BaFin launched consultation (17/2019) on a circular that provides guidance on minimum regulatory requirements for the "business organization of small insurance companies,” in accordance with Section 211 of the Insurance Supervision Act. This circular is based on the approach that the directors of a company have the overall responsibility for proper and effective governance of the company. The scope of this circular covers all primary insurance companies supervised by BaFin that fulfill the conditions set out in Section 211 of the Insurance Supervision Act. The closing date for the comment period on this consultation is December 08, 2019.
The key topics covered in the draft circular include proportionality, responsibility of management, significant risks, general business organization requirements, risk management, internal control framework, and spin-offs. The draft circular highlights that the principle of proportionality plays a significant role in the implementation of business organization requirements. On January 25, 2017, Circular 2/2017 on “Regulatory Minimum Requirements for the Business Organization of Insurance Companies” was published. The scope of Circular 2/2017 covered all companies to which the Solvency II Directive applies but it did not apply to the small insurance companies. However, the planned new circular will address the "business organization requirements" for these small insurance companies.
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Comment Due Date: December 08, 2019
Keywords: Europe, Germany, Insurance, Insurance Supervision Act, Proportionality, Governance, Operational Risk, Small Insurance Companies, BaFin
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