This page collates the FIN-FSA’s key releases and texts on insurance supervision in 2024.

In 2024, stress tests were conducted in the supervision of the insurance sector to gauge the sector’s risk resilience and the operability of its practices for governance and boards of directors. The focus areas of FIN-FSA supervision for 2024 included reliable governance and preparedness for uncertainty in the operating environment.

Insurance companies’ governance under particular scrutiny

In 2024, the FIN-FSA has paid particular attention to the working and control practices of insurance companies’ boards of directors. Both strong good practices and significant areas of development have been identified in the operation of insurance companies’ boards of directors. In particular, the importance of the identification and prevention of conflicts of interest was highlighted as a crucial part of sound corporate governance.

The FIN-FSA found that there is significant variation in the quality of material prepared for insurance companies’ boards of directors. Some companies have excellent practices that support efficient and transparent decision-making while, for some companies, the supervisor recommends improvements to documentation and compliance with the code of conduct.

• Room for development in the operation of insurance companies’ boards of directors (in Finnish)
• Observations about conduct in the minutes of insurance companies’ boards of directors (in Finnish)
• Thematic review: Employee pension companies must identify and prevent conflicts of interest (in Finnish)
• Strong good practices but also significant variation as well as identifiable areas of development in materials of insurance companies’ boards of directors (in Finnish)

The customer’s need must be assessed when selling insurance products

The FIN-FSA reminded insurance companies of the importance of assessing the customer’s need for insurance. This also concerns aspects other than pure new business: for example, when the insurance company decides to cancel an insurance portfolio and offer “new policies to replace the old ones”, the customers’ need for insurance must be reviewed.

• Insurance needs may change – FIN-FSA reminds insurance companies to verify the need for insurance (in Finnish)

Clarity and understandability are important in the marketing of employee pension companies

FIN-FSA issued guidelines on the marketing of expense loading components of insurance premiums, highlighting the clarity and understandability of the information given. The estimate concerning the expense loading components of insurance premiums must present in clear and understandable terms any relevant assumptions and other factors affecting the component, on which the estimate is based. When an employee pension company presents a comparison of its expense loading components with those of other companies, it must pay particular attention to the information and expressions used, ensuring comparability, illustrativeness and relevance for the customer.

• Practical interpretation of guidelines on employee pension companies’ expense loading components (in Finnish)

Pension insurers’ real estate investment valuations were appropriate

In its assessment, the FIN-FSA determined that the fair values of pension insurers’ real estate investments were largely up to date as of the end of 2023 and had been reviewed by an independent external appraiser. Pension insurers had largely reflected the weakened real estate market conditions in the fair values of their real estate investments. The largest write-downs had been made in their largest real estate classes: offices and residential real estates. The FIN-FSA also supervises non-life and life insurance companies’ real estate investments, making findings similar to those for pension insurers.

• Return on insurance sector’s direct real estate investments fell to negative territory in 2023, valuation practices mainly appropriate (in Finnish)

In-depth analysis of reinsurance risks

Reinsurance was one of the focus points of insurance supervision by the FIN-FSA and the European Insurance and Occupational Pensions Authority (EIOPA) in 2024. In April, EIOPA published a statement on the supervision of non-equivalent third-country reinsurers. Inflation and natural disasters and pandemics in previous years have reduced the rate of return of reinsurance and toughened the market, which emphasises the need for the management of basis risk by primary insurers.

The FIN-FSA conducted an in-depth analysis of reinsurance risks in 2024, and its results will be published in 2025. The in-depth analysis delved into non-life insurance companies’ reinsurance arrangements with respect to their risk-mitigation characteristics, effectiveness, the accuracy of calculations, basis and counterparty risks as well as opinions of the actuarial function.

• Reinsurance – topical supervision theme (in Finnish)

Practices and resourcing of internal audit under review

In 2024, the FIN-FSA examined how non-life and life insurance companies had organised their internal audit function and ensured its appropriate implementation. At the same time, the FIN-FSA reviewed what kind of policies, guidance and tools the companies utilise in audit activity to ensure independence and effectiveness.

Based on the outcome of the review, the FIN-FSA issued recommendations, good practices and development topics to help strengthen internal audit’s duty and position, independent of operational activities, to carry out audits and potentially other reviews concerning the company’s activities extensively and to report on them to senior management.

Twenty-two non-life and life insurance companies authorised in Finland participated in the survey. Findings based on the survey support previous observations from ongoing supervision, according to which there are significant differences in the procedures and resources of internal audit in different companies.

According to the findings, there are shortcomings in ensuring the resources and competence of the function, in the quality and extent of audit plans, and also room for development in the interaction between internal audit and the board of directors.

• Thematic review of non-life and life insurance companies’ internal audit function – significant differences in practices and resources (in Finnish)

Insurance sector event reached 180 industry representatives

In December, the FIN-FSA arranged a traditional supervised entities’ event for non-life and life insurance companies. Representatives from almost 180 companies attended to the event. In the event, topical supervisory themes were addressed, best practices shared and upcoming regulatory requirements discussed. These events provide an opportunity for the exchange of information and experiences, and ensure that all operators are up-to-date with the latest requirements.

In December, there was also a supervised entities’ event for unemployment pension institutions and sickness funds, where the FIN-FSA’s representatives discussed topical supervisory issues and the impacts of amendments to reporting and regulation. In addition, the focus areas of supervision for the following year where shared in the event.

Moreover, the FIN-FSA organised separate events for unemployment funds and insurance companies’ contact persons for agents.

• Almost 180 representatives of non-life and life insurance companies convened in traditional year-ending event for supervised entities arranged by Life and Non-life Insurance division (in Finnish)
• FIN-FSA supervised entities’ event for employee pension institutions and unemployment funds highlighted current and upcoming supervisory topics (in Finnish)

Artificial intelligence was used in writing the article. However, the article was finalised and reviewed by FIN-FSA’s specialists.