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Motor Insurance Insolvency Compensation Act 2024
The Motor Insurance Insolvency Compensation Bill 2024 was enacted on 9 October 2024. The legislation transposes Articles 10(a) and 25(a) of the EU Motor Insurance Directive. The new provisions are designed to enhance the protection of motor insurance policyholders and injured parties where the responsible insurer becomes insolvent. The legislation appoints the Motor Insurance Bureau of Ireland (the MIBI) as the body responsible for dealing with claims arising from accidents where the relevant insurance undertaking is insolvent.
CBI publishes updated new authorisation checklist for (re)insurance undertakings
The Central Bank of Ireland (CBI) has consolidated its five checklists for the authorisation of new (re)insurers into one document. Previously, the checklists were split up based on entity type (life insurance, non-life insurance, reinsurance, captive non-life insurance and captive non-life reinsurance undertakings). The CBI believes that the streamlined checklist will increase the efficiency of the authorisation process. In a helpful development, the checklist states that the CBI will try to accommodate timing considerations of applicants.
Professional indemnity insurance - CBI guidance for retail intermediaries
The CBI has updated its guidance for retail intermediaries on the requirement to hold professional indemnity insurance (PII) cover. The guidance has been updated following the amendment of the Insurance Distribution Directive and the Insurance Distribution Regulations (the IDR) by Commission Delegated Regulation (EU) 2024/896 in April 2024. Under the new rules, the minimum PII levels required to be held by insurance, reinsurance and ancillary intermediaries registered under the Insurance Distribution Regulations (the IDR) are €1,564,610 per claim and €2,315,610 aggregate cover per annum. The new rules apply to all intermediaries from 9 October 2024.
CBI reports on the flood protection gap
On 14 October, the CBI published a report on the flood protection gap. Looking at the shortfall between the economic losses and the insured losses arising from floods, the report also considered insurance accessibility for such events. The report was produced following engagement with key stakeholders, including members of the insurance industry and officials from the Department of Finance and the Office of Public Works. Its key findings include:
The report notes that the flood protection gap will remain an area of focus for the CBI going forward.
CBI publishes Private Motor Insurance Report
The CBI recently published its sixth annual Private Motor Insurance Report of the National Claims Information Database (NCID). Capturing data from 2009 to 2023, the report aims to provide transparency with regard to private motor claims. Some key findings from the report include:
Robert Kelly, the Director of Economics and Statistics at the CBI, said that the market was profitable in 2023, with insurers operating profit being 8% of total income.
EIOPA presents its Methodology on Value for Money Benchmarks
On 7 October 2024, the European Insurance and Occupational Pensions Authority (EIOPA) published its methodology on setting value-for-money benchmarks for unit-linked and hybrid insurance products. The methodology outlines a three-step approach to create reference benchmarks. The first step involves clustering products with similar features into groups based on policyholders' needs. Step two defines indicators for costs and returns, around which value for money benchmarks are calculated. This will help identify products that offer poor or no value to consumers and leads to more supervisory scrutiny. Lastly, under step three, EIOPA will use the data it collects for its annual costs and past performance reports to calculate benchmarks. EIOPA will not request additional reporting to help minimise the burden on the market.
EIOPA opens first batch of consultations on technical standards after Solvency II Review
At the beginning of the month, EIOPA launched a series of consultations on regulatory technical standards and implementing technical standards reflecting changes to be introduced by the Solvency II review. Five consultations were launched covering the following areas:
Stakeholders have until 2 January 2025 to provide their feedback on these consultation papers.
EIOPA opens consultation on criteria for selecting insurers to run macroprudential analyses
EIOPA issued a consultation paper on the criteria national supervisors should refer to when selecting which (re)insurers to perform macroprudential analysis in their own risk and solvency assessments (ORSA) and in their application of the prudent person principle (PPP). This consultation is issued as part of the ongoing Solvency II review.
The draft technical standards envisage that individual (re)insurers and (re)insurance groups with total assets exceeding €12bn can be requested to perform macroprudential analysis in their ORSAs and in applying the PPP. Additional qualitative criteria are included in the draft technical standards which allow supervisory authorities consider if additional (re)insurers or (re)insurance groups should be included or exclude from the scope of requiring the performance macroprudential analysis in ORSAs and the application of the PPP. Stakeholders have until 9 January 2025 to provide their feedback on this consultation paper.
EIOPA’s draft advice calls for one-to-one capital weight for insurers’ crypto holdings
On 24 October 2024, EIOPA launched a public consultation on its draft technical advice on standard formula capital requirements for investments in crypto assets within the Solvency II regime. This follows a call for advice from the European Commission (EC) issued in light of proposed Solvency II amendments which would allow the EC to pass Delegated Acts that better reflect crypto-asset risks. EIOPA’s draft advice explains the current prudential treatment of investments in crypto-assets and ultimately proposes a 100% haircut to insurers’ crypto assets regardless of their balance sheet treatment and investment structure. The consultation runs until 16 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 October 2024 in relation to the relevant risk-free interest rate term structures with reference to the end of September 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 September 2024.
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.