Regulatory changes

With a view to averting any repetition of the financial market crisis, the federal government proposed the “Act for the Strengthening of the Supervision of Financial Markets and Insurance” in the year under review. The legislation gives the Federal Financial Supervisory Authority greater powers to regulate the financial market. The intention is to restore trust in the financial system and put in place a solid foundation going forward for business transactions between financial institutions.

In addition, the federal government backed up its previous steps to further stabilise the financial market with the “Act on the Further Development of Financial Market Stabilisation”. Ailing financial institutions now have the possibility to set up so-called “bad banks”, enabling them to offload toxic assets from their balance sheets and hence step up their lending again to the business community.

The Solvency II Directive of the European Commission continues to be of great significance to the insurance industry. Solvency II is intended to provide Europe with a risk-based solvency system. The specifics are currently under consideration by various government bodies in consultation with the insurance industry. Many insurance undertakings are already preparing for implementation of the regulations that will apply in the future. In April 2009 the EU institutions – namely the European Parliament, the Council and the Commission – agreed upon a compromise for the Solvency II Framework Directive. The insurance industry's various interest groups also see this political settlement as a major step towards a modern system of insurance supervision. The standards contained in the EU Solvency II Directive are to be implemented by the member states in national law by 2012.