Legal and regulatory environment
The global insurance business is subject to regulatory rules and requirements that are both numerous and detailed. The supervisory authorities of the countries in which our Group operates enjoy far-reaching competencies and powers of intervention. Observing these regulations and requirements, and continually adjusting business and products to conform to new ones, entails a considerable financial outlay on the part of the Group.
A global trend is still discernible towards tightening of the regulatory requirements of insurance companies, which in some cases are very unclear. There is a particular focus on insurance groups of systemic importance (“too big to fail”), which will in future face much more stringent regulatory requirements, especially with regard to their capitalisation. The Talanx Group has so far not been classed as relevant to the global system.
The introduction of Solvency II, which was provisionally scheduled for 1 January 2014, has been postponed by a further two years. Planned adjustments through the Omnibus II Directive were implemented only after delays in the year under review. Trilogue negotiations on this subject resumed in the second half of the year, and chief negotiators on behalf of the European Commission, the European Parliament and the Council of Ministers did not reach an agreement until 13 November 2013. The planned launch date for Solvency II is now 1 January 2016. Companies will be able to apply for approval for an in-house model from April 2015 onwards, so that this approval can be granted as at 1 January 2016. The Talanx Group is currently developing an internal Group model and is in the preliminary application phase for this. Talanx has developed this in-house risk model on a proprietary basis and intends to use it instead of the alternative “standard formula” in the Solvency II Directive in order to calculate solvency capital requirements for the Talanx Group with greater precision and to reflect economic and legal realities as accurately as possible. We have outlined the effects and risks of Solvency II in the risk report and in the forecast and opportunities report of this report, as well as in the Notes in section ”Nature of risks associated with insurance contracts and financial instruments”, subsection “Concentration risk”.
The Frankfurt/Main-based European Insurance and Occupational Pensions Authority (EIOPA) has published a large number of guidelines and explanatory texts addressed to the respective national insurance regulators in preparation for Solvency II. The Federal Financial Supervisory Authority (BaFin) wants to apply all guidelines issued by EIOPA for the preparatory phase and has provided EIOPA with the comments “Yes, do comply” or “Yes, intend to comply” for all guidelines. To structure the preparation process and support affected companies, it has also grouped the guidelines into 15 subject areas. Even in the current preparatory phase, EIOPA’s activities have resulted in a barely manageable proliferation of supervisory rules and regulations across the whole sector. The implementation of Solvency II will also lead to the amendment of the German Insurance Supervision Act (VAG) in the medium term. At present, however, only a preliminary draft from the last federal government is available.
After the initial failure of plans to introduce a financial transaction tax throughout Europe or in the Eurozone countries only, the EU Economic and Financial Affairs Council agreed on 22 January 2013 to the introduction of a financial transaction tax in eleven countries (Belgium, Germany, Estonia, France, Greece, Italy, Austria, Portugal, Slovakia, Slovenia and Spain); talks about the implementation of the Directive have begun. In view of the stipulations in the CDU/CSU-SPD coalition agreement, it is therefore highly likely that this will be introduced in Germany, either as part of a European solution or as a national solution.