Which financial activities are supervised? European experience Banking Insurance Asset management

Why supervision of financial activities? The reliability and functioning of the financial industry is of national interest. Solvency supervision. Ensure that the company can meet the (future) liabilities. The accounting rules differ per country and activity Consumer (supplier and investor) protection. A combination of maximum safety and profit

Organisation of the supervision A trend to integrate the separated supervision activities in one national body Grouping of bank-, insurance- and asset-management companies. New integrated cross-sectoral products. More efficiency and less co-ordination costs with a comprehensive full-scale overview of the market The national voice has more impact in Europe

Supervision of Health insurance The differences in supervision of public and commercial insurance are evident Public healthcare insurance by a legal entity under the the Ministry of Health Package and regulations by Ministry of Health In close co-operation with the health providers Social business Commercial healthcare (incl. supplementary) insurance by a legal entity under the Ministry of Finance Close connected to other financial industries Commercial business

Supervision of public and commercial health insurance undertakings A tendency from detailed daily process-control to financial end-control, but: Public funds are most intensively (day by day) controlled (incl.quality) Public funded enterprises. Non-profit enterprises Subscribers’ power to influence quality is very weak Mostly compulsory. No freedom of choice Commercial funds are less intensively controlled Private premium collection. Full profit enterprises More clients’ influence. When dissatisfied, they can resign. The market will regulate more (but safety for all!)

Licensing Before granting authorisation the supervision body conducts a comprehensive legal/financial study: Met the legal conditions Evidence of own funds Operation Plan Management of good education and reputation In case of mismanagement: Advises or directives to improve Dismissal of management Stop the license Stop the business

On-going supervision On-going monitoring: Information by: Still sufficient provisions and uncommitted funds in balance with the risk taken Reinsurance to a appropriate degree Changes in the business strategy and the environment Changes in the operation Information by: All types of notifications Audit reports Management Information System Free access to the Board and all operations

Countries differ Prior approval of General Conditions, tariffs and (changes in) premiums Actuarial directives When to involve a trustee actuary Reserves for the old age and chronic diseases Complaints handling Responsible for training programs In public healthcare insurance: Advise in new building/supply of care institutes Risk equalisation between funds Settlement of claims/payments abroad

Solvency requirements Dependent on risk Differ for public and commercial funds. A public fund has more risk sharing and so lower requirements Calculated as a percentages of the premium and the experienced claims. For public funds are minimum and maximum requirements. An example: A public fund: minimum is 8% of the risk (future years) and the maximum is 2,5 times that amount A commercial fund: 16% of the premium or 23% of the average 3 years claims. The highest outcome is the requirement (mostly the 23%)

Quality control of public funds is essential Supervisory bodies are focused on financial aspects Clients of the public system complain about quality of service but have not enough power. Statutory quality control (Quality Law) works as consumer protection Quality control by the fund itself is not sufficient Usually the supervisory body is responsible, but there is a tendency to use specialised quality institute Quality control of the public healthcare providers is a must too. This is done by public health fund but preferable by specialised institute

Commercial insurers are under the rules of the free market Commercial insurers are under the rules of the free market. Quality is a matter of survival Clients of a commercial institute are far more powerful. They can resign! Market requires quality of the insurer (and health provider) Commercial insurers have Quality Management Systems and Complaints Programs in place There is a tendency to use specialised quality institutes Commercial insurers control the provider very intensive

Summary and advises Supervision is essential. Public healthcare insurers are supervised more intensive then commercials The healthcare needs are evident Equal access for all in full solidarity and high quality But: the Slovakian healthcare debts are enormous So: Supervise the funds to support the management Limit the public benefits to the essentials Introduce voluntary healthcare insurance to generate extra money flow