Supervisory goals, main functions and activities
Main supervisory goals
The main goals of supervision are to verify the legality and to evaluate the safety and stability of insurance companies’ business operations, in order to protect the interests of insured persons, policyholders, beneficiaries under insurance contracts and public interest, and to contribute to the stability of the financial system, as well as to promote and preserve the trust in the insurance market.
The fundamental objectives of Hanfa are:
- promotion and preservation of the stability of the financial system
- supervision of legality of supervised entities’ operations.
Main supervisory functions
In the achievement of its objectives Hanfa is governed by the principles of:
- building confidence among participants of the financial market
- reporting to consumers.
Hanfa shall acquaint the public with the role and manner of functioning of the financial system, including the development of awareness of the benefits and risks that are connected with various types of investments and financial activities.
Main areas of ongoing and planned supervisory activities
On the basis of supervision, verification and assessment, Hanfa shall determine whether insurance companies operate in accordance with legal and other regulations under which they have to operate, whether they have in place an appropriate organizational structure and a stable management system, as well as capital that provides an adequate management system and coverage of risks that insurance companies are exposed to or could be exposed to in their business operations.
On the basis of supervision, verification and assessment, Hanfa shall assess qualitative requirements associated with the management system, the assessment of risks that insurance companies may face, and the ability of insurance companies to assess risks taking into account the environment in which they operate.
Hanfa may, if necessary, develop appropriate quantitative tools within supervisory procedures in order to assess the ability of insurance companies to deal with possible events or future changes in economic conditions that could adversely affect their overall financial position. Hanfa may order the companies to ensure the implementation of appropriate tests.
In defining the frequency and intensity of supervision, Hanfa is guided by the size and significance of insurance companies, as well as the scope, nature and complexity of risks present in the insurance companies’ business.
In addition to the above-mentioned control of management system in the area of supervision, Hanfa is also focused on reviewing and assessing valuation of assets and liabilities under the Solvency II Directive, reviewing and assessing compliance of solvency capital requirement by individual modules with the provisions of the Solvency II Directive, investment process, provisions modelling process, sufficiency of provisions for claims, protection of interested persons referred to in Article 375 of the Insurance Act, premium sufficiency, compliance of key functions with legal provisions and adequacy of established organization as well as their effectiveness, review and assessment of own risk and solvency assessment (ORSA), IT system, prevention of money laundering and terrorist financing etc.