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

The purpose of financial market supervision is to contribute to the stability of the financial market as a whole and to the secure and sound functioning of the financial market, with the aim of ensuring financial market credibility, the protection of financial consumers and other financial market customers, and compliance with competition rules.

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.