Tasks

(1) The primary objective of supervision is the protection of policyholders and of the beneficiaries of insurance benefits.
(2) The supervisory authority monitors the entire business operations of insurance undertakings within the framework of legal supervision in general, and financial supervision in particular. In doing so, it ensures compliance with the laws applicable to the conduct of insurance business, and, for primary insurance undertakings, additionally ensures that the interests of the insured are adequately safeguarded. In doing so, it takes appropriate account of the possible effects of its decisions on the stability of the financial system in the respective affected states of the European Economic Area. In the event of exceptional movements in the financial markets, it takes into account the potential procyclical effects of its measures.
(3) Legal supervision covers the proper conduct of business operations, including compliance with the supervisory provisions, the provisions concerning the insurance relationship, and all other provisions concerning the insured, and the legal bases of the scheme of operations. Legal supervision also extends to compliance with the employment and social law provisions to be observed by pension funds in the field of occupational retirement provision.
(4) Within the framework of financial supervision, the supervisory authority must, for the entire business activity, ensure the continuous ability to meet obligations arising from the insurance contracts, and, in doing so, in particular the solvency and the long-term risk-bearing capacity of the insurance undertaking, the formation of adequate technical provisions, investment in correspondingly suitable assets, compliance with sound business principles, including proper business organisation, and compliance with the other financial bases of the business operations.
(5) The supervisory authority regularly examines and assesses the strategies, processes, and reporting procedures that an insurance undertaking has established in order to comply with the laws and administrative provisions issued under Directive 2009/138/EC or under Directive (EU) 2016/2341 (supervisory review process). The supervisory review process includes assessing
1. the qualitative requirements relating to business organisation,
2. the risks to which the undertaking is, or could be, exposed, and
3. the undertaking's ability to assess and withstand these risks, having regard to the respective business environment. The supervisory authority determines the minimum frequency and scope of these examinations, assessments, and evaluations, having regard to the nature, scale, and complexity of the activities of the insurance undertaking concerned. For pension funds, it also takes into account the scale of the activities.
(6) Supervision extends, beyond domestic business, to business activity carried out in other member or contracting states through branches or under the freedom to provide services. In doing so, financial supervision is exercised under sole competence, and supervision otherwise is exercised in cooperation with the supervisory authority of the other member or contracting state.
(7) Supervision must also extend to the liquidation of an undertaking, and to the winding-up of existing insurance contracts, where the business operations are prohibited or voluntarily discontinued, or the authorisation to conduct business is revoked.
(8) The supervisory authority performs its tasks and exercises its powers solely in the public interest.