Primary insurers and reinsurers from third countries, i.e. countries that are not member states of the European Union or signatories to the Agreement on the European Economic Area, are subject to authorisation and must establish a German branch office if they wish to carry on primary insurance or reinsurance business in Germany. The requirements for the authorisation application and the branch office are based in particular on the provisions of sections 68 and 69 of the Insurance Supervision Act (Versicherungsaufsichtsgesetz – VAG).

Section 67 (1) sentence 2 of the Insurance Supervision Act provides an exception for primary insurance and reinsurance undertakings that wish to conduct only reinsurance business in Germany. According to this exception, the requirement for authorisation and the establishment of a branch office does not apply if primary insurers or reinsurers from third countries conduct only reinsurance business in Germany through provision of cross-border services and if the European Commission has decided in accordance with Article 172(2) or (4) of Directive 2009/138/EC that the solvency regimes for reinsurance activities carried out by undertakings in the relevant country are equivalent to the regime described in that Directive or if primary insurers or reinsurers are allowed to carry on reinsurance business without an authorisation or branch based on an agreement between the European Union and a third county, provided the requirements of the agreement are fulfilled.

The respective equivalence decisions taken by the European Commission can be found on the website of the European Commission and on the website of EIOPA.

In this context it should be noted that the legal situation with regard to reinsurance business in Germany changed when the Act to Modernise Financial Supervision of Insurance Undertakings (Gesetz zur Modernisierung der Finanzaufsicht über Versicherungen - 10. VAG Novelle) entered into force on 1 January 2016. Insurance by correspondence (Korrespondenzversicherung), a tool that has been known for many years, can continue to be be used. Insurance by correspondence, which is not subject to authorisation, applies to reinsurance business if, at the instigation of an undertaking domiciled in Germany, a reinsurance contract is concluded by correspondence with a primary insurer or reinsurer domiciled abroad without one of the parties being assisted by a professional intermediary in Germany or a professional intermediary domiciled abroad but acting as intermediary in Germany.

Consideration of risk mitigation techniques using reinsurance contracts with primary insurers or reinsurers from third countries is subject in particular to the provisions of Article 211(1) and (2) of Commission Delegated Regulation (EU) 2015/35 of 10 October 2014.