Financial Services Regulation and Compliance - Insurance June 2022
Insurance (Miscellaneous Provisions) Bill 2022 passed Report and Final Stages in the Dáil
The long-awaited Insurance (Miscellaneous Provisions) Bill 2022 passed Report and Final Stages in the Dáil on 2 June 2022 and President Michael D Higgins signed it into law as the Insurance (Miscellaneous Provisions) Act 2022 (the Act) on 27 June 2022. The Act will take effect from its commencement date, presently unconfirmed. The Act introduces drafting changes to the Consumer Insurance Contracts Act 2019 and amendments to the Central Bank (National Claims Information Database) Act 2018 relating to deductions of State support payments from COVID-19-related claim settlements. The Act also introduces a new requirement for the Central Bank of Ireland (CBI) to report to the Minister for Finance on its work relating to price walking, and amends the European Union (Insurance and Reinsurance) Regulations 2015 to address issues arising relating to the Insurance Temporary Run-off Regime, created following Brexit.
Remarks by Governor Gabriel Makhlouf at Insurance Ireland’s Annual Industry Lunch
Governor Gabriel Makhlouf addressed attendees of Insurance Ireland's Annual Industry Lunch on 16 June 2022. His speech focused on the importance of insurance in Ireland and abroad, noting that Ireland's insurance industry is the fifth largest in the EU in terms of assets with a total balance sheet of €538bn as of 2021. Turning to current issues and industry trends, Governor Makhlouf discussed climate change, and the risks it poses to the insurance industry. He also mentioned the CBI's Climate Risk and Sustainable Finance Forum which would be held later in July. Other longer term trends for the insurance industry identified by Governor Makhlouf included ageing populations, the digitalisation of financial services and the growing role of Asia in the global economy.
CBI Second Annual Report of the National Claims Information Database - Employers' Liability and Public Liability Insurance
On 22 June, the CBI published its second National Claims Information Database (NCID) report on employers' and public liability insurance. On its release, Department of Finance, Minister of State, Seán Fleming remarked that access to the data collected by the NCID gives Ireland a unique position within the EU to analyse market developments. The report notes that increases in insurance premiums covering employers' liability, public liability and commercial property had slowed in 2020 compared to 2019. Separately, 57% of “packaged” employers' liability, public Liability and commercial property policies had premiums of less than €1,000 and 92% less than €5,000, while only 2% had premiums over €25,000. The CBI noted that 85% of policies sold relating to these areas were part of a package containing all three types of policy.
EIOPA: Consultation paper on the advice on the review of the Securitisation prudential framework in Solvency II
In October 2021, the European Commission issued a call for advice to the Joint Committee of the ESAs for the purposes of reviewing the securitisation prudential framework to assess the framework's performance in respect of, among other items, capital requirements from the perspective of the (re)insurance sector. In June 2022, the European Insurance and Occupational Pensions Authority (EIOPA) published its consultation paper, which seeks information from relevant stakeholders regarding the framework. EIOPA has requested that stakeholders respond to the consultation paper by 1 September 2022.
EIOPA feedback statement - discussion paper on open insurance: accessing and sharing insurance-related data
Following the publication of its discussion paper in January 2021, EIOPA published its feedback statement, based on responses from relevant stakeholders, on open insurance, more specifically discussing the access to and sharing of insurance-related data. Based on responses received, EIOPA concluded that there is potential for open insurance if it is correctly regulated. EIOPA highlighted that a key consideration is striking the correct balance between data protection, insurance and competition regulations and the innovative nature of open insurance. EIOPA intends to further monitor open insurance and to continue facilitating discussion on this topic between relevant stakeholders.
Consultation on the supervisory statement on management of non-affirmative cyber underwriting exposures
EIOPA has issued a consultation paper seeking stakeholders' responses on the management of non-affirmative cyber underwriting exposures. Non-affirmative cyber risk exposure arises when an insurance policy neither includes nor excludes cyber coverage explicitly. When a cyber event does arise in circumstances where cyber risk exposure is non-affirmative, the consequences can be costly and time-consuming. EIOPA is requesting views to inform it approach to the supervision of cyber insurance, consulting on areas such as what actions have been taken to date to address non-affirmative cyber risk, challenges associated with addressing the risk and cost. Stakeholders have the opportunity to submit their responses until 18 July 2022.
Consultation on the supervisory statement on exclusions in insurance products related to risks arising from systemic events
EIOPA is calling for responses from stakeholders on the supervisory statement on exclusions in insurance products that relate to risks arising from systemic events such as pandemics, cyber-attacks and climate change. Systemic events are defined as severe events which cause disruptions to and have a significant adverse effect on the economy, national security or public health. Such events can lead to a risk that insurance products become unaffordable or unavailable to consumers. EIOPA is seeking stakeholder feedback to help design a unified supervisory approach to how national competent authorities treat exclusions in insurance policies that arise from risks following system events. The consultation ends 18 July 2022.
EIOPA publishes monthly technical information
On 3 June, EIOPA published its monthly technical information on the relevant risk free interest rate term structures (RFR) and symmetric adjustment of the equity capital charge for Solvency II with reference to the end of May 2022. Upcoming publication dates in 2022 are 5 July, 3 August, 5 September, 6 October, 7 November and 5 December.
On 21 June 2022, EIOPA published the Data Point Models (DPM) methodology in the technical format of XBLR as the standard for reporting data submission between EIOPA and national competent authorities. For Solvency II the PWD insurance DPM and Taxonomy 2.7.0. were updated on 1 June 2022.
EIOPA’s supervisory activities in 2021
On 24 June 2022, EIOPA published its annual report on its supervisory activities for the preceding year, 2021 (the Report). Among other EIOPA activities carried out in 2021, the Report showed that EIOPA published two supervisory statements in 2021 in light of the challenges brought about by the COVID-19 pandemic. The first statement focussed on undertakings' own risk and solvency assessment and the second focussed on supervisory practices and expectations where a breach of an undertakings' solvency capital requirement occurs.
Additionally, 2021 saw focus by EIOPA on subjects pertaining to environmental, social and governance risks. The report also references the monitoring undertaken by EIOPA on implementing the warning on travel insurance products' issues arising from the thematic review on consumer protection issues in travel insurance. Looking towards the remainder of the year ahead, EIOPA has published key areas of focus for 2022 such as the supervision of emerging risks and common supervisory culture and tools in its supervisory convergence plan.
Sanctions imposed in response to the crisis in the Ukraine
Since February, 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.
For more information on these topics please contact any member of A&L Goodbody's Insurance & Reinsurance team.
Date published: 12 July 2022