Financial Services Regulation and Compliance - Insurance Feb 2021
CBI responds to the High Court decision in FBD business interruption insurance case
On 5 February 2021, the High Court issued its judgment in the FBD business interruption case. The judgment ruled in favour of the policyholders and a further date was set to determine quantum. The Central Bank of Ireland (CBI) welcomed the High Court decision and stated that it will be closely examining its potential impact for customers in the context of the CBI's sustained and ongoing engagement with relevant firms.
CBI issues press release on business interruption insurance
On 17 February 2021, the CBI issued a press release outlining its ongoing examination of business interruption insurance issues. The CBI expects firms to ensure fair treatment of customers, including:
- honouring valid claims and paying them promptly
- where there is doubt about the meaning of a term, the interpretation most favourable to the customer should prevail
- where legal action results in an outcome favourable to other customers, firms are required to take swift action to ensure that those customers benefit
- making interim payments pending the final determination of sums due
The CBI has contacted insurers to reiterate its expectations regarding the fair treatment of customers. Insurers are expected to adopt a proactive and speedy approach in communicating with affected customers and resolving relevant claims.
CBI portal to view and request changes to specific institution details
The CBI plays a role in assessing proposed amendments to an institution's approved business model and has established an online portal through which changes must be requested. All insurance institutions should have received advance notification prior to the launch of the portal for the insurance sector. The portal will allow authorised users of the institution to view and request changes to their institution details. Examples of changes which must be submitted through the portal include:
- change of legal name
- acquiring transaction notifications
- branch application submissions
- changes to business plans
- approval of ancillary own funds
EIOPA publishes monthly technical information
On 3 February 2021, the European Insurance and Occupational Pensions Authority (EIOPA) published technical information relating to the risk-free interest rate term structures and the symmetric adjustment for the equity capital charge for Solvency II purposes with reference in both cases to the end of January 2021. EIOPA noted the technical information will be updated on the following dates in 2021: 3 March, 8 April, 5 May, 3 June, 5 July, 4 August, 3 September, 5 October, 5 November, 3 December.
EIOPA board agrees on changes to PRIIPs key information document
On 3 February 2021, the Board of Supervisors of EIOPA submitted draft regulatory technical standards (RTS) on amendments to the key information document for PRIIPs to the European Commission. EIOPA noted that some national competent authorities (NCAs) objected to the draft RTS, but those NCAs that voiced concerns accepted the RTS based on further information from the Commission. Adoption of the draft RTS by the Commission is pending.
Gabriel Bernardino delivers speech on 10th anniversary of EIOPA
On 4 February 2021, EIOPA's chair, Gabriel Bernardino, delivered an address to mark the 10th anniversary of EIOPA. Mr Bernardino discussed the progress made by introducing Solvency II, remarking that it is now a worldwide reference in insurance regulation and has contributed enormously to the stability of the insurance market. Looking forward, alongside the review of Solvency II, Mr Bernardino noted that simplification of consumer disclosures and centralised insurance supervision will be EIOPA's primary areas of focus over the coming decade.
EIOPA addresses measures to improve the insurability of business interruption risk in light of pandemics
On 12 February 2021, EIOPA published a staff paper on measures to improve the insurability of business interruption risks in light of pandemics. EIOPA provides three key themes to improving the insurability of business interruptions risks:
(1) reducing losses through prevention measures
(2) improving risk transfer capacity through capital markets
(3) addressing systemic risk through multi-risk pooling
EIOPA observed that there are certain commonalities and differences across jurisdictions to proposals for pandemic schemes, which may warrant a coordinated European approach. EIOPA invites interested stakeholders to provide their views on the paper by 31 March 2021.
EIOPA defines its supervisory convergence priorities for 2021
On 17 February 2021, EIOPA published its Supervisory Convergence Plan. EIOPA intends to build on the priorities it outlined in its 2020 plan, noting the need to be adaptable due to the continuing COVID-19 pandemic. In addition, EIOPA identified three new priorities for 2021, namely:
(1) integration of ESG risks into prudential and conduct supervision
(2) address supervisory concerns arising from the recent market development of multi-employers institutions for occupational retirement provision providers
(3) analyse and identify potential risks to the internal market following the identification of inconsistencies in the way NCAs treat reinsurance undertakings with head offices in third countries
EIOPA intends to continue working on supervisory convergence tools.
EIOPA identifies new strategic supervisory priorities for national supervisors
On 19 February 2021, EIOPA announced business model sustainability and adequate product design as new EU-wide strategic supervisory priorities for national competent authorities (NCAs) to factor into their work programmes. NCAs are instructed to focus their supervisory activities on monitoring the impact of the prolonged low-yield environment on business model sustainability. They are also instructed to monitor the impact of the COVID-19 crisis on products, the development of insurers and institutions for occupational retirement provision and business model sustainability. The supervisory priorities for 2021 draw on an assessment of the key risks and vulnerabilities in the insurance and occupational pensions sectors.
Gabriel Bernardino delivers speech on path to strong and sustainable recovery
On 17 February 2021, Gabriel Bernardino, chair of EIOPA, addressed the Marsh McLennan Global Risks Report 2021 event on how the insurance and pensions sectors can contribute to mitigating global risks like infectious diseases. The address focused on
- fostering a sustainable recovery and EIOPA's green agenda
- the opportunities and challenges of EIOPA's digital agenda
- closing protection gaps through shared resilience solutions
For more information on these topics please contact any member of A&L Goodbody's Insurance & Reinsurance team.
Date published: 9 March 2021