The insurance industry is subject to state supervision by BaFin (Federal Financial Supervisory Authority).

The insurance industry is based on trust: Customers expect an insurance company to be able to provide the contractually agreed benefits at all times and often over a very long period of time. With its supervision of insurance companies, BaFin therefore fulfils important social and economic tasks and contributes to the long-term stability of the entire financial sector.

According to the Insurance Supervision Act (Section 81 (1) VAG), the two main objectives of insurance supervision are to adequately protect the interests of policyholders and, above all, to ensure that the obligations arising from insurance contracts can be fulfilled at all times.

Consumer protection is therefore at the centre of insurance supervision. In principle, this has not changed since the Supervision Act came into force in 1901.

One of the tasks of the supervisory authority is to monitor insurance companies to ensure that the insurance benefits they promise are fulfilled and to observe the competitive behaviour of insurance companies and their representatives (competition guidelines). Insurance supervision is carried out by the Federal Insurance Supervisory Office (BAV) and the responsible state supervisory authorities.

Source reference: See VDT publication "VDT article series part 5 l Glossary" and the source indicated there.