to Certain Acts, as amended (hereinafter referred to as the ‘Insurance Tax Act’) in relation to insurance contracts concluded prior to the entry into force of the Insurance Tax Act.

In the opinion of the Administrative Court, it is clear from the wording of Section 6 of the Insurance Tax Act that the amount of insurance premium received (i.e. as contractually agreed) is subject to insurance tax; consequently, the tax base is the amount of the premium received, reduced by the tax. Regarding the retroactive effect of the Insurance Tax Act on insurance contracts concluded prior to the Act’s entry into force, the Administrative Court stated that, although the Act does not expressly provide for an ‘increase’ in insurance premiums in relation to insurance contracts concluded prior to the introduction of insurance tax, this consequence follows indirectly and logically from its provisions, and it referred to Section 4(2)(a), Section 5(3) and Section 6(4) of the Insurance Tax Act.

The Court of Cassation upheld the administrative court’s finding that the insurance company had presented an isolated interpretation of the Insurance Tax Act without taking into account consumer protection and the existence of the provision in Section 53 of the Civil Code. According to the Court of Cassation, in the case of so-called consumer contracts, an insurance company cannot unilaterally alter – in this instance, increase – the agreed premium. The Court of Cassation acknowledged that the legislative amendment had had negative economic consequences for the insurance company. As it was unable to unilaterally increase the premium in relation to policyholders (consumers), it effectively had a lower net income (margin) and found itself at an economic disadvantage during the relevant period. However, the Court of Cassation did not agree that the legal solution to this situation should have been to make a unilateral change for a reason other than that agreed in the contract, as this would have circumvented Section 53 of the Civil Code, which guarantees consumer protection. The law protects the predictability of contracts and the weaker party (the consumer). The Court of Cassation emphasised that if insurance companies were able to amend contractually agreed terms (the amount of the premium) in this way, individually negotiated contracts would lose their guaranteed stability and the consumer would be placed at a significant disadvantage. They are therefore protected by law against unforeseen increases in insurance premiums. The insurance company has certain tools at its disposal to compensate for this situation (on the contract anniversary, in new contracts, and through pro futuro clauses in the General Terms and Conditions). The insurance company could have addressed the risk of legislative changes in advance in the contracts it concluded with policyholders. It is common for insurance companies to have contractual clauses that respond to changes in legislation; in doing so, they must comply with the Insurance Act, consumer protection legislation, disclosure requirements and the right to terminate the contract or object in the event of a significant change. If an insurance company does not have such a clause, this is its business risk; if it does have one, it passes the risk on to the consumer.

On the basis of the above facts, the Court of Cassation agreed with the administrative court’s conclusion that the contested decision of the National Bank of Slovakia had been issued in accordance with the law. As the grounds for appeal were not sufficient to call into question the substantive correctness of the administrative court’s judgment, it dismissed the appeal as unfounded.

This judgment was delivered unanimously by the Supreme Administrative Court; no remedy is admissible against it.

The decision was taken by Panel No. 3 of the Supreme Administrative Court, composed of: the President of the Panel, JUDr. Michal Dzurdzík, PhD., and the members of the Panel, JUDr. Katarína Benczová and JUDr. Zuzana Šabová, PhD.