Draft Bill of the Federal Ministry of Finance for an Insurance Recovery, Resolution and Supervisory Amendments Act (VSAAG)
Overview of the Current Situation
Insurance companies that are members of the statutory policyholder protection fund are required to pay contributions to the fund. The regular annual contributions payable by all life insurers participating in the fund amount to 0.2 per mille (0.02%) of the aggregate net technical provisions until the fund reaches 1 per mille (0.1%) of aggregate net technical provisions. (This target has already been reached, and the fund currently amounts to EUR 1.2 billion.)
In addition, extraordinary contributions of up to 1 per mille (0.1%) of aggregate net technical provisions may be levied if this is necessary to enable the statutory policyholder protection fund to perform its functions.
If the assets accumulated through contributions to the statutory policyholder protection fund are insufficient to ensure the continued performance of the insurance contracts in a portfolio transferred to the fund, the supervisory authority may reduce the obligations arising under those contracts by up to 5% of the contractually guaranteed benefits.
If, after the statutory policyholder protection fund has fully exhausted its regular annual contributions and extraordinary contributions, and after the guaranteed benefits under the contracts have been reduced by 5%, the continuation of the contracts still cannot be ensured, the German life insurers have, under a voluntary industry commitment (Selbstverpflichtungserklärung), undertaken to make additional financial resources available to the statutory policyholder protection fund. These additional resources may be called upon, for each calendar year and for each protection event, in an amount of up to two extraordinary contributions.
The aggregate amount of the obligations—comprising regular annual contributions, statutory extraordinary contributions, and the additional contributions provided under the voluntary industry commitment—corresponds to a cumulative 1% of the life insurers' net technical provisions.
The combination of regular and extraordinary contributions, the possible reduction of guaranteed benefits, and the voluntary industry commitment provides a balanced allocation of the financial burden among the policyholder protection fund, policyholders, and the life insurance industry.
