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The Central Bank of Iceland (CBI) maintains forward-looking and risk-oriented supervision of the activities of insurance undertakings, analyses the main risk factors in their operations, and monitors market developments.

The Central Bank of Iceland also monitors the compliance of entities in the insurance market with the laws that apply to their activities and that appropriate measures are taken when necessary. The CBI also monitors the practices of entities in the insurance market with regard to normal and sound business practices.

The Central Bank of Iceland issues questions and answers in order to increase transparency in the implementation of supervision and, at the same time, provide regulated parties and other parties concerned, greater security in the application of laws and regulations.

A merger of insurance companies, which involves transferring all assets and liabilities to a new or acquiring company without liquidation, requires approval from the Financial Supervisory Authority.

The repurchase of an insurance company, which reduces basic own-fund items, requires prior approval from the Financial Supervisory Authority.