MaGo (Minimum Requirements for the Business Organization of Insurance Undertakings)

Concept

MaGo (Minimum Requirements for the Business Organization of Insurance Undertakings) is a circular issued by BaFin, the German financial supervisory authority, that specifies the general requirements for the governance system of insurance undertakings enshrined in the Insurance Supervision Act (VAG) and operationalizes them for supervisory practice.

Regulatory Content

MaGo specifies central elements of the governance system, including the requirements for the four key functions (risk management, compliance, internal audit, and the actuarial function), the principles of a proper business organization, the requirements for the risk management system including the Own Risk and Solvency Assessment (ORSA), and the requirements governing the outsourcing of functions and activities.

Relevance for Supervisory Practice

As an administrative circular, MaGo specifies indeterminate legal concepts of the VAG and thereby forms a central benchmark against which BaFin measures the adequacy of an insurance undertaking’s business organization in the course of its ongoing supervisory activity; it is regularly revised to integrate developments at the European level, such as EIOPA guidelines, into national supervisory practice.