Financial Services Regulation & Compliance - Insurance November 2018
DOMESTIC
Insurers to advise customers about the impact of Brexit before the end of 2018
On 22 November 2018, the Central Bank of Ireland (CBI) wrote to the CEOs of both Irish and UK insurers operating in the Irish market in relation to communicating with their customers on Brexit. The CBI expects insurers to inform customers no later than 31 December 2018 about the potential impact of Brexit on their policies and the contingency measures in place to prevent customer detriment and ensure service continuity beyond 29 March 2019.
Proposals to introduce new accountability measures for senior managers
On 14 November 2018, Derville Rowland, Director General for Financial Conduct at the CBI, delivered a speech to the Eversheds Sutherland Conference on proposals to enhance accountability in financial services. According to Ms. Rowland, the CBI is recommending a new Senior Executive Accountability Regime to government which would place obligations on firms and senior managers to clearly define where responsibility for decision making rests within their businesses. The CBI is also proposing (a) new universal Conduct Standards (b) enhancements to the existing Fitness and Probity Regime and (c) a unified enforcement process to ensure that individuals can be pursued directly for misconduct rather than only where they have 'participated' in a firm's wrongdoing.
CBI updates Solvency II guidance on applications for approval of basic and ancillary own funds
The CBI has published a series of new Solvency II guidance updating and replacing its Solvency II Information Notes 1, 3 and 4. The new guidance covers applications for approval of basic own funds and capital contributions and applications for approval of ancillary own funds. Also covered are applications for approval of the matching and volatility adjustments, transitional risk free interest rates, transitional technical provisions and undertaking specific parameters.
CBI publishes findings from its MGA thematic inspection
On 7 November 2018, the CBI published the findings from its thematic inspection of managing general agents (MGAs). Key findings include: (a) deficiencies in the provision by MGAs of key information (e.g. the identity and location of their insurer); and (b) contingency plans to deal with an insurer exiting the market are not being formally documented. The CBI has warned that it will make full use of its supervisory powers up to and including enforcement to ensure disclosure requirements are met going forward.
CBI publishes outsourcing discussion paper
On 19 November 2018, the CBI published a discussion paper on outsourcing based on the findings from its review of outsourcing in financial services. Key areas which the CBI believes need urgent attention include: governance, risk management and business continuity planning; the handling of sensitive data; offshoring and chain outsourcing; outsourcing concentration risk. The discussion paper seeks feedback on these and any other relevant outsourcing issues by18 January 2018.
CBI publishes thematic inspection of gadget insurance
On 22 November 2018, the CBI published the findings of its thematic inspection of the sale of gadget insurance. The CBI found that, in certain circumstances, product information provided to consumers was inadequate. The CBI expects consumers to be provided with an annual statement setting out key product features, benefits, exclusions, how to make a claim and the total cost of the product. Sellers are also required to consider any relevant existing insurance cover when recommending a new policy so as to avoid consumers "paying on the double".
EUROPEAN
Commission consults on amending the Solvency II Delegated Regulation
On 9 November 2018, the European Commission published draft amendments to the Solvency II Delegated Regulation (2015/35) for public consultation. The proposed amendments include:
- introducing criteria a reduction of capital charges in the standard formula for unrated debt and unlisted equity investments;
- aligning the standard formula with rules applicable in the banking sector; and
- redefining the recognition of risk mitigation techniques, the group solvency calculation and the volume measure for non-life premium risk.
The draft amendments reflect technical advice provided by EIOPA and work undertaken as part of the capital markets union. Submissions are invited by 7 December 2018.
For further information please contact a member of the Financial Regulation team.
Date Published: 14 December 2018