The insurance sector is subject to state supervision by the 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, often over a very long period. Through its supervision of insurance companies, BaFin therefore fulfils important social and economic functions 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 safeguard the interests of policyholders and, above all, to ensure that the obligations arising from insurance contracts can be met at all times.

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

One of the supervisory authority’s tasks is to monitor insurance companies to ensure that they fulfil the insurance benefits they have promised, and to monitor the competitive behaviour of insurance companies and their agents (competition guidelines). Insurance supervision, as a form of substantive state supervision, is carried out by the Federal Insurance Supervisory Authority (BAV) and the relevant state supervisory authorities.

Source reference: See the VDT publication “VDT Article Series, Part 5 | Glossary“ and the source cited there.