Topic Professional suitability Guidance notices on fitness and propriety
Article from the Annual Report 2016 of the BaFin
The legislation extended the focus of the supervisory authorities from the management board to the supervisory board some years ago. Since 2009, BaFin's supervisory activities have also covered the members of administrative and supervisory bodies.
Special requirements
For the purpose of defining the activities of the supervisory boards of insurers, the corporate law provisions of the German Stock Corporation Act (Aktiengesetz), as added to or modified by regulations under co-determination and supervisory law, must be observed. In accordance with the German Audit Reform Act (Abschlussprüfungsreformgesetz), all insurance undertakings within the scope of Solvency II must ensure when appointing members of supervisory boards that at least one member has professional knowledge of accounting or the audit of financial statements.
Collective capabilities
Furthermore, the members of the supervisory board as a whole must be familiar with the industry in which the company operates. In order to be able to discharge their responsibilities in the supervisory board, the members must be able to demonstrate that they have dependable basic knowledge of the insurance sector. In addition, the subject areas of investment, underwriting and accounting must in any event be covered within the supervisory body. BaFin will pay particularly close attention to these points in future in relation to new appointments of supervisory board members.
Supporting guidance notice
BaFin revised its guidance notice on the fitness and propriety of members of administrative or supervisory bodies in November (see info box "New guidance notices on fitness and propriety"). The new version addresses the collective capabilities of the supervisory body in addition to the particular qualifications of the individual members. The guidance notice contains a table template in which the individual members are expected to record their assessment of their abilities once a year. Taking this as a starting point, the administrative or supervisory body is supposed to prepare a development plan on an annual basis, exploring the potential for improvement or further development
New guidance notices on fitness and propriety
BaFin has revised and updated its guidance notices on the fitness and propriety of management board members and members of administrative or supervisory bodies (only available in German). It has also published for the first time a corresponding guidance notice for persons responsible for key functions or working within those functions. Under Solvency II, most insurers must establish four key functions as an important element of their system of governance: an independent risk management function, a compliance function, an internal audit function and an actuarial function.
