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CBI publish Insurance Quarterly Newsletter - Q3 2024
The Central Bank of Ireland (the CBI) has published its Insurance Quarterly Newsletter for Q3 2024 (the newsletter), highlighting news, developments, and future dates / events of note for the (re)insurance sector. The newsletter addresses a range of topics including the CBI’s inspections and thematic reviews on matters such as (re)insurers’ climate change materiality assessments, the administration of unclaimed life assurance policies, and the impact of the new personal injuries guidelines on insurance claims. The CBI also highlighted its recent workshop on responsible use of big data and related technology.
Recent CBI publications referred to in the newsletter include its guidance and checklist for (re)insurance authorisation applications. At European level, the newsletter addresses items including the European Insurance and Occupational Pensions Authority's (EIOPA) two consultations relating to the review of Solvency II and its opinion on the supervision of captive (re)insurers. Finally, the CBI issued an update on its targeted assessment of insurers’ Consumer Protection Risk Management (CPRM) frameworks, noting that there would be continued focus on firms’ CPRM frameworks, and reminding firms to conduct a review and gap analysis of those frameworks.
CBI’s Deputy Governor Donnery - “Best interests - delivering for consumers in a complex world”
Speaking at the Health Insurance Authority (HIA) Conference in September, Deputy Governor Sharon Donnery of the CBI acknowledged that while the CBI and HIA have distinct mandates regarding health insurance, there are many areas where their roles and goals intersect. Deputy Governor Donnery explained that both institutions have recently taken steps to deepen cooperation and have committed to sharing insights where appropriate.
The Deputy Governor highlighted innovation, competition and ease of access for consumers as benefits of the recent change in the financial landscape. She also noted the challenges of the complex landscape, citing the paradox of choice for consumers as a particular challenge. Too much choice is impacting consumers’ engagement with the options available to them, resulting in consumers not considering, or not being offered, the best and most suitable product available. From a supervisory point of view, she notes that the CBI are alive to and are considering this challenge, particularly in terms of whether choices are being well explained, well understood, or are really adding value.
Deputy Governor Donnery noted that in light of the rapidly changing financial landscape, the CBI is changing too, so that they can continue to deliver for consumers in a more complex world. She cited the changes to how the CBI regulates and supervises consumer protection, including the step change in external engagement, the revision of the Consumer Protection Code and the introduction of the Individual Accountability Framework.
CBI publishes insurance corporations statistics - Q2 2024
The CBI published its insurance corporations statistics for the second quarter of 2024 on 3 September 2024. In its publication, the CBI notes that the total assets of the Irish insurance corporation sector decreased by 0.5%, €2.4bn, during Q2. In comparison, total assets increased by 5.3%, €22bn, in the first quarter of 2024.
Other key points highlighted by the CBI include that reinsurance technical reserves and debt securities fell the most during the quarter, falling by 1.1% and 0.8% respectively. So far this year, total assets have increased by 6%.
European Union (Insurance Distribution) (Amendment) Regulations 2024 published in Iris Oifigiuil
The European Union (Insurance Distribution) (Amendment) Regulations 2024 were published in Iris Oifigiuil on 17 September 2024 (the Regulations). The Regulations amend the level of professional indemnity (PI) insurance that must be held by insurance, reinsurance and ancillary insurance intermediaries under the The European Union (Insurance Distribution) Regulations 2018. The new levels of PI cover required are €1,564,610 for individual claims and aggregate PI cover of €2,315,610 per year in respect of all claims. The Regulations come into force on 9 October 2024.
EIOPA on leveraging insurance to shore up Europe’s climate resilience following publication of the Climate Resilience Dialogue
EIOPA published an article on 3 September 2024 responding to the Climate Resilience Dialogue’s (CRD) final report. The CRD is a special group formed by the European Commission to improve the discourse and understanding of the climate protection gap among (re)insurers and other stakeholders across the EU. Noting the key role insurance plays in cushioning the negative implications of catastrophes, EIOPA proposes several solutions to reduce the climate protection gap, including:
EU competitiveness report: Insurers back ambition and highlight actions needed
On 9 September 2024, the European Commission published its report entitled 'The future of European competitiveness'. The two-part report sets out recommendations to enhance the EU's competitiveness and boost sustainable growth in the EU. It calls to increase the flow of investments and savings across the EU and ensure Europe's ambitious decarbonisation plans are part of a larger coherent plan. It also calls for an overall reduction in the regulatory burden.
Insurance Europe have said that they welcome the report and call on the EU to:
EIOPA on the role of reinsurance in promoting healthy markets
The Chairperson of EIOPA, Petra Hielkema, recently gave a speech on the role of reinsurance in promoting healthy markets. She noted that there is a consistent growth in reinsurance globally. Last year, reinsurance accounted for 18.8% of the total gross written premiums within the insurance and reinsurance sectors across the EEA, amounting to just under €230bn.
Ms Hielkema said that one of EIOPA's main goals is to address the protection gap related to natural catastrophes. She noted that, by diversifying risk across borders, reinsurers mitigate the impact of localised disasters which, in turn, supports the resilience of primary insurers.
The speech also touched on the broader implications of a growing reinsurance market and that the increasing reliance on third-country reinsurance in Europe is raising concerns about dependency on non-EU markets.
Ms Hielkema went on to speak about other trends and risks such as the growing prevalence of complex reinsurance structures such as profit sharing, asset intensive insurance and mass-lapse reinsurance.
EIOPA proposes a broad reform of the pan-European pension product to tackle Europe’s pension gap and support the digital and green transitions
On 11 September 2024, EIOPA published a staff paper on the future of the pan-European pension product (PEPP).
The PEPP was launched in 2022 and was designed to offer a simple and cost-effective retirement savings option with which European citizens could supplement their state pensions. However, its uptake has been limited. EIOPA suggests a number of measures to deal with the various supply, demand and structural issues. These measures include:
Beyond the above measures, EIOPA believes that national and Union-wide initiatives are indispensable to making a revised PEPP a success. They suggest that the PEPP should be granted the same favourable tax treatment that national pension products enjoy and that pension dashboards should be implemented to improve transparency.
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 September 2024 in relation to the relevant risk-free interest rate term structures with reference to the end of August 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 August 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.