Financial Services Regulation and Compliance - Insurance Nov 2020
Financial Services Regulation and Compliance - Insurance Nov 2020
Central Bank of Ireland publishes second motor insurance report of the National Claims Information Database
On 3 November 2020, the Central Bank published its second annual National Claims Information Database Private Motor Insurance Report. The report is aimed at improving the overall transparency of the private motor claims environment. The data contained in the report relates to the period up to 31 December 2019. The report found that the cost of motor insurance claims had fallen by 9 per cent between 2009 and 2019, while premiums rose by 35%.
The report identified three broad channels through which claims are typically resolved:
through the insurers themselves
through the Personal Injury Assessment Board
as a result of litigation
The report also provides data on the timing of when claims were settled.
Central Bank publishes update on prudential regulatory flexibility measures
On 5 November 2020, the CBI provided an update on the supervisory flexibility measures implemented in March 2020 in response to the COVID-19 pandemic. One of the areas of flexibility related to (re)insurance undertakings meeting specific risk mitigation programme (RMP) submission dates. The CBI considers that firms should have now adapted to the current operating environment and expects such firms to meet any RMP submission dates. The CBI also confirmed that it will continue to review its approach to supervisory flexibility for the (re)insurance sector and may provide further updates in the future.
Opening Remarks of Domhnall Cullinan, Director of Insurance Supervision, at the 2020 Insurance Industry Briefing
On 12 November 2020, Domhnall Cullinan, the CBI's Director of Insurance Supervision addressed insurance industry stakeholders at the 2020 industry briefing. Mr Cullinan noted that there is a negative public perception of the insurance industry and discussed in detail the Central Bank's future areas of supervisory focus, which includes:
the viability of business models in the face of disruptive change
the financial and operational resilience of firms
Central Bank publishes financial stability note on Differential Pricing
On 16 November 2020, the Central Bank published a Financial Stability Note focused on differential pricing. The note examines international practices relating to differential pricing and outlines that there are costs and benefits for consumers. The note highlights that consumers may not always be aware of differential pricing, or where they are aware, may not attempt to avoid it. The note concludes that stakeholders must engage in a cost-benefit analysis in order to reach a satisfactory policy solution on differential pricing with appropriate consideration given to potential competition and consumer price effects, as well as impact on vulnerable consumers.
Text of Health Insurance (Amendment) Bill brought before Seanad
The text of the Health Insurance (Amendment) Bill completed the first and second stages in Seanad Eireann (the Bill). The Bill proposes to Amend the Health Insurance Act 1994, to:
specify the amount of premium to be paid from the Risk Equalisation Fund in respect of certain classes of insured persons from 1 April 2021
specify the amount of the hospital utilisation credit applicable from 1 April 2021
make a consequential amendment to the Stamp Duties Consolidation Act 1999
EIOPA publishes updates regarding information for Solvency II relevant risk free interest rate term structures, symmetric adjustment to equity risk and representative portfolios for calculation of volatility adjustments
On 5 November 2020, EIOPA published updated technical information on the symmetric adjustment of the equity capital charge and risk free interest rate term structures for Solvency II purposes with reference to the end of October in both cases. On the same date, EIOPA published updated representative portfolios that will be used for calculation of the volatility adjustments to the relevant risk free interest rate term structures for Solvency II.
EIOPA publishes quarterly risk dashboard
On 9 November 2020, EIOPA published its updated Risk Dashboard based on the second quarter of 2020 Solvency II data. Risk exposures of the European Union insurance sector slightly reduced compared to the July risk assessment. However, macro risk remained very high, while market, credit, profitability and solvency risks decreased to medium level. EIOPA noted that the risk assessment does not account for the outbreak of the second wave of the pandemic. The results also show that insurance risks remain at medium level, driven by general concerns over a decrease in premium growth, and in some Member States over reserve adequacy.
Offical Journal publishes Commission Implementing Regulation on the calculation of technical provisions and basic own funds in Q4
On 10 November 2020, Commission Implementing Regulation (EU) 2020/1647 of 9 November 2020 laying down technical information for the calculation of technical provisions and basic own funds for reporting was published in the Official Journal of the European Union. The Regulation entered into force on 9 November 2020 and applies from 30 September 2020.
Speech by Gabriel Bernardino delivered virtually on 12 November 2020 - Crisis and recovery: Challenges and opportunities for the insurance sector
On 12 November 2020, Gabriel Bernardino, the chairman of EIOPA, delivered a speech to the annual Croatian Insurance Days. In his speech Mr Bernardino highlighted that throughout the COVID-19 crisis, EIOPA's actions have centred on three main priorities:
ensuring at the early stages of the crisis that there was business continuity
ensuring stability of the sectors
mitigating impact on consumers
Mr Bernadino referenced the 2020 review of Solvency II, noting that the main purpose of the review has been to make sure that the regime remains fit for purpose. He noted that the EIOPA opinion on Solvency II to the European Commission is delayed until the end of 2020 to take the impact of COVID-19 on the insurance sector and economy into account.
In addressing the need for economic recovery, Mr Bernardino emphasised that the recovery should be as green as possible, noting that initiatives designed to kick start the economy would need to have sustainability at their heart.
EIOPA launches survey on application of the Insurance Distribution Directive
On 12 November 2020, EIOPA launched a survey seeking feedback from stakeholders on their experience with the application of the Insurance Distribution Directive (the IDD). In particular, EIOPA is seeking feedback on the improvement of quality of advice and selling methods, the impact of the IDD on SMEs and possible improvements identified after the application of the IDD.
The survey closes on 1 February 2021, with EIOPA planning to publish a report by the end of 2021.
EIOPA consults on the application of supervisory ladder
On 25 November 2020, EIOPA published a consultation on the statement on supervisory practices and expectations in case of breach of the Solvency Capital Requirement (the Consultation). EIOPA is seeking feedback on this statement which aims to promote supervisory convergence in the application of the supervisory ladder, in particular addressing the recovery plan required in case of breach of the SCR. EIOPA states that the supervisory practices addressing the supervisory ladder are necessarily flexible and should consider the specific situation of the insurance or reinsurance undertaking.
EIOPA is seeking feedback before Wednesday 17 February 2021.
Consultation on EIOPA advice regarding Article 8 of the Taxonomy Regulation
On 30 November 2020, EIOPA published a consultation paper on advice regarding Article 8 of the Taxonomy Regulation. The consultation refers to the relevant ratios to be mandatorily disclosed by insurers falling within the scope of the Non-Financial Reporting Directive as well as on the methodologies to build those ratios.
EIOPA is seeking feedback by 12 January 2021 and will finalise its advice for submission to the European Commission in February 2021.