Insurance Supervision Act (Germany)
| Basic data | |
|---|---|
| Title: | Law on the Supervision of Insurance Companies |
| Short title: | Insurance Supervision Act |
| Abbreviation: | VAG |
| Type: | Federal law |
| Scope: | Federal Republic of Germany |
| Legal matter: |
Commercial administrative law , insurance law |
| References : | 7631-11 |
| Original version from: | May 12, 1901 ( RGBl. P. 139) |
| Entry into force on: | July 1, 1901 |
| New announcement from: | December 17, 1992 ( Federal Law Gazette 1993 I p. 2 ) |
| Last revision from: | Art. 1 G of April 1, 2015 ( Federal Law Gazette I p. 434 ) |
| Entry into force of the new version on: |
January 1, 2016 (Art. 3 G of April 1, 2015) |
| Last change by: |
Art. 6 G of March 19, 2020 ( Federal Law Gazette I p. 529, 538 ) |
| Effective date of the last change: |
March 28, 2020 (Art. 13 G of March 19, 2020) |
| GESTA : | D046 |
| Weblink: | Text of the law |
| Please note the note on the applicable legal version. | |
The Insurance Supervision Act (VAG) regulates the state supervision of insurers and pension funds operating in Germany . Every market participant who conducts insurance business or pension fund business has to take into account state requirements that serve to commence and continue business operations. In particular, regulations to ensure the permanent fulfillment of contracts and the protection of customers are important. The Supervision Act also regulates matters relating to mutual insurance associations , foreign branches and holdings. It does not apply to social security companies . The Federal Financial Supervisory Authority (BaFin) is responsible for supervision . This was founded on May 1, 2002 and consists of the supervision of insurance companies, banks and securities issuers. Individual insurers are directly subject to state law supervision.
Basics of state insurance supervision
The state oversees and regulates the economy based on the social responsibility assigned to it by law. This includes the insurance industry in particular, as it is of particular importance to the economic security of the individual citizen and, due to its complexity, calls for a special need for protection. The multitude of similar risks is combined into collectives and these risks are balanced out within the framework of the collectives. Insurance cannot therefore be dealt with on the basis of the individual insurance contract . Rather, the concerns of all customers must be viewed collectively. In order to ensure the equalization of risks in the collective, the state must be able to intervene over and above contract law and affect the entire portfolio of insurance contracts.
For this reason, most states have introduced state regulation of insurance, which is directly monitored by the insurer and laws.
A single market for insurance services was introduced in the European Community (EC) in 1994. Insurance products should be allowed to be freely offered by an insurer licensed in a member state in all member states and furthermore also within the EEA . Since then, state regulation in the EC has been determined by European law . The VAG largely only implements European law, exercising certain options.
Content of the VAG
Companies subject to supervision
The VAG stipulates that every company that conducts insurance business is subject to the VAG, including companies that hold stakes in insurers ( Section 1 VAG). The supervisory authority determines which transactions are considered insurance transactions ( Section 4 VAG). Except for certain exceptions, only those regulated entities may one containing the term "insurance" company (lead § 6 1 para. VAG). Literature and jurisprudence presuppose the following criteria for an insurance business within the meaning of this law: 1. Remuneration (premium entitlement of the insurer), 2. Assumption of risk, 3. Benefit entitlement of the policyholder in the event of an insured event, 4. Similarity of the insured risks (requirement for a risk equalization), 5. Plannedness (calculability of the risk through a high number of cases), 6. Independence of the promise (no dependence on another contract, such as the assumption of a guarantee in a sales contract). In the absence of independence of the promise, the mere assumption of a maintenance guarantee for video equipment is not an insurance business. Litigation financiers do take on a risk, but still do not fall under the term insurer, because the risk of joint enforcement is not an insurance business. In the case of a caretaker service that guarantees snow removal regardless of whether it will snow or not in return for a lump sum, an insurance business cannot be assumed, as there is a lack of plan (when it snows, all customers in its area of activity are affected).
Permission to conduct business
In order to be allowed to conduct insurance business, a company must first obtain permission from the supervisory authority ( Section 8 VAG). Since an insurance company is not allowed to carry out any other business activity ("non-insurance business") ( Section 15 VAG), this approval must be obtained at the time of its establishment. The supervisory authority must be fully informed about the intended business activity, the financial resources and the future managers, as otherwise an operating license must be refused. For this purpose, the business plan of the company being set up is submitted.
Life and health insurance companies may only act within the limits of its businesses (so-called " separation of lines " according to § 8 para. 4 sentence 2 VAG). In order to ensure the independence of the regulation of insured events, legal protection insurance companies may only offer other classes of insurance if they outsource the regulation to another company ( Section 164 (2) VAG). Therefore, legal expenses insurers are mostly specialist companies that do not offer any other insurance.
General rules for business operations
The VAG determines the required minimum scope of an insurance contract under European law . The design of applications and consumer information is also specified.
In the area of life and health insurance, there are minimum requirements for agreeing the amount of contributions . In the case of contracts of this kind, which often run for decades, the citizen cannot judge whether a granted contribution is sufficient to achieve the promised services. In order to prevent ruinous price competition, the state oversees the contribution agreements. Every life and health insurer must also appoint a responsible actuary who monitors compliance with the imputed rules in day-to-day business operations, as a supervisory authority cannot alone guarantee the necessary permanent internal control of the respective company.
The VAG defines comprehensive regulations for health insurance insofar as it is used as a substitute for statutory health insurance (“substitutive health insurance”). The premium adjustment and profit sharing are particularly affected .
Insurers must submit any change to the business plan presented at formation to the regulator for approval. For contracts concluded before 1994, the details of the contract design are also part of the business plan. In the past, approval had to be obtained for every product change. Since 1994, insurers have been free to design their products except for the details explicitly regulated in the VAG and no longer require prior approval. Significant changes in business operations, e.g. B. the change of managers or the responsible actuary must be coordinated with the supervisory authority.
Insurance business conducted abroad by a German insurer is also subject to supervision, regardless of whether it is operated through a branch or directly.
Since the insurance business is carried out in large groups, it is practically not possible to transfer the contracts to another insurer by means of an individual agreement with the individual policyholders due to the consent requirement of the individual insured according to § 415 BGB . On the other hand, a transfer of the portfolio of insurance contracts to another insurer is necessary in view of the often long contract terms. Therefore, there is a possibility of "portfolio transfer" without the consent of the individual policyholder, which differs from the contractual requirement according to § 415 BGB via § 13 Paragraph 5, 2nd half-sentence VAG. However, the approval of the supervisory authority is required to safeguard the interests of the policyholders.
Mutual insurance associations
According to Section 8 (2) VAG, insurers may choose the legal form of a stock corporation, but also that of a corporation or public-law institution . A special feature is the legal form of the mutual insurance association , which only applies to insurers, in accordance with Section 171 of the VAG. The association law , which is not sufficient for this type of law in terms of form and requirement profile , is overcome by provisions in the VAG. Apart from special club-typical arrangements, the rules for stock corporations are mainly used accordingly.
Management of insurance companies
The VAG regulates the fundamentals of insurers. According to uniform European regulations, insurers must have unencumbered own funds to a certain extent, which ensure that obligations can be met even in the event of unexpected losses. Further regulations ensure that an insurer cannot simply reduce its assets at the expense of its security. In particular, the insurers are limited in the investment of their assets. In the amount of their obligations to customers, insurers must keep assets separate from their other assets - in the so-called security assets - under the supervision of a trustee. In the event of insolvency, these security assets cannot be accessed by other creditors . This means that the insurer's obligations are particularly secured in the event of insolvency. In life and health insurance, these are to be assessed particularly carefully for the purpose of assessing capital adequacy and securing security assets. In order to determine the actuarial reserves , the VAG provides special regulations based on an authorization by the HGB .
Supervision of insurance companies
The responsible supervisory authority is responsible for supervising the insurer. This includes monitoring compliance with legal regulations and the financial situation of the insurer. The interests of the customers should be safeguarded and the obligations entered into should be permanently achievable. The regulations do not serve to protect personal customer interests , but to protect the public interest . The supervisory authority has extensive rights of intervention for this purpose. In this way, it can force life and health insurers to make an appropriate profit participation. If necessary, it can replace the management of an insurer with a special representative. The authority even extends so far that an insurer can be wound up if there is evidence of mismanagement.
In the event of financial difficulties, the supervisory authority takes over the essential functions of the insurer. Ultimately, only they can apply to open insolvency proceedings . Before that, however, she has extensive options for solving problems, such as a temporary ban on benefit payments or entitlement restrictions.
The insurers can participate in the supervision within the framework of the insurance advisory board. They also bear the costs of supervision.
Interpretation and content control of general insurance conditions
Since the liberalization of the insurance industry in 1994, general insurance conditions no longer have to be approved before they can be used. They can still be checked by the insurance supervisory authority as required. The legal interpretation takes precedence over a content control . The decisive factor is how an average policyholder without special knowledge of insurance law must understand the respective clause with reasonable assessment, careful review and consideration of the recognizable context. In principle, the main subject of the insurance contract ( core benefits, amount of premiums, insurance benefits) is not checked, unless the suspicion of a usury is raised . Additional price agreements, premium adjustment clauses and the determination of the policyholder's obligations can be checked by the insurance supervisory authority at any time. Unreasonable discrimination against the policyholder ( Section 307, Paragraph 1, Sentence 1 of the German Civil Code) can also be eliminated. The requirement to only draft the clauses in a clear and understandable manner (transparency requirement, Section 307 (1) sentence 2 BGB) only applies as far as the insurer is able to describe the conditions precisely.
Other areas of supervision
Owners of significant holdings in insurers, insurance groups , reinsurers , pension funds , pension funds and German branches of foreign insurers are also subject to supervision .
The VAG determines the formation of a security fund that is intended to ensure that the obligations assumed by the insurers can be met at all times.
The VAG determines penalties and fines in the event of violations.
See also
- Federal Financial Supervisory Authority
- Ordinance on the calculation bases for actuarial reserves
- Protektor Lebensversicherungs-AG
literature
- Gunne W. Bähr (Ed.): VAG. Insurance Regulatory Law Manual . 1st edition, Verlag CH Beck, Munich 2011, ISBN 978-3-406-60053-1 .
- Oliver Brand / Manuel Baroch Castellvi: Insurance Supervision Act. Hand comment . 1st edition, Nomos-Verlag, Baden-Baden 2018, ISBN 978-3-8487-2368-3 .
- Ulrich Fahr / Detlef Kaulbach / Gunne W. Bähr / Petra Pohlmann: Insurance Supervision Act (VAG). (With Solvency II, Investment Ordinance and Capital Equipment Ordinance). Comment . 5th edition, Verlag CH Beck, Munich 2012, ISBN 978-3-406-62805-4 .
Web links
- Insurance Supervision Act (versions in force since 2016)
- Insurance Supervision Act (valid until 2016)
Footnotes
- ↑ Federal Constitutional Court judgment of 26 July 2005, Az. 1 BvR 80/95 para. 95
- ↑ BVerwG VersR 1987, 701
- ↑ BAV ruling chamber VerBAV 1999, 167
- ↑ Permanent BGH case law, z. B. BGH VersR 2004, 1039.
