9. ‘Senior Management’ of Insurance Undertakings

Directive 2009/138/EC of the European Parliament and of the Council of 25 Nov. 2009, OJEU L 335, p. 1, of 17 Dec. 2009.

The abbreviation DVO when used here and after in reference to the Level 2 DVO signifies the EU Commission draft known as Draft Implementing Measures Solvency II, 31 Oct. 2011.

RegE eines Zehnten Gesetzes zur Änderung des VAG [Government’s Draft of a Tenth Act Amending the German Insurance Supervision Act] of 15 Feb. 2012, BT-Drucks. [Document of the German Bundestag] 17/9342; also, BR-Drucks [Document of the German Bundesrat] 90/12.

Any mention of insurance undertakings in this chapter includes reinsurance undertakings.

On this point see Dreher, “Begriff und Inhaber der Schlüsselfunktionen nach Solvency II und VAG 2012” [in English: Concept and Holders of Key Functions under Solvency II and the German Insurance Supervision Act 2012], VersR (2012), 933 (Chap. 7, above); id., “Die aufsichtsbehördliche Kontrolle der Inhaber von Schlüsselfunktionen nach Solvency II and künftigem VAG” [in English: Review by Supervisory Authorities of the Holders of Key Functions under Solvency II and the Future German Insurance Supervision Act], VersR (2012), 1061 (Chap. 8, above).

See in detail Dreher/Lange, “Die Qualifikation der Aufsichtsratsmitglieder von Versicherungsunternehmen nach VAG und Solvency II” [in English: Qualifications of Supervisory Board Members of Insurance Undertakings under the German Insurance Supervision Act and Solvency II], ZVersWiss (2011), 211 (Chap. 6, above); disputed.

See Dreher, VersR (2012), 933 (937 f.) (Chap. 7, above, at 7.​3.​2.​3).

The difference between the terms “key task” and “key function” in the legal provisions is ultimately irrelevant. The term “key function” predominates in the Solvency II system and is also used exclusively hereafter. See Dreher, VersR (2012), 933 (934 f.) (Chap. 7, above, at 7.​2.​2).

See Dreher, VersR (2012), 1061 (1066 f. and 1069) (Chap. 8, above, at 8.​2.​4 and 8.​3.​3).

Hereafter cited as the Governance Guidelines.

“Persons who effectively run the undertaking are those who, in addition to the management, are authorized to make significant decisions for the undertaking”.

VAG-RegE [Government’s Draft of a Tenth Act Amending the German Insurance Supervision Act], id. n. 3 above, at Statement of Reasons for sec. 25 VAG [German Insurance Supervision Act] at 272.

See Dreher, VersR (2012), 933 (935 f.) (Chap. 7, above, at 7.​2.​3).

See art. 265 SG13, para. 1 c, para. 2 of the DVO.

Under existing law, see also risk-takers within the meaning of sec. 4, para. 1 VersVergV [Remuneration Regulation for the Insurance Industry], “whose activities have a material impact on the undertaking’s risk profile”.

See Dreher/Lange, “Die Vollharmonisierung der Versicherungsaufsicht durch Solvency II” [in English: Full Harmonization of Insurance Supervision under Solvency II], VersR (2011), 825 (831 f.) (Chap. 1, above, at 1.​4.​2); Bürkle, “Die Zukunft der materiellen Versicherungsaufsicht in Deutschland” [in English: The Future of Substantive Insurance Supervision in Germany], VersR (2011), 1469 (1472 ff.); id.,“Die aufsichtsbehördlichen Eingriffsbefugnisse nach Solvency II – Legalitätskontrolle statt materieller Aufsicht” [in English: Supervisory Intervention Powers under Solvency II – Control of Legality in place of Substantive Supervision] and Grote, “Die aufsichtsbehördlichen Eingriffsbefugnisse nach Solvency II – Die besonderen Eingriffsbefugnisse” [in English: Supervisory Intervention Powers under Solvency II – Special Intervention Powers] in: Dreher/Wandt, eds., Solvency II in der Rechtsanwendung [in English: Solvency II in Legal Application], (Karlsruhe: Verlag Versicherungswirtschaft 2009) 191 ff. and 225 ff.; Kaulbach, in Bähr, ed., Handbuch des Versicherungsaufsichtsrechts [in English: Manual of Insurance Supervision Law] (2011), sec. 8, ref. 46.

In detail Dreher/Lange, VersR (2011), 825 (Chap. 1, above); Bürkle, VersR (2011), 1469 (1472 f.); Wandt/Sehrbrock, Regelungsziele der Solvency II-Rahmenrichtlinie [in English: Regulatory Objectives of the Solvency II Framework Directive], ZVersWiss (2011), 193 (200). On an unclear basis – “The Directive does not prescribe full harmonization in all areas” – and inconsistent with continuing the VAG’s [German Insurance Supervision Act’s] existing law, RegE [Government’s Draft], id., n. 3 above, p. 255. Contrary to that, the German Bundesrat assumes full harmonization in its opinion to the RegE [Government’s Draft], BR-Drucks. [Document of the German Bundesrat] 90/12 at 2 f. in substance and at 13 explicitly. Also in support of full harmonization – although confusing the terms full harmonization and maximum harmonization – staff member of the Austrian Federal Ministry of Finance Wagner, “Solvabilität II und VAG neu: Was bleibt, was ändert sich”? [in English: Solvency II and the New German Insurance Supervision Act: What is Unchanged? What is Changed?], VersRdsch (9/2010), 23 (24, 26); FMA [Financial Market Authority (Austria)] – Österreichische Finanzmarktaufsicht Solvency II Handbuch [in English: Austrian Financial Market Authority Solvency II Manual] (2012), 1, 5 in reference to the “new rules” under Solvency II.

See on this point Dreher/Lange, VersR (2011), 825 (827 f.) (Chap. 1, above, at 1.​3.​1.​2).

Likewise, explicitly, art. 258 SG6, para. 1 sent. 2 of the DVO for the key functions.

Thus the criterion of “sound and prudent management” in art. 42, para. 1 a of the Solvency II Directive aimed at members of the managing board would not be suitable for senior management; see Dreher, VersR (2012), 1061 (1063) (Chap. 8, above, at 8.​2.​3.​1).

The RegE-VAG also opens the floodgates – including for senior management – in sec. 299, para. 1, no. 1 with BaFin’s [Federal Financial Supervisory Authority] first-ever entitlement, impermissible under European law, to information directly from all “employees” of the insurance undertaking; see in detail Dreher, VersR (2012), 1061 (1071) (Chap. 8, above, at 8.​6.​2).