Chapter 16 - Germany Insurance
Approximately 909 foreign insurers are underwriting direct risks on the German market, either through a branch or, for the majority, by offering services from their foreign places of business.
Approximately 909 foreign insurers are underwriting direct risks on the German market, either through a branch or, for the majority, by offering services from their foreign places of business. Most of these insurers are based in countries of the European Economic Area (EEA). Approximately 1,278 German underwriters add to this number. All of these underwriters together achieved a turnover related to direct insurance of €114 billion in non-life insurance and €90.4 billion in life insurance, of which €5.9 billion and €5.2 billion respectively was generated by EEA insurers.7 Many of the German insurers are small-capital companies or mutuals that are only active within narrow geographical limits. The federal Financial Supervisory Authority (BaFin), the German insurance supervisory authority, lists 37 actively operating reinsurers that have their seat in Germany and seven that are seated in the EEA as at 31 December 2018.
The implementation of directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the Taking-up and Pursuit of the Business of Insurance and Reinsurance (Solvency II) into German law focused on the capital backing of insurers. Despite initial expectations that the Solvency II requirements might not come into force before 2017, on 6 March 2015 the Bundesrat (representation of the German federal states) approved the Parliament Act on the Modernisation of the Financial Supervision of Insurance Companies, which implemented the Solvency II regime into national law. The German Solvency II legislation came into force on 1 January 2016. Under the Solvency II regime, both low interest rates and capital requirements were identified by reinsurers as drivers for reinsurance solutions and by the growing number of run-off service providers as drivers for run-off solutions. As required by European law, insurers may transfer portfolios to other insurers in a Member State of the European Union, which, since 2008, also applies to reinsurers (Section 166 of the German Insurance Supervision Act (VAG)). Germany is far from being a haven for run-off services, however, as German law does not recognise the English concept of ‘schemes of arrangements’ and the Federal Supreme Court held in 2012 that English court orders on the approval of these schemes are not enforceable in Germany. This fits with the German approach of being somewhat protective with regards to the position of the insured, often without any strict differentiation as to whether an insured is a consumer or a business entity.
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