Financial Services Regulation and Compliance – Insurance Mar 2022


Central Bank implements new Insurance Regulations

On 15 March 2022, the CBI has published the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Insurance Requirements) Regulations 2022 (the Regulations) which will come into force on 1 July 2022. The Regulations resulted from a review conducted by the CBI into differential pricing, which focused on the private car and home insurance markets. The CBI found that differential pricing could result in unfair outcomes for some consumers. As a result the CBI proposed the Regulations to address a series of issues identified in the review. The Regulations apply to motor and home insurance policies sold to consumers. Key requirements include:

  • a ban on price walking in motor and home insurance effective from 1 July 2022;
  • a requirement for insurers and intermediaries to carry out annual review of their home and motor insurance pricing policies and processes (to ensure they do not discriminate against consumers based on tenure, or systematically exceed the price charged to first time renewal consumers when offering renewals for longer tenure consumers); and
  • cancellation-related changes from 1 October 2022 (e.g. allowing consumers to cancel auto-renewals of non-life insurance policies free of change, and informing consumers of that right).

Insurance Quarterly Newsletter – March 2022

The CBI published the latest issue of its Insurance Quarterly Newsletter on 24 March 2022. The newsletter covered a range of sectoral issues, including the crisis in Ukraine and the digital maturity of the Irish insurance market. The CBI also reported on its review of the use of Exempt Ancillary Insurance Intermediaries (EAII) in the insurance sector; highlighting areas requiring improvement in that context (e.g. remuneration arrangements and recording of reasons for cancellation of polices). The newsletter also provided updates on the Regulations mentioned above; the use of service companies in the insurance sector; and recent enforcement cases relevant to the insurance sector (e.g. in the fitness and probity space).

Central Bank of Ireland Insurance Corporations Statistics

The Central Bank of Ireland (CBI) released its latest insurance corporation statistics, on 8 March 2022. Key indications based on the statistics included a considerable upward trend in total premiums recorded. The statistics also evidenced a notable increase in total claims. Additionally, while overall life insurance technical reserves (ITRs) liabilities increased significantly; in contrast, non-life insurance ITRs decreased.


EIOPA – Draft amendments to supervisory reporting and disclosure requirements

On 31 March 2022, EIOPA submitted draft implementing technical standards (ITS) under Solvency II to the European Commission. These include proposals to (a) simplify quarterly reporting for all undertakings, (b) remove some annual reporting templates for all undertakings, (c) implement new thresholds to encourage risk-based and proportionate reporting and (d) adjust reporting requirements for captives to better reflect their business models.

EIOPA recommendations on insurance stress tests

Following on from its 2021 Insurance Stress Test report, EIOPA has published recommendations for supervisors on 21 March 2022. EIOPA advised national supervisors to examine overreliance on transitional measures from Solvency I to the Solvency II regime and whether risks among insurers leading to considerable drops or a (near) breach of SCR ratios were being managed. It also recommended that supervisors investigate the reasons insurers did not take action to manage risk areas identified in their stress tests. Supervisors were also asked to assess the viability of actions taken by insurers who deviated from the actions discussed at the pre-validation phase. Finally, EIOPA advised NCAs to take supervisory actions (e.g. on-site inspections) to assess the quality of the data being provided to NCAs.

EIOPA – Long-term priorities on digital transformation and innovation

EIOPA published its Digital Transformation Strategy in December 2021. More recently (18 March 2022), EIOPA launched dedicated webpages relating to each of the five key long-term priorities identified in that Strategy, i.e. (1) open insurance/finance, (2) AI and Big Data analytics, (3) financial stability and resilience, (4) benefits of the single digital market and (5) supervisory technology. The webpages provide insight into each focal area; and outline how EIOPA is proposing to address them. Among other matters, EIOPA conforms that it will be proactively assessing the changes, opportunities and challenges that transformation and innovation bring.

ECON – Solvency II, Insurance Recovery and Resolution

On 7 March 2022, the European Parliament’s Committee on Economic and Monetary Affairs (ECON) published a document relating to its work on Solvency II and the Insurance Recovery and Resolution Directive. This is intended to stimulate debate, and suggests topics for discussion/focus as part of those initiatives (including the purpose of, and achieving proportionality in, insurance regulation).

EIOPA – Results of study on internal models

The results of EIOPA’s annual study on the modelling of market and credit risk in internal models was published on 10 March 2022. EIOPA highlighted the need for continuous national and EU-level supervisory scrutiny (and confirmed its intention to further develop appropriate supervisory tools and develop consistent supervisory approaches in this space). The results indicate considerable variation between insurers in terms of the combined credit and market risk charge applied in their calculations (partly driven by differing risk management approaches/preferences).

EIOPA – Russian rouble RFR term structure

EIOPA issued an alert on 25 March 2022 highlighting that it would publish Russian rouble risk-free interest rate (RFR) term structures (for use in end-March 2022 calculations). EIOPA also confirmed that it was tracking the movement of Russian rouble interest rates and trading of Russian government bonds through the month and would continue to monitor the situation until the end of March.

EIOPA monthly technical information (Solvency II)

The European Insurance and Occupational Pensions Authority (EIOPA) published its February 2022 technical information for Solvency II, on 3 March 2022. This included updated information to be applied in calculations regarding volatility adjustments; symmetric adjustment of the equity capital charge for Solvency II; and relevant risk free interest rate term structures.

Sanctions imposed in response to the crisis in the Ukraine

Over the course of February and March, the EU imposed a number of sanctions in response to the crisis in the Ukraine. Given that the crisis is developing and sanctions are continuing to evolve, the CBI is publishing details of new restrictive measures/sanctions that are adopted in this regard, as well as any associated EU/UN guidance, on their dedicated webpage.