Insurance

The supervisory function of Národná banka Slovenska – objectives and main activities

By supervising insurance undertakings, Národná banka Slovenska (NBS) performs an important social and economic function and supports the long-term stability of the entire financial sector. The supervision of insurers by Národná banka Slovenska involves seeking and assessing information and documentation on facts concerning insurers and their activities (the key information being provided by the insurers themselves via financial reporting). The main focus is on any shortcomings in insurers’ activities, and on the causes, consequences, and persons responsible for these shortcomings. All authorised insurers in the Slovak market must be subject to effective and proactive supervision, conducted with a critical eye and having regard to overarching market objectives. This includes identifying as soon as possible any risks that could be detrimental to policyholders or to systemic stability, assessing such risks, and monitoring how insurers perform their activities in order to prevent undesirable developments or to identify such developments in good time. Insurers are required to adopt measures to mitigate any risks identified or to minimise their consequences. Particularly important in this respect is the supervision of solvency ratios. Insurers must, above all, establish adequate technical provisions, invest their assets in line with the prudent person principle, and follow standard business practices.

In accordance with annual plans or on a case-by-case basis, Národná banka Slovenska takes a closer look at insurers by conducting on-site inspections at their premises. Insurers that are not performing their activities in compliance with statutory and regulatory requirements may be subject to penalties imposed by Národná banka Slovenska.

Národná banka Slovenska also contributes to the development of financial market regulation and maintains a dialogue with various stakeholders.

The insurance market participants which Národná banka Slovenska supervises comprise insurance undertakings, reinsurance undertakings, and branches of insurance and reinsurance undertakings from non-EU countries. The conduct of insurance business in Slovakia is governed principally by Act No 39/2015 Coll. on insurance (‘the Act’).

The purpose of insurance regulation is to protect policy holders and beneficiaries and at the same time to support market stability, through risk evaluation and efficient capital allocation.

The structure of insurance regulation is based on three pillars. Pillar 1 lays down capital requirements for insurance and reinsurance undertakings, taking account of the risks to which they are exposed (including underwriting, credit, market and operational risks). Pillar 2 sets out requirements for the governance and supervision of insurance and reinsurance undertakings. Pillar 3 focuses on reporting and disclosure requirements.

Under the freedom to provide services, i.e. to provide services on a cross-border basis, insurance and reinsurance undertakings established in another EU Member State may conduct (re)insurance business in Slovakia either through a branch or directly, without establishing a branch. Financial supervision of the activity of these undertakings is the responsibility of the home Member State.

Insurance supervision information

Supervisory review process (in Slovak language only)

Last updated date: 2. 8. 2022