Topic Reporting obligations Insurance undertakings & pension funds
All private and public insurance undertakings which carry on private insurance business within the scope of the Insurance Supervision Act and have their registered office in Germany are subject to supervision either by BaFin or by the supervisory authorities of the Federal States. Pension funds have also been subject to insurance supervision by BaFin under the Act since the beginning of 2002, as have domestic reinsurance undertakings since December 2004.
Supervised insurance undertakings
At present, 567 insurance undertakings and 31 pension funds are supervised by BaFin. Just under 900 undertakings, most of them relatively small, regional mutual insurance associations, are supervised by individual supervisory authorities of the Federal States.
Insurance undertakings having their registered office in another EU member state or in a state party to the Agreement on the European Economic Area (EEA) which conduct business in Germany under the freedom to provide service are primarily subject to supervision by their home country. BaFin does, however, consult the foreign supervisory authority if it identifies breaches of general German legal principles.
Social insurance institutions – i.e. statutory health insurance funds, the statutory pension insurance fund, statutory accident insurance institutions and unemployment insurance – are not subject to supervision under the Insurance Supervision Act. They are regulated by other government agencies, such as the statutory health insurance funds of the Federal Insurance Office (Bundesversicherungsamt).
Division of responsibilities between the Federal Government and the Federal States
Insurance supervision is divided between the Federal Government and the Federal States – in accordance with the federalist system of the Federal Republic of Germany.
BaFin supervises on behalf of the Federal Government those private insurance undertakings operating in Germany which are of material economic and financial significance and public insurance undertakings engaging in open competition which operate across the borders of any Federal State.
The supervisory authorities of the Federal States are mainly responsible for supervising public insurers whose activities are restricted to the particular Federal State in question and those private insurance undertakings which are of lesser economic and financial significance.
BaFin has various means at its disposal to take supervisory action against insurance undertakings. Under the Insurance Supervision Act it may issue any instructions that are "appropriate and necessary" in order to prevent or eliminate undesirable developments that threaten to harm the interests of policyholders. One "undesirable development" in particular would be if an undertaking failed to comply with the statutory and supervisory requirements applying to the carrying-on of insurance business. In addition to this general catch-all clause, the Act gives BaFin a number of special powers in order to avert certain typical threats. These special powers are wide-ranging. The supervisory authority may appoint a special commissioner to replace the board of management, supervisory board or other governing bodies of the company. It can even revoke an undertaking's authority to carry on business. BaFin can also conduct ad hoc surveys into, for example, the effects of falling equity prices on undertakings' guarantee assets - so-called stress tests or scenario analyses.
BaFin and the the supervisory authorities of the federal states fulfil their disclosure obligations on this page.