Financial Services Regulation and Compliance - Insurance November 2023

Domestic

Health Insurance (Amendment) Bill 2023 debated (see here)

The Health Insurance (Amendment) Bill 2023 (the Bill) was presented to Dáil Éireann on 16 November 2023. The Bill seeks to amend the amount of premium to be paid from the Risk Equalisation Fund under the Health Insurance Act 1994 (the 1994 Act) for various categories of insured persons from 1 April 2024. It also seeks to make consequential amendments to the Stamp Duties Consolidation Act 1999. This Bill is part of an annual process whereby legislation is introduced to amend the level of risk equalisation credits under the 1994 Act and the related stamp duty levies. As of 29 November, the Seanad were continuing to debate the Bill. Once this stage is completed, the next stage in the process would be for the Bill to return to Dáil Éireann for consideration, and subsequently be signed into law by the President.

The Central Bank publishes 'Intermediary Times' Newsletter (see here)

On 17 November 2023, the Central Bank of Ireland (the CBI) issued the second edition of its ‘Intermediary Times’ newsletter. The newsletter addresses news highlights, developments, and important topics of relevance to intermediaries (with a CBI focus on putting the consumer first).

Key updates in the publication include:

  • Fitness and probity requirements – From Q1 2024, the annual PCF confirmation return will be submitted under the fitness and probity section of the CBI’s online portal. Firms are also encouraged to examine the CBI’s new fitness and probity application guidance.
  • Professional indemnity insurance (PII) – Firms are encouraged to keep up to date on any changes to the levels of professional indemnity insurance that must be held by intermediaries, noting that EIOPA proposed an increased level of PII cover under the Insurance Distribution Directive in its draft Regulatory Technical Standards submitted to the Commission on 30 June 2023. The base PII proposed to apply to each claim is €1,564,610 [+ €264 230].
  • Consumer Protection Code review – The CBI reminds firms that a consultation paper will be published on a revised Consumer Protection Code in early 2024.

Suitability of Long-Term Life Assurance Products – The CBI published a “Dear CEO” letter targeted at insurers in August 2023 addressing weaknesses regarding ongoing suitability of life assurance products. Intermediaries are encouraged to examine the letter and consider their own practices in that context.

European

EIOPA publishes November 2023 Insurance Risk Dashboard 2023 (see here)

On 6 November 2023, the European Insurance and Occupational Pensions Authority (EIOPA) published its Insurance Risk Dashboard. This document aims to illustrate key risks for the insurance sector (e.g. macro, market and other risks including digitalisation). The dashboard grades those risks according to EIOPAs assessment (very high, high, medium and low).

Macro risks highlighted by EIOPA include deterioration of global GDP (gross domestic product), and the volatility of certain market risks. Risks remaining at medium level include credit risks, and interlinkage/ imbalance risks (e.g. those between primary insurers and reinsurers, between the insurance and banking sector, and interlinkages created through derivative holdings and insurance risks).

ESG risks remain graded at a medium level. Interestingly, while flood risks have increased, windstorm risks have decreased for the period 2021 to 2022 (per data collected from the EIOPA Pilot dashboard on the insurance protection gap). Exposures through climate relevant assets (meaning those assets that are exposed to climate impact) sits at around 3.3% of total assets held by insurers. EIOPA also noted that insurers investments in green bonds remained fairly stable.

EIOPA publishes monthly technical information (see here and here)

EIOPA published its monthly technical information on 7 November 2023 regarding the relevant risk-free interest rate term structures with reference to the end of October 2023, for Solvency II purposes. This technical information is used for the calculation of technical provisions for (re)insurance obligations. On the same date, EIOPA also published technical information on the symmetric adjustment of the equity capital charge for Solvency II with reference to the end of October 2023.

EIOPA speech comments on hidden and horizon risks for insurers (see here)

On 21 November 2023, EIOPA Chairperson, Petra Hielkema, addressed the attendees at the 2023  EIOPA Conference on ‘Hidden risks and new horizons: What’s next for supervision’. Some of the key themes Ms Hielkema touched on in her speech included:

  • evolution of regulation, including its ongoing review to ensure it remains relevant and capable of addressing new and potential risks/concerns
  • gaps in supervisory reach in respect of cross- border insurance business
  • use of data to inform policymaking and the continued focus on its use in the insurance market

For more information on these topics please contact any member of A&L Goodbody's Insurance & Reinsurance team.

Date published: 11 December 2023