CZECH REPUBLIC Law and Practice Contributed by: Stanislav Šimek, Vojtěch Mlynář and Jakub Dostál, BADOKH
ment decisions on behalf of multiple pooled investors in accordance with a uniform fund strategy. 7.4 Regulation of Programmers and Programming Programmers solely developing trading algorithms and other electronic trading tools are generally not subject to algorithmic trading regulatory frameworks. Since investment firms are subject to regulatory requirements for system robustness, developers cre - ating algorithms for such entities should design these systems in compliance with the applicable standards. Czech insurtech providers often use automated deci - sion engines that assess risk in real time at the point of sale, drawing on structured data inputs (eg, age, location, income) to generate instant pricing. Insurtech providers are subject to the same regula - tory framework as traditional insurers, and are thus required to act honestly, professionally and in the cli - ent’s best interests. Insurtech providers typically oper - ate either as independent intermediaries, requiring CNB authorisation, or as tied agents, requiring only registration. 8. Insurtech 8.1 Underwriting Processes Where AI is used in underwriting or pricing, insurtech providers may qualify as providers or deployers of high-risk AI systems under the EU AI Act, triggering obligations relating to accuracy, reliability and trans - parency of functioning. The Czech Insurtech Association’s planned regula - tory sandbox may stimulate further innovation in this sector. 8.2 Treatment of Different Types of Insurance The Czech Insurance Act distinguishes between life and non-life insurance (eg, property, liability or travel). Licensing by the CNB is specific to these catego - ries and insurers may only provide services that are permitted by their specific authorisation. Czech law generally does not allow insurers to operate life and
non-life insurance simultaneously, except for limited combinations. Capital requirements for insurers range from CZK70 million to CZK200 million for non-life insurers, and CZK105 million for life insurers. Where life and non-life activities are operated concurrently under the permit - ted exception, the statutory initial capital must equal the sum of the respective minimums for life and non- life insurance. Non-life insurance products require the provision of a standardised Insurance Product Information Docu - ment at the point of sale. Investment-based products (ie, mostly life insurance) attract more extensive dis - closure and conduct obligations, reflecting their long- term and savings-related nature. Regtech providers are not regulated as a distinct cat - egory under Czech law. Whether a regtech provider becomes regulated depends on the nature of the activities it performs. These are some of the frameworks that may apply: • DORA – Where a regtech provider provides tech - nology services to financial institutions, those insti - tutions must include mandatory provisions in their contracts, such as audit rights and data security standards. Systemically important providers can be placed under EU supervisory oversight. • GDPR – Where the regtech provider processes personal data, it must implement appropriate tech - nical and organisational measures and comply with EU data protection rules. • Czech AML Act – Where the regtech provider is involved in AML/KYC processes, it may itself become subject to AML obligations. • EU AI Act – Where the regtech provider develops or deploys AI systems, it may trigger obligations around accuracy, transparency and human over - sight. 9. Regtech 9.1 Regulation of Regtech Providers
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