Bulgaria's Top Prosecutor Orders Probe of Regulator over Insurer

* Cyprus-based insurer put into liquidation

* Public anger as 200,000 Bulgarians left without car insurance

* Government calls for resignation of regulator's deputy chair

By Angel Krasimirov

SOFIA, Aug 20 (Reuters) - Bulgaria's chief prosecutor ordered the country's main intelligence agency on Monday to investigate financial regulator KFN's oversight of the Bulgarian branch of Cyprus-based Olympic Insurance Company Ltd, after the firm was placed in liquidation.

The Financial Supervision Commission, or KFN, said it prohibited Olympic Insurance's branch in Bulgaria from signing new contracts on May 10 after it was informed about problems at the insurer by Cyprus's Insurance Companies Control Service.

The Cypriot insurance regulator appointed a provisional liquidator for Olympic Insurance, which operated in Cyprus and Bulgaria, on Aug. 10, after revoking the company's insurance licence for failing to meet minimum capital requirements.

Nearly 200,000 Bulgarians holding compulsory third-party car liability policies with the company have been left without cover.

In an unusual move, chief prosecutor Sotir Tsatsarov asked Bulgaria's State Agency for National Security to investigate whether KFN had complied with legal requirements when Olympic Insurance began operating in Bulgaria in 2009 and how it had exercised its supervisory powers, the prosecutor's office said in a statement.

At the same time, Finance Minister Vladislav Goranov told reporters the government would urge KFN's Deputy Chair Ralitsa Agayn, who is in charge of insurance supervision, to resign.

"We find serious shortcomings in (the work of) the head of the insurance supervision's department," Goranov said.

KFN, Agayn and Olympic Insurance...