Page Contents
Domestic
European
Related areas
Minister for Finance imposes restrictions on compensation available under the Motor Insurance Insolvency Compensation Act 2024
On 15 January 2025, Minister for Finance Jack Chambers made an order to the effect that the Motor Insurers’ Bureau of Ireland (MIBI) shall not, in respect of a claim under section 9 of the Motor Insurance Insolvency Compensation Act 2024 (the Act), make an offer of compensation which exceeds €170,000 until the claim has been audited in accordance with section 17 of the Act.
Section 9 of the Act provides that an injured party resident in Ireland may make a claim in relation to a motor accident to the MIBI in respect of contracts written by an insurer, either in Ireland or in another member state of the EEA.
By way of background, the Act was commenced on 17 October 2024 with a view to enhancing the protection of motor insurance policyholders and injured parties where the responsible insurer becomes insolvent.
EU publishes amendments to Solvency II and the Insurance Recovery and Resolution Directive
On 8 January 2025, the Directive amending Solvency II and the Insurance Recovery and Resolution Directive (IRRD) were published in the Official Journal of the European Union. Both will enter into force on 28 January 2025 and must be implemented into Irish law by the end of January 2027.
Changes to Solvency II
Insurance sector firms will need to consider the impact of the various upcoming changes to Solvency II. A key area of change for insurers with long-term liabilities will be amendments to risk margin calculation. Other areas impacted by the changes include the rules concerning:
IRRD
The IRRD aims to enhance the resilience of the insurance sector, protect policyholders and maintain economic stability in the EU by requiring a harmonised approach to recovery and resolution planning. Key provisions of IRRD include:
Resolution authority: Member States will have to designate authorities which will have the power to intervene where (re)insurers are failing or likely to fail. These authorities, in consultation with National Competent Authorities (NCAs), must create ‘resolution plans’ for life and non-life (re)insurers representing at least 40% of the relevant national markets.
Pre-emptive recovery plan: Certain (re)insurers will have to prepare and keep updated plans which contain measures to restore their financial positions should that position deteriorate. NCAs will be required to ensure at least 60% of the national life and non-life (re)insurance markets must be subject to pre-emptive recovery planning requirements.
Regulations requiring pre-emptive recovery planning by (re)insurers were introduced in 2021 and were followed by CBI guidance. It remains to be seen if and how these existing Irish measures will be impacted by the transposition.
EIOPA publishes Consumer Trends Report
On 15 January 2025, the European Insurance and Occupational Pensions Authority (EIOPA) published its 2024 Consumer Trends Report (the report), which highlights the main trends in consumers’ experience with insurance and pension products. The key focus areas of the report are:
Interestingly, the report analyses how the use of AI functions by insurers will impact the insurance industry and the importance of privacy, security, and ethical considerations when implementing AI solutions.
The report also notes that value for money risks persist, especially in respect of certain unit-linked and hybrid insurance products. EIOPA’s data shows that consumers generally feel that the products they purchase offer good value for money. However, for insurance-based investment products, a quarter of Europeans believe that such products do not offer value.
EIOPA publishes updated information for policyholders of the insurer NOVIS
EIOPA published updated information on 15 January 2025 for policyholders of NOVIS Insurance Company, NOVIS Versicherungsgesellschaft, NOVIS Compagnia di Assicurazioni and NOVIS Poisťovňa a.s. (collectively referred to as NOVIS) in its role as coordinator of the NOVIS cooperation platform.
The Slovak national supervisory authority, Národná banka Slovenska, withdrew the authorisation of NOVIS in June 2023 and petitioned the court to dissolve NOVIS and appoint a liquidator for the company. However, no liquidator has yet been appointed. The stalled liquidation process may lead to consumer detriment in that policyholders may face the risk of financial losses as they continue to pay premiums to NOVIS.
EIOPA urges policyholders to seek professional advice and carefully re-evaluate their options based on the information available.
EIOPA makes recommendation to Bulgaria’s Financial Supervision Commission
On 13 January 2025, EIOPA published a recommendation to Bulgaria’s Financial Supervision Commission (FSC) urging it to review its supervisory processes regarding the assessment of (re)insurers’ solvency position. Following a solvency simulation, EIOPA viewed the FSC’s process as too superficial and not reflective of the due diligence expected of a supervisor verifying the solvency of a supervised entity (proportionate to the nature, scale and complexity of the situation). The FSC has two months to confirm to EIOPA whether it complies or intends to comply with the recommendation.
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 7 January 2025 in relation to the relevant risk-free interest rate term structures with reference to the end of December 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 December 2024.
EIOPA adopts technical advice on the implementation of new proportionality framework under the Solvency II Directive
Following the entry into force of the Directive amending Solvency II, EIOPA published its technical advice on the implementation of the new proportionality framework under Solvency II. The advice, which is a response to the European Commission’s Call for Advice of 30 April 2024, endorses the methodology in the Directive for classifying insurance undertakings as ‘small and non-complex’ (SNCUs), which sets out clear criteria for identifying SNCUs that stand to benefit from proportionality measures following a simplified notification process to supervisors.
In addition to SNCUs, the new proportionality regime also empowers supervisors to grant (and withdraw) similar concessions to other insurers whose risk profile justifies the use of some proportionality measures even though they do not classify as SNCUs.
EIOPA’s technical advice on Solvency II’s new proportionality framework marks an important step towards reducing the regulatory burden on undertakings in Europe’s insurance sector while maintaining a prudent approach to risk management.
EIOPA recommends new risk factors for the natural catastrophe (nat cat) standard formula
EIOPA has submitted proposals to the European Commission following the comprehensive reassessment of the Nat Cat risk standard formula it conducted in 2023 and 2024 mandated by the Solvency II review. The reassessment ensures that the nat cat parameters remain valid considering developing scientific understanding and recent catastrophic events.
The broadest update comes for flood hazards, with seven countries including Ireland, Luxembourg and Norway being proposed for inclusion in the standard formula for flood risk. Exposures in these countries were found to be material as result of the impact of climate change in recent years.
This reassessment exercise forms part of EIOPA’s broader scope of work related to natural catastrophes, including analyses of insurers’ exposure to physical climate change and insurance-based solutions aimed at narrowing Europe’s insurance protection gaps. The European Commission will now consider this opinion for a potential recalibration of the relevant standard formula parameters.
EIOPA publishes final technical advice to the European Commission on the capital treatment of insurers’ direct exposure to central clearing counterparties
On 31 January 2025, EIOPA issued its final technical advice on the standard formula treatment of (re)insurers’ direct exposures to qualifying central clearing counterparties (QCCPs, the Advice). The European Commission sought the Advice after noting that (re)insurers who were direct members of QCCPs were subject to greater capital requirements than (re)insurers with indirect exposures to QCCPs. Traditionally, (re)insurers could not be direct members of QCCP’s, and the issue arose following changes to QCCPs access models that allowed (re)insurers to become direct members. EIOPA’s Advice recommends making a series of amendments to Solvency II so that (a) treatment of direct and indirect QCCP exposures are aligned, and (2) treatment of default fund contributions is aligned with the Capital Requirements Regulation.
EIOPA’s annual report on administrative sanctions under the IDD
EIOPA published its fifth annual report (the report) on 29 January 2025 on the imposition of administrative sanctions and other measures by NCAs under the Insurance Distribution Directive (IDD) in 2023.
The report’s key findings show:
The report also includes a case study on the Croatian supervisor in relation to sanctions concerning a breach of the core IDD principle that insurance distributors should always act honestly, fairly and professionally in accordance with the best interests of their customers.
EIOPA Insurance Risk Dashboard
EIOPA has published its January 2025 Insurance Risk Dashboard based on Solvency II data for Q3 2024 and 2024 -YE. The dashboard aims to illustrate the principal risks in the EU insurance sector through data gathered from insurance groups and undertakings within the EU. The dashboard covers a wide range of risks from credit to ESG-related risks.
The dashboard shows that risks are currently stable in the EU's insurance sector. However, there are weaknesses arising from uncertainty in the market including changes in real estate prices and some concerns arising from the impact of increasing geopolitical tensions on the dynamics of key economies.
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.