Germany's Federal Financial Supervisory Authority (BaFin) set out supervisory priorities for strengthening the insurance sector’s “future viability”, with a renewed focus on whether insurance products deliver appropriate value to customers and an expansion of conduct supervision beyond life insurance. The update was delivered by BaFin Executive Director Julia Wiens in remarks at the 14th Annual Conference on Insurance Supervision. BaFin pointed to a marked reduction in effective costs for unit-linked life insurance products in recent years and said it will place greater emphasis on the value life insurance provides during the retirement payout phase. Insurers were also urged to price guaranteed benefits cautiously, while avoiding safety margins that fall disproportionately on policyholders. Conduct supervision reviews will be extended next year to additional business lines, starting with property and casualty insurance, including closer scrutiny of pricing differentiation such as motor insurance discounts that are not clearly risk-based, and more detailed examination of “price-walking” repeated premium increases unrelated to insured risk or insurers’ costs. BaFin also highlighted expectations around adopting new technologies, particularly artificial intelligence, while managing associated risks such as discrimination, and flagged shortcomings in investment risk management, especially at smaller insurers, including the need to understand complex alternative investments such as private equity, private debt and real estate and not rely solely on third-party advice. Across these themes, BaFin positioned strong governance and effective risk management as the foundational requirement for insurers’ long-term resilience and strategic steering, particularly amid ongoing economic uncertainty and geopolitical and climate-related risks.

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