Financial Services Regulation and Compliance - Insurance Jan 2020
Domestic
Department of Finance publishes summary of responses to Public Consultation on Climate Change and Insurance
The Department of Finance has published a summary of responses to its July 2019 public consultation on climate change and insurance (with particular focus on the flood risk insurance model) in the context of the 'Climate Action Plan 2019 to Tackle Climate Breakdown'. Submissions were received from a variety of stakeholders, including the insurance industry, business associations and members of the public. The insurance industry is broadly supportive in principle of the current Government policy in relation to increasing flood insurance coverage which is focused on the development of a sustainable, planned and risk-based approach to managing flooding problems. The insurance industry has expressed the importance of the provision of flood risk data by the Office of Public Works so that it can be factored into underwriting decisions. The Department of Finance intends to use the submissions to further consider its flood insurance policy and facilitate the continued making of appropriate evidence-based policy making.
Commencement of Consumer Insurance Contracts Act 2019
As covered in our December edition of our Financial Services Regulation and Compliance Bulletin, the Consumer Insurance Contracts Act 2019 was signed into law on 26 December 2019. The Department of Finance has confirmed that the timeline for commencement of this Act will be decided by the next Government after the general election scheduled for 8 February 2020.
European
EIOPA publishes the technical specifications for the Market and Credit Risk Comparative Study YE2019
On 13 January 2020, EIOPA published the instructions and technical specifications for the 2019 Market and Credit Risk Comparative Study. The objective of this study is to compare risk charges for a selection of asset portfolios to be used as a tool for the supervisory review of internal models, with a specific focus on interest rate risk modelling in the 2019 study. EIOPA has requested that insurance undertakings follow the instructions for filling out the data request and submit the relevant documentation to their national supervisory authority by 31 May 2020.
EIOPA publishes monthly technical information for Solvency II Relevant Risk Free Interest Rate Term Structures
On 9 January 2020, EIOPA published technical information on the relevant risk free interest rate term structures with reference to the end of December 2019. EIOPA additionally published the fourth parallel technical information on the relevant risk free interest term structures with reference to the end of December 2019 based on Refinitiv data.
EIOPA publishes January 2020 Risk Dashboard based on the Q3 2019 Solvency II data
On 29 January 2020, EIOPA published its updated risk dashboard for Q3 2019 summarising the main risks and vulnerabilities in the EU insurance sector.
Key observations include:
- risk exposures remained stable during Q3 2019
- macro risks continue at a high level with the macroeconomic environment remaining subdued and the prolonged low interest rates posing a challenge to the insurance sector
- market risks are at a high level but show a decreasing trend due to lower expected bond market volatility since October 2019
- solvency ratios for groups and life undertakings declined across the whole distribution in Q3 2019 but profitability and solvency risks continue to be at a medium level
market perceptions remain at a medium level, with life insurance stock prices outperforming, and non-life stocks underperforming, the overall market.
EIOPA publishes information on the use of limitations and exemptions from reporting under Solvency II
On 28 January 2020, EIOPA published its annual report on the use of exemptions and limitations from the regular supervisory reporting under Solvency II for 2018 and Q1 of 2019. EIOPA stated that the limitations and exceptions set out in Article 35 of the Solvency II Directive are not to be seen as the only proportionality measure. Several other proportionality measures were recommended for undertakings to consider, including embedded proportionality and risk-based thresholds. The report also noted that the majority of Solvency II national competent authorities do not have a formal process in place to grant or withdraw authorization for the use of limitations and exemptions from reporting.
Omnibus Directive (EU) 2019/2177 published in the Official Journal
On 27 December 2019, Omnibus Directive (EU 2019/2177) was published in the Official Journal. This Directive forms part of a number of measures aimed at reforming the European Systems of Financial Supervision. The Directive entered into force on 30 December 2019. The Directive amends Directive 2009/138/EC (Solvency II), Directive 2014/65/EU (MiFID II) and Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money-laundering or terrorist financing.
For more information on this topic please contact any member of A&L Goodbody's Financial Regulation team.
Date published: 7 February 2020