Life insurers
Supervision
Last published: 8 November 2022
Regulation and supervision of life insurers and pension undertakings are important in safeguarding customers’ rights under insurance and pension contracts, and in instilling public confidence in the market. The supervisory regime aims to foster financially solid, risk-aware undertakings with sound governance and control. Supervisory activity comprises on-site and off-site inspections.
Supervised undertakings
Finanstilsynet's registry provides an overview of undertakings under supervision and the types of licences they have been granted.
Norwegian branches of insurers headquartered in another EEA state are primarily subject to supervision by the competent authority in the state where the insurer is headquartered.
Risk-based supervision
Finanstilsynet’s supervision is risk-based. Supervisory activities are prioritised on the basis of the undertakings’ risk level and importance (size). In Finanstilsynet's early warning system, the undertaking’s solvency ratio (i.e. the ratio to own funds to the solvency capital requirement) is the main criterion for assessing its risk level. As part of the established early warning system, representatives from various units in Finanstilsynet meet at least every quarter to discuss the undertaking’s situation and possible need for follow-up based on available information. More detailed off-site analyses of the undertakings are carried out as needed. On-site inspections are an important tool.
On-site inspections
During an on-site inspection, the undertaking’s operations are reviewed, including its risk exposure, capital needs and management and control system. On-site inspections may cover the entire business or focus on specific risk areas.
After an on-site inspection, Finanstilsynet prepares a preliminary report to the undertaking's board of directors. The report is exempt from public disclosure On the basis of the report and the board's comments, supervisory comments (final report) are prepared. The comments will as a rule not be exempt from public disclosure and are published on Finanstilsynet’s website.
Off-site inspections
Insurers are obliged to report to Finanstilsynet in the form of regular, statutory reports as well as ad hoc reporting that can be carried out when deemed necessary by Finanstilsynet.
The reporting is used as a basis for assessing risk in the individual undertakings and for the entire industry.
Supervision of management and control systems
Supervisory modules have been prepared for evaluating the undertakings’ systems for managing and controlling significant risks. Finanstilsynet uses the modules primarily in connection with on-site inspections.
The assessment factors in the documents are based on legal and regulatory requirements that implement Solvency II in Norwegian law, recommendations from the European Supervisory Authority (EIOPA), relevant recommendations from the International Association of Insurance Supervisors (IAIS) and experience from supervisory activity.
Supervision of insurers’ own risk and solvency assessment
Undertakings shall, at least annually, carry out an own risk and solvency assessment (ORSA). This process shall be an integral part of the undertaking's risk management system. The undertaking shall submit the report to Finanstilsynet within 14 days after the board has approved the assessment. Finanstilsynet evaluates all assessments received, focusing especially on undertakings' capital targets and capital plans. The undertaking receives written feedback as and when needed. Such feedback will often be given in connection with on-site inspections.
Supervision of technical provisions, capital requirements and own funds
Finanstilsynet supervises undertakings’ valuation of technical provisions and calculation of solvency capital requirements. This entails controlling and analysing reports that must be provided to Finanstilsynet on a regular basis and carrying out off-site inspections based on additional information obtained by Finanstilsynet, as well as on-site inspections.
Supervision of the use of internal models
Insurers may, subject to permission from Finanstilsynet, use their own risk model to calculate their solvency capital requirement. Finanstilsynet oversees that the models are used for risk management purposes and controlled and verified in accordance with regulatory requirements. Such supervision is partly on-site and partly off-site.