Japan continues its fight to boost prices in an economy that has long batted deflation - a cycle of falling prices and wages. Japan, the world's third largest economy, struggled with deflation in the 1990s, during which time the country saw a number of large insurers go bust.
Deflation is hard on insurers because it tends to depress long-term investment returns, particularly from government bonds. Low rates made it hard for insurers to earn decent returns from their bond portfolios to cover promised payouts to policy holders.
"We don't judge upon monetary policy at all. But if you ask me do they impact the ability of the insurance industry to act appropriately? The answer is yes, they do. Is monetary policy as such appropriate, that is upon the central bankers to judge. We have to cope with the markets as they are," Hufeld told CNBC.
Speaking on the future of BaFin and its size, he said that current complexities in regulation required the group to maintain its scale for now.
"The EU (European Union) in general is a very complex animal and it will stay that way, so if we want to do our job and we are one of the most relevant authorities in the game, there can't be a significant shrinkage. If you are talking medium to longer term 5-10 years from now, that may be a different ball game, which is very difficult to predict today," he added.
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