Federal Office of Private Insurance FOPI
Federal Office of Private Insurance FOPI
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Group supervision
Focuses of insurance group and conglomerate supervision
Insurance group and conglomerate supervision as practised by FOPI focuses on the following aspects:
a) Direct supervision with involvement of the external audit office:
The supervisory activity of FOPI relies primarily on direct supervision. In this way, FOPI gains immediate insight into a corporate group, thereby continuously expanding its expertise and keeping costs low for the groups. For selected partial areas such as the audit of the annual financial statement or the formal certification of compliance with provisions of supervision law, FOPI relies on the external audit office and, where necessary, other experts.
b) Consolidated and group-wide supervision:
The group and conglomerate supervision practised by FOPI does not only cover a consolidated view of the corporate group. Rather, FOPI is interested in the risk situation and the links between the entities within the group or conglomerate – such as with respect to the SST and internal transactions. Special attention must be paid to the aggregation of all partial risks within a group or conglomerate and the restricted transfer of capital between different countries.
c) Cooperation with other supervisory authorities:
The experiences and findings of individual supervision by foreign supervisory authorities must be taken into account. Intensive cooperation with supervision colleagues abroad is therefore an important foundation of supervision activity.
d) Building-block approach:
In the case of insurance conglomerates, the risks and equity capital, the requirements of banking institutions within the conglomerate must be evaluated and calculated in accordance with Basel II. According to the building-block approach, the requirements in the insurance and financial areas are added together.
Implementation of supervision practice by means of directives
With the placement of nine groups and conglomerates under supervision, it became necessary to implement the supervision law provisions and supervision practice. Accordingly, FOPI enacted six directives covering the following areas at the end of 2006 (see Documentation/Directives):
- Reporting on organisation
- Reporting on structure
- Reporting on internal transactions
- Solvency I
- Group/conglomerate report
- Corporate governance/risk management/internal control system
When implementing supervision, FOPI paid particular attention to inclusion of developments in the international insurance and financial world and the relevant supervision. As a consequence, groups and conglomerates:
- are not only viewed from the outside as a homogeneous structure (consolidated view), but also their internal aspects and group/conglomerate-internal processes and structures are made transparent, so that supervision arbitrage and circumvention are identifiable,
- are evaluated according to internationally recognised accounting standards,
- submit the annual reports of the external audit office to the board of directors, and the annual reports of the internal audit office to the external audit office and FOPI as a basis for evaluation,
- may only take allowable own funds into account for the Solvency I calculation which withstand a careful consideration throughout Europe,
- demonstrate to FOPI the organisation of their management structure, the responsibilities and powers of their management, their staffing, and their internal rules and regulations,
- subject their board of directors and management team to an inspection of fitness and properness, and comply with the principles of corporate governance.
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