Financial Services Regulation and Compliance - Insurance Jan 2021
DOMESTIC
Sinn Féin Bill on differential pricing published
On 14 January 2021, the Insurance (Restriction on Differential Pricing and Profiling) Bill 2021 was introduced to the Dáil by Sinn Féin spokesperson on finance, Pearse Doherty TD. The Bill seeks to prohibit the practice of differential or discriminatory pricing of certain insurance premiums and the use of profiling techniques in the calculation of such insurance premiums. The Bill applies to home and motor insurance contracts.
Government's spring legislative programme published
On 13 January 2021, Government Chief Whip, Jack Chambers TD published the Government's Spring Legislation Programme (Programme) for 2021. Included in the Programme is the Road Traffic (Miscellaneous Provisions) Bill, which, among other things, provides a framework for the regulation of e-scooters and scrambler bikes as well as for a motor insurance database.
Health Insurance (Amendment) Act 2020 commences
The Health Insurance (Amendment) Act 2020 (the Act) was signed into law on 16 December 2020. Section 5 of the Act commenced on 1 January 2021. Sections 2, 3, and 4 of the Act will commence on 1 April 2021. The Act among other matters:
- amends the Health Insurance Act 1994 (the 1994 Act) to specify the amount of premium to be paid from the Risk Equalisation Fund in respect of certain classes of insured persons
- amends the 1994 Act to specify the amount of the hospital utilisation credit applicable from 1 April 2021
- makes a consequential amendment to the Stamp Duties Consolidation Act 1999
EUROPEAN
IRSG advises EIOPA on consultation paper on draft opinion on the supervision of the use of climate change risk scenarios in ORSA
On 4 January 2021, EIOPA's Insurance and Reinsurance Stakeholder Group (IRSG), a group of 30 industry stakeholders established by EIOPA, offered advice in response to EIOPA's Consultation on the draft opinion on the supervision of the use of climate change risk scenarios in ORSAs. The IRSG agrees that (re)insures should consider the management of climate change risks which are expected to have future material impact on their business model. However, the IRSG considers that quantitative climate change scenario analyses should only be included in the ORSA where climate risks are material. The IRSG also reiterated its view that the primary objective of any insurance supervisory regime is to ensure (re)insurers can pay their debts on time and any new requirements should not extend beyond this primary objective.
EIOPA publishes monthly technical information
On 6 January 2021, EIOPA published technical information on the symmetric adjustment of the equity capital charge and risk free interest rate term structures for Solvency II purposes with reference to the end of December 2020. EIOPA also updated the representative portfolios that will be used for calculation of the volatility adjustments to the relevant risk-free interest rate term structures for Solvency II on 7 January 2021.
EIOPA and NCA MOUs with UK authorities take effect
EIOPA has advised that the following memoranda of understanding (MOUs) agreed between EIOPA/EEA National Competent Authorities (NCAs) and the UK's Prudential Regulation Authority and Financial Conduct Authority took effect on 1 January 2021, following the end of the Brexit transition period.
- A multilateral MoU on supervisory cooperation, enforcement and information exchange between the EEA NCAs and the UK Authorities; and
- A bilateral MoU between EIOPA and the UK Authorities on information exchange and mutual assistance in the field of insurance regulation and supervision.
The MOUs provide a framework for cooperation in relation to prudential and supervisory insurance matters and encourage mutual assistance and sharing of information.
EIOPA publishes second paper on the methodological principles of insurance stress testing with focus on liquidity
On 26 January 2021, EIOPA published its Second Paper on Methodological Principles of Insurance Stress Testing (the Paper) which follows the first discussion paper published in December 2019. The Paper discusses the principles that can be utilised to design stress test exercises to assess the vulnerability of insurers to liquidity shocks. The conclusions contained in the Paper are based on the current understanding and knowledge of liquidity risk in the insurance industry and may evolve in the future.
EIOPA consults on open insurance
On 28 January 2021, EIOPA announced its public consultation on open insurance, which focuses on access to and sharing of insurance-related data. EIOPA confirms that initial analysis indicates that data exchange through open Application Programming Interfaces (APIs) has started to emerge in the insurance sector, which can facilitate innovation. In its discussion paper, EIOPA highlights the following key areas:
- broader discussion and impact assessment on different open insurance approaches from a regulatory/supervisory perspective
- proper oversight and supervision
- data protection and digital ethics
- interoperable data sharing framework and API standards
- level playing fields and data reciprocity
EIOPA believes a broad multi-stakeholder discussion would be beneficial and the consultation is open until 28 April 2021.
EIOPA publishes annual report on the use of capital add-ons under Solvency II
On 28 January 2021, EIOPA published its annual report on the use of capital add-ons by national competent authorities under Solvency II. The report is based on 2019 year end data. The objective of the capital add-on measure is to ensure that the regulatory capital requirements reflect the risk profile of an undertaking or insurance group.
EIOPA publishes consumer trends report
On 29 January 2021, EIOPA published its 2020 Consumer Trends Report (the Report), outlining the impact of COVID-19 on the insurance and pensions sector. The Report notes that financial innovation/digitalisation has enabled business continuity measures to be effective, rendering the process of buying insurance, submitting claims and complaints as normal as possible. Key consumer issues arising from the pandemic include continued concerns regarding unit-linked products and travel insurance products.
For more information on these topics please contact any member of A&L Goodbody's Insurance & Reinsurance team.
Date published:11 February 2021