To this end, the insurance undertaking must inform the supervisory authority in its Home State of which business it intends to conduct in which countries, submitting, at the same time, all relevant information. The home supervisor then verifies the information and, provided there are no objections, forwards the relevant documents, together with a solvency certificate, to the supervisory authority of the Host State. Insurers intending to conduct business under the freedom to provide services may commence business activities as soon as they receive information from the home supervisor that the relevant documents have been dispatched. The establishment of a branch usually requires a waiting period of two months following receipt of such information from the home supervisor.

Close cooperation

The supervisory authorities of the EU and EEA Member States cooperate closely in supervising cross-border insurance undertakings. While financial supervision is the responsibility of the home supervisor, the supervisory authority of the Host State is responsible for “all other supervision” in accordance with section 62 (1) sentence 1 of the VAG. This includes, for example, supervising compliance with the so-called “general good” requirements. These are requirements that, in the interest of the general good, apply to all market participants in the respective EU/EEA Member State, which includes EU/EEA insurers operating in that Member State.¹⁾

Insurance supervisors must exchange information on a regular basis so as to be able to effectively perform their duties with regard to cross-border insurance undertakings, in particular safeguarding the interests of the insured. Their cooperation is based on EIOPA’s Decision on the Collaboration of Insurance Supervisory Authorities (BoS Collaboration Decision).

This decision requires insurance supervisory authorities within the EU/EEA to exchange certain data and information, in particular during notification procedures, that may be important for the supervisory assessment of planned business operations and the subsequent ongoing supervision of cross-border activities. In addition to general information about the undertaking and the planned business activities, this also includes information on the organisational structure in the broad sense in connection with the undertaking's cross-border activities. Compared with the previous General Protocol, the BoS Collaboration Decision has considerably expanded the nature and scope of the information to be exchanged among supervisors.

New requirements for establishing a branch

One of the most significant changes introduced in the Decision is the requirement that the information provided to the host supervisor by the home supervisor as part of the notification procedure for the establishment of a branch is to include information about the persons who effectively run the branch or hold key functions related to the business activities of the branch. If the notifying undertaking is part of a cross-border group, information about the group supervisor and the group's structure and last reported group solvency position must also be provided.

In addition, information on the planned distribution channels, outsourcing contracts and partners in the Host State is now required, as well as a summary of the undertaking's system of governance including the risk management system in place. Finally, the BoS Collaboration Decision requires the supervisory authorities to exchange information relating to the business strategy of the undertaking concerned, and, in particular, how this strategy takes account of the activities of the future branch.

New requirements for commencing activities under the freedom to provide services

If the notifying undertaking intends to operate exclusively, or almost exclusively, in the Host State concerned, the information provided by the home supervisor to the host supervisor under the notification procedure for commencing activities under the freedom to provide services is to include information relating to the persons who effectively run the undertaking or hold key functions. If the notifying undertaking is part of a cross-border group, information relating to the group supervisor and the group's structure and last reported group solvency position must also be provided.

One of the most significant changes made is that the home supervisor must now inform the host supervisor about any related undertakings and persons or local third parties involved in the underwriting activities in the Host State. In addition, information is to be provided about the person responsible for handling complaints arising from the provision of services. If the notifying undertaking intends to operate exclusively, or almost exclusively, in one or more Member State(s) on a freedom of services basis, a summary of the undertaking's system of governance, including the risk management system in place is to be provided, along with information on the undertaking's business strategy detailing, in particular how this strategy takes account of the planned provision of services.

Requirements for supervisors and undertakings

The focus of the supervisory authorities of Host Member States is increasingly shifting towards the supervision of EU/EEA branches and service providers. This is particularly evident in countries where foreign companies considerably influence or even dominate the insurance market. Experience gained since the entry into force of the BoS Collaboration Decision has shown that many Host States – including Germany – have a strong interest in receiving comprehensive information on the relevant business activities of foreign undertakings and how they integrate these activities into their business structure. Collecting such company-specific information often leads to further enquiries with the insurance undertaking or other supervisory authorities, which may affect the duration of the notification procedure considerably.

Insurers planning to commence or expand cross-border business activities should enquire in advance about the precise information to be exchanged between supervisors in their particular case. BaFin expects the undertakings and the supervisory authority of the Home State concerned to provide the data and information required for the notification procedure of their own accord. By providing BaFin with all the information required on the basis of the BoS Collaboration Decision when submitting the application for the establishment of a branch or commencement of business operations under the freedom to provide services, both the undertaking and the supervisory authority concerned can help accelerate the notification procedure. BaFin has published the forms “Establishment of a branch” and “Freedom to provide services” (only available in German) on its website to give an overview of the data required and to facilitate provision of the relevant information.

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