A German life assurance company sells policies to residents of Ireland. Who regulates the solvency of this life company?

• A. The German Regulatory Authority, BaFin.
• B. The Irish Central Bank.
• C. The European Securities and Markets Authority.
• D. The European Insurance and Occupational Pensions Authority.

Answer: (A)

Solvency regulation for insurers operating in another EU country follows the home regulator principle under Solvency II. A German life company is authorised in Germany, so its solvency is supervised by BaFin, even when selling to Irish residents. The Irish Central Bank handles licensing for cross-border business and conduct-of-business issues in Ireland, but not the insurer’s solvency. ESMA and EIOPA set EU-wide standards and coordinates supervision, but the direct regulator for solvency is the home-state authority. So BaFin is responsible for the insurer’s solvency.