Securing the claims of policyholders

The central duty of the supervisory authority is to ensure the claims of insured parties; in other words, to provide solvency protection and protect insured persons against the consequences of insolvency on the part of insurance companies. In order to be able to satisfy the claims of its insured parties, an insurance undertaking must set aside a sufficient level of technical provisions, calculated on the basis of actuarial principles. These technical provisions must be covered by what are known as tied assets at all times.

The investment of tied assets is subject to strict regulations in respect of risk diversification, permitted investment categories, risk management and capital investment management.
If an insurance company is adjudicated bankrupt, any proceeds from the sale of tied assets will first be applied to claims under insurance policies. Insured claimants therefore enjoy preferential status over other creditors, since, in the event of bankruptcy, they are to be paid out of the proceeds realised on tied assets and their claims are to be satisfied in priority to all other creditors.