Financial Services Regulation and Compliance - Insurance Mar 2020
Central Bank of Ireland's (CBI) COVID-19 hub
The CBI's COVID-19 hub is now available on the CBI's website. The hub provides information to consumers, SMEs and regulated firms on the CBI's statements and guidelines in response to the COVID-19 emergency.
CBI publishes Insurance Corporations Statistics FOR Q4 2019
On 6 March 2020, the CBI published its Insurance Corporations Statistics for Q4 2019. The key points include that (i) insurance technical reserves and related claims increased on the asset side of the balance sheet to €49.4bn in Q4 2019, representing an 89% increase on Q4 2018 and (ii) non unit-linked technical reserves increased by 5% points over the year and now account for 18% of total reserves held by Irish insurance corporations.
Cost of insurance working group (CIWG) publishes latest progress update
On 5 March 2020, the CIWG published its Tenth Progress Update on the Action Plan of the Reports on the Cost of Motor Insurance and Employer and Public Liability Insurance. This update concentrates on the status of the recommendations in the reports. The update highlights the following key developments:
- the passing of the Judicial Council Act 2019 (which provides for the establishment of a Personal Injuries Guidelines Committee)
- the enactment of the Consumer Insurance Contracts Act 2019
- the publication of the CBI's first National Claims Information Database Report
- the work of the Law Reform Commission to examine the possibility of developing legislation to delimit or cap the level of damages
CBI sets out expectations of insurers in light of COVID-19 emergency
On 27 March 2020, the CBI issued a "Dear CEO Letter" communicating its expectations of insurers in light of the COVID-19 outbreak. Its expectations include:
- putting forward consumer-focused solutions
- where there is doubt regarding the interpretation of a policy term, the term that is most favourable to the consumer should prevail
- firms will ensure that their customer-facing functions are adequately resourced to ensure customer needs are met
- the CEO's of each firm shall take responsibility for the oversight of how their firm is managing COVID-19 coverage determinations
EIOPA publishes statement on actions to mitigate the impact of COVID-19 on the EU insurance sector
On 17 March 2020, EIOPA published a statement on actions to mitigate the impact of COVID-19 on the EU insurance sector. EIOPA has been monitoring the evolving COVID-19 position in close cooperation with other European supervisory authorities and the European Systemic Risk Board.
In light of the COVID-19 outbreak, EIOPA's statement provides key messages on (i) business continuity and (ii) solvency and capital position for insurers likely to face challenging market conditions in their immediate future.
EIOPA issues recommendations on supervisory flexibility regarding deadlines of supervisory reporting and public disclosure by insurers
On 20 March 2020, EIOPA issued its recommendations on supervisory flexibility for supervisory reporting deadlines and public disclosure by insurers. The recommendations are addressed to national supervisory authorities and provide for flexibility in upcoming supervisory reporting deadlines enabling insurers to focus on monitoring and assessing the impact of COVID-19 and ensuring business continuity.
The recommendations aim to offer operational relief in allowing for delays in reporting and public disclosure for:
- annual reporting referring to year-end occurring on 31 December 2019
- quarterly reporting referring to Q1 2020
- Solvency and Financial Condition report referring to year-end occurring on 31 December 2019
EIOPA publishes monthly technical information
On 4 March 2020, EIOPA published technical information on the symmetric adjustment of the equity capital charge and relevant risk free interest rate term structures for Solvency II purposes with reference to the end of February 2020 in both cases.
EIOPA publishes summary report on EU-US Insurance Dialogue Project: Big Data Working Group
On 24 February 2020, EIOPA published a summary report from the Big Data Working Group (BDWG) on the EU-US Insurance Dialogue Project. Following a paper published by the BDWG in 2018, the summary report outlines the outcome of the BDWG's discussions in 2019 on third-party vendor issues, disclosures to applicants and policyholders about how rating factors and third-party vendor reports are being used and the use of artificial intelligence models.
The BDWG listed its areas for potential discussion over the course of 2020/2021, which includes:
- further development of AI principles
- regulatory review of predictive models
- industry use of Big Data for fraud detection and claims settlement
- continue monitoring development son third party vendors and consumer disclosure issues
EIOPA publishes summary report on EU-US Insurance Dialogue Project: The Cyber Insurance Market Working Group
On 19 February 2020, EIOPA published a summary report from the Cyber Insurance Market Working Group (CIWG) on the EU-US Insurance Dialogue Project. Following a paper published by the CIWG in November 2018, the summary report outlines the outcome of the CIWG's discussions in 2019 on an overview of the market, the assessment of non-affirmative cyber risk and the potential for catastrophic losses, the challenges and opportunities of insuring and reinsuring cyber risk and the availability of cyber insurance data.
The CIWG listed the themes it would like to further elaborate on, which includes:
- approaches to collecting data and developing techniques to support more sophisticated assessment of cyber risks
- sharing US and EU approaches to cyber incident reporting and responses
- discussing the current role and use of risk pools to provide additional capacity to tackle the potential system nature of cyber risk
EIOPA publishes cyber underwriting: Managing the risks of digital finance
On 3 March 2002, EIOPA published a speech by Fausto Parente from the AFORE 4th Annual FinTech and Regulation Conference. Mr. Parente's speech focused on the importance of respecting data and the importance of protecting people through cyber insurance.
Mr. Parente mentioned that EIOPA had set up a consultative expert group on digital ethics in insurance to help develop principles of digital responsibility in insurance noting that it is paying particular attention to fairness and non-discrimination, transparency and explainability and governance.
Furthermore, Mr. Parente noted that there needs to be a common understanding of contractual definitions so that policyholders and insurers share the same understanding of contract terms and that it hopes to work closely with national supervisors to ensure appropriate underwriting standards are in place. This is all in the hope of having a common approach to mitigate the risks.
EU publishes the Commission delegated regulation (eu) 2020/442 of 17 december 2019 correcting delegated regulation (eu) 2015/35 supplementing directive 2009/138/ec of the european parliament and of the council on the taking-up and pursuit of the business of insurance and reinsurance (solvency ii)
On 26 March 2020, the EU published the Commission Delegated Regulation (EU) 2020/442 of 17 December 2019 correcting Delegated Regulation (EU) 2015/35 supplementing Directive 2009/138/EC of the European Parliament and of the Council on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II). The amendments relate to the look-through approach and risk weights for flood risk.
EIOPA publishes extraordinary information for solvency ii relevant risk free interest rate term structures and symmetric adjustment to equity risk with reference to 24 march 2020
On 27 March 2020, EIOPA published a statement noting that it would be carrying out extraordinary calculations on a weekly basis to monitor the relevant risk-free interest rate term structures and the symmetric adjustment to equity risk. EIOPA will publish this information on a weekly basis in a designated "Extraordinary weekly updates" section on the EIOPA website so as to assist (re)insurance undertakings in monitoring their solvency and financial position.
Commission amends short-term export-credit insurance Communication in light of economic impact of coronavirus outbreak
On 27 March 2020, the European Commission decided to temporarily remove all countries from the list of "marketable risk" countries under the short-term export-credit insurance communication. This widens the availability of public short-term export credit insurance and provides further flexibility as to the possibility of state insurers providing insurance for short-term export-credit. Following this amendment, state insurers will in principle be able to provide insurance for short-term export-credit risk for all countries, without the need to demonstrate that the respective country is temporarily “non marketable.”
For more information on these topics please contact any member of A&L Goodbody's Insurance & Reinsurance team..
Date published: 6 April 2020