Stand:updated on 01.01.2016 Objectives, tasks and activities
The insurance industry is based, to quite an important degree, on trust. Customers expect their private insurer to be a reliable contracting party, often over a very long term. With its supervision of insurers, BaFin therefore fulfils important social and economic responsibilities and contributes to the long-term stability of the entire financial sector.
The Insurance Supervision Act (Versicherungsaufsichtsgesetz – VAG) forms the most important statutory basis for insurance supervision in Germany. The VAG is largely based on Directive 2009/138/EC (Solvency II) and is accompanied by numerous other legal bases at the national and European levels.
In accordance with section 294 of the VAG, the primary objective of supervision is to protect the policyholders and beneficiaries. To fulfil this objective, the supervisory authority monitors all business operations of insurers within the framework of legal supervision in general, and financial supervision in particular.
The objective of legal supervision is the proper operation of insurance business, including compliance with supervisory provisions, regulations governing insurance contracts, any other provisions concerning the insured and the legal basis of the business plan.
In the context of financial supervision, BaFin ensures, in respect of the overall business activities, that insurance undertakings are able to meet their obligations under insurance contracts at all times and, in particular, that they are solvent and maintain their long-term risk-bearing capacity, that they have recognised adequate technical provisions, invest in appropriate assets, comply with the principles of good business practice, including those in respect of a proper system of governance, and that they also comply with the other financial principles established for their business operations.