The target of supervisory disclosure is to facilitate a uniform standard of transparency and responsibility of supervisory authorities. Publicised information should be easily accessible and comparable. For this reason, corresponding legal requirements that have to be adhered to by the FMA were created under Solvency II and the IDD.
The disclosure obligations for the FMA are defined in Article 256 of the Insurance Supervision Act 2016 (VAG 2016 – Versicherungsaufsichtsgesetz 2016) in which the provisions of the Solvency II Directive (Directive 2009/138/EC) and the Insurance Distribution Directive (Directive (EU) 2016/97) are transposed. In addition, transparency provisions are clarified in Articles 316 and 317 of the Delegated Regulation (EU) 2015/35 as well as Implementing Regulation (EU) 2015/2451 .
In order to comply with these requirements, the FMA hereby discloses information regarding the following topics:
Laws, administrative regulations and general guidance with regard to the requirement in accordance with Article 31 (2) point a) of Directive 2009/138/EC
Laws, administrative regulations and general guidance with regard to Solvency II are disclosed regarding the following topics:
Level 1: Solvency II Directive
Level 2: Delegated Acts
Level 2,5: Technical Standards
Level 3: EIOPA guidelines and recommendations
Level 4: Monitoring of harmonised implementation
Solvency II is based on EU Directive 2009/138/EC on the taking-up and pursuit of the business of Insurance and Reinsurance. This “Solvency II-Directive” replaces and complements 14 insurance directives and, for the first time, introduces solvency regulations, for the first time aligned with economic risks, for all EU member states.
In Austria the Solvency II-Directive is transposed into national law by the Insurance Supervision Act 2016 (VAG 2016), which entered into force on 1 January 2016.
National transposition of Level 1:
The following legal acts were adopted due to authorisations of the European Commission provided for by the Solvency II-Directive:
Implementing technical standards developed by the European Insurance and Occupational Pensions Authority (EIOPA) are submitted to the European Commission and shall be adopted by means of regulations or decisions.
Pillar 1 (quantitative requirements)
Pillar 2 (qualitative requirements)
Pillar 3 (reporting and disclosure requirements)
With a view to establishing consistent, efficient and effective supervisory practices within the European System of Financial Supervision (ESFS), and to ensuring the common, uniform and consistent application of Union law, EIOPA is in a position to issue guidelines and recommendations addressed to competent authorities or financial institutions.
According to Article 16 (3) EIOPA-Regulation the competent authorities and financial institutions shall make every effort to comply with those guidelines and recommendations. If required by the respective guideline or recommendation, financial institutions shall report, in a clear and detailed way, whether they comply with that guideline or recommendation (Article 16  EIOPA-Regulation). Therefore, the FMA is considering EIOPA guidelines and recommendations in the course of its supervisory activities within the legal framework.
National implementation measures and supervisory practice are monitored by the European Commission in close collaboration with EIOPA, thereby contributing to supervisory convergence and effective implementation of union law.
Distribution and market conduct
Accounting and statutory audits
Reporting requirements to the European Central Bank
Motor vehicle liability insurance and compensation of road accident victims
General criteria and methodologies of the Supervisory Review Process (Art. 36 Directive 2009/138/EC)
The FMA shall monitor and assess the adequacy of strategies, processes and reporting procedures used by the insurance and reinsurance undertakings with regard to their compliance with the applicable regulations regarding contract-based insurance.
The FMA shall in particular assess the qualitative requirements in relation to the governance system, the risks that the insurance undertaking or reinsurance undertaking is exposed to or could be exposed to, as well as the ability of the undertaking to be able to assess such risks while taking into consideration the prevailing business environment. The following topic areas are at the centre of the supervisory review process:
1. Governance system, including the own risk and solvency assessment and investment rules pursuant to Chapter 5 of the VAG 2016 with the exception of Article 106 and Articles 114 to 116 VAG 2016;
2. Technical provisions pursuant to Section 1 of Chapter 8 of VAG 2016;
3. Solvency capital requirement and minimum capital requirement;
4. Quality and quantity of own funds and
5. where applicable, the continuous compliance with the requirements for an internal model.
Furthermore, the FMA shall assess the adequacy of the methodologies and practices of insurance and reinsurance undertakings that are meant to determine potential events or changes in economic conditions, which could have a detrimental effect on the general financial capacity of the respective undertaking. In addition, the FMA shall assess the ability of insurance and reinsurance undertakings to absorb such potential events or changes in economic conditions.
Depending on the results of this assessment, supervisory measures will be taken.
Criteria and methodologies for the individual phases of the Supervisory Review Process
The Supervisory Review Process can generally be divided into the following three phases
1. Categorisation of risks
2. Detailed review
3. Supervisory measures
Phase 1 – Categorisation of risks
For the categorisation of risks and impacts, both, the information submitted as part of regular reporting requirements under Solvency II as well as additional national reporting requirements under the regulation on reporting by insurance undertakings, are being taken into account.
These reports are, among other things, used to generate risk and early warning indicators. The results of stress tests, time series analyses, comparisons between undertakings or relevant peer groups and other issue-related analyses are also considered in assessments. Further examples of elements that are regarded are indications from other supervisory authorities and analyses of the general and insurance specific market environments as well as the market behaviour of individual undertakings. For the classification of the respective undertaking all of this data, which is assessed in a largely standardised manner at first, is complemented with additional qualitative observations (e.g. from a regular dialogue with company representatives).
For the purpose of the categorisation of risks, the FMA identifies and assesses the ability of undertakings to adequately react to and to bear current and potential future risks. The risk profile is thereby contrasted with the ability to bear risk.
In the case of the categorisation of impacts, the impact of default on both the policyholders and the market are assessed. The result is for example determined by the size of the undertaking (as defined by the amount of technical provisions and premiums).
The categorisation of risks and of impacts is transferred to four supervisory levels – ranging from “low” to “very high” – defining the supervisory intensity for the next year. The supervisory plan, determining the frequency and the intensity of the supervisory activities for every undertaking, is based on the assignment of undertakings to respective supervisory levels.
Phase 2 – Detailed review
Detailed reviews take place on the basis of the supervisory plan in the form of location-independent analyses and on-site inspections. The FMA’s thematic reviews have been published since the entering into force of the package of measures constituting the “Supervisory Reform 2017”.
Phase 3 – Supervisory measures
Weaknesses as well as existing or potential deficiencies or infringements against requirements may lead to supervisory measures being ordered. The initiation of such measures is commensurate to the detected deficiencies. A review of the implementation of measures in the undertaking is conducted by the FMA and the supervisory plan is adjusted in accordance to the effectiveness of the activities conducted in the undertaking concerned.
The Supervisory Review Process also applies to insurance groups, where the procedure generally follows the same processes that are used for individual undertakings. In addition, the supervisory authorities that are involved work in close cooperation with one another. The procedures for cooperation, the exchange of information and consultation between the supervisory authorities that form the supervisory college are determined and applied in the respective supervisory college.
The type and manner of exercising the options prescribed in Directive 2009/138/EC , based on the provision of Annex III of Commission Implementing Regulation (EU) 2015/2451:
Aims, principle functions and activities of supervision
(Article 31 (2)(e) Directive 2009/138/EC)
The protection of policyholders and beneficiaries is the main purpose of insurance supervision.
Irrespective of this main aim, the FMA shall duly consider in the performance of its tasks the potential impact of its decisions on the stability of the financial system in all EEA Member States concerned, particularly in emergency situations, based on the information available at the relevant time. In times of exceptional movement in the financial markets the FMA shall take the potential procyclical effects of the measures that it deploys into account.
The FMA shall monitor all business conduct of insurance and reinsurance undertakings in the scope set out for the licence pursuant to Article 6 para. 1 VAG 2016.
The FMA’s supervisory activities must be both risk-based and forward looking. It shall be at the centre of the supervisory activities to monitor the orderly functioning of insurance and reinsurance business as well as the compliance with the applicable regulations for the operation of contractual insurance business, in particular the VAG 2016, Commission Delegated Regulation (EU) 2015/35 and the EU technical standards, of insurance and reinsurance undertakings. In this regard, the FMA takes care of an appropriate combination of location-independent activities and on-site inspections.
Furthermore, in exercising its powers, the FMA shall take the nature, scale and complexity of the risks arising from business activities of insurance and reinsurance undertakings into account.
Insurance supervision includes the performance of the official tasks and powers that are defined and are assigned to the FMA in the Insurance Supervision Act 2016 (VAG 2016 – Versicherungsaufsichtsgesetz 2016), in the Motor Vehicle Liability Insurance Act of 1994 (KHVG 1994 – Kraftfahrzeug-Haftpflichtversicherungsgesetz), in the Act on Compensation of Road Accident Victims (VOEG – Verkehrsopfer-Entschädigungsgesetz), in the Federal Law on the Liability under Civil Law for Damage caused by Radioactivity (AtomHG 1999 – Atomhaftungsgesetz 1999), in the Financial Conglomerates Act (FKG – Finanzkonglomerategesetz), in the Rating Agencies Enforcement Act (RAVG – Ratingagenturenvollzugsgesetz), in the Act on the Enforcement of the Securities Financing Transactions Regulation (SFT-Vollzugsgesetz) and in the Financial Markets Anti-Money Laundering Act (FM-GwG – Finanzmarkt-Geldwäschegesetz).
Details on the main areas for supervisory activities are outlined in FMA Annual Reports as well as in FMA’s thematic reviews.
National provisions for the protection of the general good, to which the performance of insurance and reinsurance distribution by insurance and reinsurance undertakings in Austria are subject, including the information, to what extent Austria has decided to apply stricter rules than in Chapter V as well as pursuant to Article 29 (3) of Directive (EU) 2016/97 (Article 11 (1) of Directive (EU) 2016/97): Information about Mandatory Provisions in Austrian Law.
Note: The document “Information about Mandatory Provisions in Austrian Law”, which is relevant in connection with the cross-border activities of EEA insurance undertakings and EEA reinsurance undertakings in Austria, includes (besides the provisions which have to be published according to Article 11 (1) of Directive (EU) 2016/97 and Article 256 para. 2 VAG 2016) other mandatory provisions for the protection of the general good and legal provisions, which are applicable for the contractual insurance activity in Austria.
Insurance Statistics (Amount of premiums and financial situation)