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Personal Injuries Resolution Board Act 2022 (Commencement) (No. 2) Order 2024
On 4 December 2024, the Minister for Enterprise, Trade and Employment, Peter Burke, signed the Personal Injuries Resolution Board Act 2022 (Commencement) (No. 2) Order 2024 (the Order). The Order commences further provisions of the Personal Injuries Resolution Board Act 2022 (the Act), which forms part of the government’s wider ‘Action Plan for Insurance Reform’ and, in particular, introduced reforms to the then Personal Injuries Assessment Board. The newly commenced sections of the Act extend mediation services offered by the Injuries Resolution Board to motor liability injury claims, with effect from 12 December 2024.
Notification Guidance for (Re)Insurance Undertakings when Outsourcing Critical or Important Functions or Activities under Solvency II
The Central Bank of Ireland (the CBI) has recently published its Notification Guidance for (Re)Insurance Undertakings when Outsourcing Critical or Important Functions or Activities (CIFAs) under Solvency II. A similar process note was published by the CBI in March 2016, predating EIOPA’s 2020 guidelines on outsourcing to cloud service providers and information and communication technology (ICT) security and governance, as well as the CBI’s own Cross-Industry Guidance on Outsourcing, published in 2021. The CBI indicated at the time of the 2021 guidance that further notification guidance would be forthcoming.
To assist undertakings in conducting the due diligence required prior to outsourcing, the CBI has produced an Excel spreadsheet titled “Notification Template”. This includes:
Motor Insurers Insolvency Compensation Fund levy to be reduced from 1% to 0%
The Motor Insurers Insolvency Compensation Fund (MIICF) levy has been reduced from 1% to 0% with effect from 1 January 2025. This follows a reduction from 2% to 1% in Budget 2024. The MIICF was established in 2018 to provide access to a compensation mechanism for victims of road traffic accidents where the relevant insurer is insolvent. This reduction will positively impact all motor insurance policy holders on renewal from January 2025.
EIOPA and ECB propose European approach to reduce economic impact of natural catastrophes
On 18 December 2024, the European Insurance and Occupational Pensions Authority (EIOPA) and the European Central Bank (ECB) published a joint paper offering a proposal for an approach to mitigate the economic impact of climate disasters in the EU. The 2024 joint paper follows a 2023 joint ECB-EIOPA discussion paper (the 2023 paper) which examined methods that could be used to combat the EU’s natural catastrophe – ‘NatCat’ – protection gap. In line with stakeholder feedback received on the 2023 paper, EIOPA and the ECB advocate a two-pillar approach to reduce the economic impact of climate-related catastrophes in the EU consisting of (i) an EU public-private reinsurance scheme, and (ii) an EU fund for public disaster financing (which would be subject to participating Member States agreeing to implement specific risk mitigating measures). The joint paper notes that, while adoption of any EU-level solution hinges on EU-wide political agreement, EIOPA and the ECB encourage stakeholders to rely on the proposals both as a basis for discussion and as a comparison tool when analysing other solutions aimed at closing the NatCat gap.
EIOPA provides updated information to policyholders affected by FWU AG’s insolvency
On 18 December, EIOPA provided updated information to policyholders affected by the insolvency of German holding company, FWU AG.
In July 2024, insolvency proceedings were opened in relation to FWU AG and its subsidiary insurance undertaking, FWU Luxembourg, disclosed to the Luxembourgish regulator that it was unable to comply with its regulatory capital requirements in relation to, not only its solvency capital requirement (SCR), but also its minimum capital requirement (MCR). The disclosure led to FWU Luxembourg’s assets being frozen and its outgoing payments being suspended. The Court of Luxembourg accepted FWU Luxemburg’s file for a suspension of payments on 2 August 2024 and appointed an administrator to oversee the company’s management of its assets and liabilities. In October, FWU Luxembourg information the Luxembourgish regulator that it had regained compliance with its MCR but that uncertainties remain in relation to compliance with the SCR.
In its recent update, EIOPA stated that an independent special administrator has been appointed by the Court to temporarily manage FWU Luxembourg. The special administrator must identify a solution (for example, restructuring or liquidation) within six months. EIOPA recommends that policyholders carefully consider the terms and conditions of their contracts and obtain professional advice. EIOPA also directs affected policyholders to the website of their national supervisory authority.
EIOPA publishes the results of its 2024 insurance stress test
EIOPA has published the results of its 2024 insurance stress test exercise. This exercise analysed and documented European insurers’ resilience against the economic and financial consequences of a further escalation of geopolitical tensions. The exercise demonstrated the European insurance sector is well-capitalised and can meet Solvency II requirements even under the stress test’s severe but plausible shocks. EIOPA confirmed that the outcome of this exercise will inform supervisory processes at European and national level.
EIOPA opens second batch of consultations on legal instruments after Solvency II review
On 4 December 2024, EIOPA launched the second series of consultations regarding relating to biodiversity risk management.
The six consultations issued relate to the following topics:
The findings of the report and the five legal instruments will guide the implementation of the new features within the Solvency II framework to improve risk management and financial stability in the EU’s insurance sector.
EIOPA invites stakeholders to provide their feedback on the consultation papers no later than 26 February 2025.
EIOPA’s Financial Stability Report - December 2024
On 12 December 2024, EIOPA published its Financial Stability Report (the report). The report gives an overview of recent developments and takes a closer look at three topics in particular:
On real estate vulnerabilities, EIOPA’s analysis shows that even a strong real estate shock would only have a modest impact on the sectors, with some individual exceptions.
Regarding asset intensive (or funded) reinsurance, the report says that while financial stability concerns appear limited for now, continued supervisory scrutiny is warranted.
On the European Systemic Risk Assessment Framework, the main sources of systemic risk for Europe’s insurance sector include increasing risks related to interlinkages between different financial actors due to a rise in the sale of credit default swaps and in the overall derivatives positions of insurers as well as emerging risks such as climate, digitalisation and cyber risks.
EIOPA calls for candidates to join its Consultative Expert Group on data use in insurance
EIOPA issued, on 5 December 2024, a call for candidates to join a Consultative Expert Group on data use in insurance. EIOPA says that the complexities relating to the use of data and its societal impact, combined with the specificities of the insurance industry, calls for the creation of the Expert Group. The group will examine:
Members of the group are expected to have extensive experience in one or more of the following areas: financial services and digitalisation, insurance economics, risk modelling, data science and computer science, consumer protection, insurance regulation and legal standards, for instance related to data and personalisation in financial services, customer needs, financial exclusion and inclusion in the financial sector.
Potential candidates will come from different backgrounds, such as the insurance industry, academia, consumer associations or other relevant stakeholder organisations. The deadline for application is 31 January 2025.
EIOPA publishes monthly technical information for Solvency II relevant risk-free interest rate term structures and monthly update of the symmetric adjustment of the equity capital charge
EIOPA published its monthly technical information on 4 December 2024 in relation to the relevant risk-free interest rate term structures with reference to the end of November 2024, for Solvency II purposes. This information is used for the calculation of technical provisions for (re)insurance obligations, and its monthly publication ensures that the calculation of technical provisions across Europe is consistent. EIOPA also published technical information on the symmetric adjustment of the equity capital charge for Solvency II with reference to the end of November 2024.
EIOPA revokes previous guidelines to avoid duplications and overlaps with DORA
EIOPA announced on 19 December that, due to the Digital Operational Resilience Act (DORA) coming into effect in early 2025, it will withdraw two previously published guidelines issued in the context of Solvency II. The guidelines to be withdrawn relate to the use of information communication technology by relevant undertakings and specifically cover “information communication technology security and governance” and “outsourcing to cloud service providers”. EIOPA’s decision to withdraw these guidelines is due to the comprehensive nature of DORA and to avoid any inadvertent overlaps regarding frameworks governing digital operational resilience. These changes will take effect from 17 January 2025.
For more information on these topics please contact any member of A&L Goodbody's Insurance & Reinsurance team.
This publication provides an overview of certain legal and regulatory developments that may be of interest to certain entities. It does not purport to provide analysis of law or legal advice and is strictly for information purposes only.