Finalised CBI guidance on cross-industry outsourcing – the (re)insurance perspective

On 17 December 2021, the Central Bank of Ireland (CBI) published its finalised cross-industry guidance on outsourcing (the Guidance), which applies to all regulated firms, including (re)insurers and (re)insurance intermediaries. The Guidance is accompanied by a feedback statement, which provides a summary on feedback received on the Guidance by stakeholders, commentary and any changes made to the final Guidance. 

In April 2021, we published a note on the potential impact of this Guidance (which was published by the CBI in draft form in February 2021) on (re)insurers, which is available online. 

The finalised Guidance

The Guidance substantively reflects the draft guidance issued by the CBI in February 2021. Only limited and non-material changes have been made.

The CBI confirms that the Guidance should be treated as a guide to good practice with regard to outsourcing and that regulated firms must always directly refer to relevant sectoral legislation, regulations and guidance when ensuring compliance with their obligations. Helpfully, the Guidance provides a list at Appendix 1 of existing sectoral legislation, regulations and guidance that apply to regulated firms (including (re)insurers) as at the date of the Guidance's publication. 

When does the Guidance come into effect?

The Guidance came into effect on 17 December 2021. However, the CBI does acknowledge that its supervisory approach will be cognisant of adjustments that all regulated firms may need to make to ensure compliance with the Guidance.

As per the Guidance, (re)insurers and (re)insurance intermediaries will be required to notify the CBI of any outsourcing arrangement in respect of critical or important functions or activities. The CBI intends to publish template notification forms for (re)insurers on its website in Q1 2022.

In respect of the obligation under the Guidance for (re)insurers and (re)insurance intermediaries to establish, maintain and submit to the CBI an outsourcing register, the Guidance provides at Appendix 3 the general content the CBI will expect to be included in an outsourcing register. The CBI intends to publish a template outsourcing register for (re)insurers and (re)insurance intermediaries in Q1 2022. It is intended that any (re)insurer with a PRISM impact rating of 'medium low' or higher will be required to submit its outsourcing register to the CBI on an annual basis, with the first submission of outsourcing registers to be completed in Q2 2022. Regulated firms with a PRISM impact rating of 'low' (such as (re)insurance intermediaries) may be required to submit their outsourcing registers on a case-by-case basis. The CBI confirms in its feedback statement that it will provide regulated firms with advance notice before outsourcing registers are to be submitted.

Next steps

As the Guidance has immediate effect, it would be advisable for boards and senior management of (re)insurers and (re)insurance intermediaries to familiarise themselves with the Guidance, in advance of the CBI publishing its template notification forms and before outsourcing registers are required to be submitted.

For further information, please contact James Grennan, Laura Mulleady, Sinéad Lynch, Adam Assahli or your regular ALG Insurance & Reinsurance team contact.

Date published: 10 January 2022