Tracker, Financial Services Regulation & Compliance - Insurance

DOMESTIC: 

Survey of Irish Insurance CEOs highlights important trends for the industry
On 3 October 2016, Insurance Ireland and PwC launched their joint report, "Disruption and Opportunity", detailing the results of a survey of Irish insurance CEOs. The Report gives an insight into the key issues facing the Irish insurance industry, these include concerns regarding over-regulation, the low interest rate environment and uncertainties arising from Brexit. Despite challenging market conditions, the Report reveals that a significant majority of Irish insurance CEOs believe there are more opportunities for growth now than there were three years ago and that targeting business growth would be the greatest focus in the coming year.

Central Bank Deputy Governor for Financial Regulation publishes article on the role of the Central Bank in relation to insurance premiums
On 21 October 2016, the Irish Independent published an article by the Central Bank of Ireland's (CBI) Deputy Governor for Financial Regulation, Cyril Roux. Against the backdrop of rising insurance premiums, Mr Roux clarified that the Central Bank has no role in setting or capping premiums or renewal rates, noting that it is prohibited from doing so under EU law. Rather, the CBI protects consumers by ensuring the solvency of Irish insurers and laying down requirements for insurers to treat consumers fairly. Mr Roux indicated that a reduction in the overall number and cost of claims would be essential to bringing about lower premiums and that CBI would continue to work with the Oireachtas Committee on Finance, the Department of Finance working group and other stakeholders in a manner appropriate to its mandate.

Address by Central Bank Director of Insurance Supervision at the Insurance Supervisory Directorate's Industry briefing
On 26 October 2016, the CBI's Director of Insurance Supervision, Sylvia Cronin, gave an address at the opening of the Insurance Supervisory Directorate's Industry briefing.  Ms Cronin noted the increasing demands of regulation in areas such as prudential and consumer regulation, IT, data protection and governance and that such regulation is increasing the level of harmonisation in fragmented markets and should be embraced by industry.  Ms Cronin highlighted that, following approval of many internal models (IMs), the CBI's supervisory focus was moving to regulation and oversight of capital and ensuring that IMs continue to reflect firms' risk profiles.  It was also noted that firms must using the standard model must continually assess its suitability to the risk profile of their businesses.  Ms Cronin also spoke about greater levels of engagement and on-site activity by supervisors and an increased focus on supervision at the macro level. Speaking about Brexit, Ms Cronin noted that she expected the UK insurance regulatory regime to remain equivalent with Solvency II.

CBI publishes Guidance for (Re)insurance Undertakings on Head of Actuarial Function Role
On 28 October 2016, the CBI published Guidance for (Re)insurance Undertakings on the Head of Actuarial Function Role. The Guidance is intended to assist (re)insurance undertakings by providing an overview of the issues that the CBI expects to be considered in the completion of certain tasks of the Head of Actuarial Function (HoAF).  The Guidance includes general expectations for the role of HoAF, as well as guidance on opinions on the overall underwriting policy and adequacy of reinsurance arrangements, and the HoAF's role in effective implementation of the risk management system.  It is intended that the Guidance will be updated periodically.

CBI publishes NST DPM Documentation
On 5 October 2016, the CBI published a number of updates to its materials relating to National Specifics Templates (NSTs) (i.e. reporting formats to be used for reporting to the CBI under Solvency II). These updates are highlighted in Appendix 1 of the accompanying document, CBI Solvency II NST Release Notes 1.1.0.

Cyril Roux, Deputy Governor for Financial Regulation of the Central Bank of Ireland addresses the Committee on Finance, Public Expenditure and Reform
On 6 October 2016, the CBI's Deputy Governor for Financial Regulation, Cyril Roux, addressed the Oireachtas Committee on Finance, Public Expenditure and Reform where he spoke about the CBI's role in insurance supervision and gave an overview of the motor insurance market and the CBI's supervisory areas of focus for the motor industry.  Amongst other matters, Mr Roux noted that premium rates are driven by claims and that policy actions which would reduce the level and uncertainty of claims would contribute to reducing the rate of premium increases and, potentially, reverse that trend.   

Insurance Ireland welcomes the publication of the new Book of Quantum
On 5 October 2016, Insurance Ireland (II) released a statement welcoming publication of the new Book of Quantum as a first step to bringing consistency to awards but calling for further action to be taken. In particular, II believes that personal injury awards should be internationally benchmarked to address situations where some awards in Ireland are three times higher than in the UK. The II has called for a timeframe to publication of the next Book of Quantum and a commitment to internationally benchmark awards.

EUROPEAN

EIOPA publishes its work programme for 2017
On 4 October 2016, the European Insurance and Occupational Pensions Authority (EIOPA) published a single programming document which, amongst other matters, sets out its work programme for 2017.  Prioritised activities for 2017 include completion of technical advice to the European Commission on Delegated Acts under the Insurance Distribution Directive (IDD) and other IDD deliverables and reviews of (a) the Solvency Capital Requirements' standard formula, and (b) Long Term Guarantee measures.

Implementing Regulations relating to credit assessments of ECAIS published in the Official Journal of the EU
On 12 October 2016, Commission Implementing Regulation ((EU) 2016/1800) was published in the Official Journal of the EU.  The Regulation lays down implementing technical standards on the allocation of credit assessments of external credit assessment institutions to an objective scale of credit quality steps for the purposes of calculation of the Solvency Capital Requirement.  The Regulation will enter into force on 1 November 2016.

European Parliament raises no objection to Commission Delegated Regulation supplementing PRIIPs Regulation
On 21 October 2016, the European Parliament updated its procedure file on the proposed Commission Delegated Regulation supplementing the Regulation on key information documents for packaged retail and insurance-based investment products (PRIIPs) with regard to product intervention to indicate that it has raised no objection.  On 11 October 2016, the Council of the EU also notified its non-objection to the Delegated Regulation.  The Delegated Regulation will apply from 31 December 2016.

EIOPA Chair speech on approach to supervisory convergence and future insurance developments
On 18 October 2016, EIOPA published a speech delivered by EIOPA Chairman, Gabriel Bernardino, at EIOPA's Annual Conference. Mr Bernardino discussed a number of EIOPA's initiatives which aim to build a common European supervisory culture including: the development of a handbook of good supervisory practices in Solvency II; creating an information system based on Solvency II data to allow development of reliable risk analysis and early warning indicators; and, prioritising on-going monitoring of internal models. In terms of other initiatives, Mr Bernardino also noted that EIOPA (a) would be organising a series of roundtables on "Insurtech" (big data and technological innovations in insurance) to learn from stakeholders about developments in this area, and (b) proposed to use the 2021 review of Solvency II to integrate a comprehensive European Union macro-prudential framework for insurance.

Insurance Europe comments on protectionist (re)insurance restrictions
On 24 October 2016, Insurance Europe published a press release and Insight Briefing outlining how policies restricting access to foreign (re)insurers can create barriers to economic growth and increase concentration risk. According to Insurance Europe, protectionism in jurisdictions can endanger entire economies, because significant loss events will have to be borne exclusively by the domestic market. Foreign (re)insurers also bring benefits in the form of capital, operational expertise, skill and discipline and technological developments and training.

EIOPA publishes monthly technical information
On 10 October 2016, EIOPA published technical information on (a) the symmetric adjustment of the equity capital charge, and (b) relevant risk free interest rate term structures, for Solvency II purposes; with reference to the end of September 2016 in both cases.   

EIOPA press release on the priority areas for the Steering Committee of the EU-U.S. Insurance Project
On 19 October 2016, the Steering Committee of the EU-U.S. Insurance Project (the Project) hosted a public forum to address the challenges of increased globalisation of the insurance market and to define priority areas of work for 2017.  Discussions at the forum included how home and host supervisors can evaluate the use of appropriate controls, governance and risk management by globally active insurers.  During 2017, the Project will focus on intragroup transactions and guarantees, cyber risk and the impact of consumer protection on the business models of insurance companies during 2017.

Implementing Regulation amending Implementing Technical Standards on templates for submission of information to supervisory authorities under Solvency II published in Official Journal of the EU
On 21 October 2016, Commission Implementing Regulation ((EU) 2016/1868) (the Amending Regulation) was published in the Official Journal of the EU.  The Amending Regulation makes a number of amendments to Commission Implementing Regulation (EU) 2015/2450, which sets out the templates for submission of information by (re)insurers to their supervisory authorities.  The amendments seek to ensure that supervisory authorities receive appropriate information on qualifying infrastructure investments made by (re)insurers as well as investments in ELTIFs and equities traded on MTFs.  A number of corrections are also included.  The Amending Regulation will enter into force on 10 November 2016.

Insurance Europe expresses concern regarding draft delegated acts under Insurance Distribution Directive
On 4 October 2016, Insurance Europe (IE) issued a press release coinciding with its response to EIOPA's July 2016 consultation paper on draft delegated acts under the Insurance Distribution Directive (IDD).  In its press release, IE states that, in order to ensure effective protection for consumers, the delegated acts must respect the original framework of the IDD, as agreed by EU policymakers.  The press release goes on to identify a number of instances in the draft delegated acts that IE believes go beyond the rules set out in the IDD, including in the areas of product oversight and governance (POG) and conflicts of interest.

For further information please contact a member of the Financial Regulation team. 

Date published: 04 Nov 2016