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RESEARCH PRODUCT

Fitness of Members of Supervisory Board

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This chapter deals with the fitness of members of supervisory boards. Since 2009, German insurance regulatory law has provided internal qualification standards for the supervisory board members of insurance companies. In accordance with Paragraph 7a, sec. 4, clause 1 of the VAG [German Insurance Supervision Act], the members of supervisory boards must be able to fulfill their tasks and supervisory functions in accordance with their level of expertise. This new requirement comports with the previous standards of German corporate law, established by the BGH [German Federal Court of Justice] in its “Hertie”-ruling. As such, this ruling will also serve as a basis to interpret the expertise requirements in German insurance regulatory law. Consequently, each supervisory board member must have a certain minimum level of general competencies, so that specialized expertise and advance knowledge are maintained on the board. Even if the supervisory board members are not “persons with key functions” within the meaning of the framework directive of Solvency II, nevertheless, on its own, the pending transformation of existing guidelines into national law will indirectly affect the qualification requirements of supervisory board members in the insurance industry.