Financial Services Regulation and Compliance - Insurance November 2022
Financial Services Regulation and Compliance - Insurance November 2022
Third Insurance Reform Implementation Report published
On 14 November 2022, the Government published the third implementation report of the action plan for insurance reform. The report confirms that 90% of the 66 Governmental actions proposed under the action plan in December 2020 are now complete or ongoing. The aim of these actions is to support enterprise and job creation, and to make Ireland's insurance sector more consumer-friendly and competitive.
Key actions taken to date include implementation of the personal injuries guidelines and the establishment of the Office to Promote Competition in the Insurance Market and the Insurance Fraud Coordination Office. The principal actions to be completed this year include the reform of both the occupiers' liability (duty of care) legislation and the Personal Injuries Assessment Board (PIAB).
CBI publishes fourth motor insurance report of the national claims information database
The CBI published its fourth annual National Claims Information Database Private Motor Insurance Report (the report) on 15 November 2022. The report seeks to strengthen the transparency of the claims environment within the private motor insurance sector, analysing the cost of premiums and claims, the aggregated financial performance of firms providing motor insurance and settlement information.
Notably, the report is the first to capture the impact of the new Personal Injuries Guidelines (the guidelines). The report notes that 16% of injury claims were settled with reference to the guidelines in 2021. It also notes that average compensation was 34% lower where a claim was settled using the guidelines than for claims which would have been settled under the Book of Quantum.
S.I. No. 552/2022 Health Insurance Act 1994 (Section 11E(2)) Regulations 2022 published
On 11 November 2022, the Health Insurance Act 1994 (Section 11E(2)) Regulations 2022 (S.I. No. 552 of 2022) were published in Iris Oifigiúil (the regulations). The regulations are short, simply providing that the Health Insurance Authority is satisfied that the two contracts listed in the schedule do not provide for advanced cover.
FSPO publishes Digest of Legally Binding Decisions – Health Insurance
The Financial Services and Pensions Ombudsman (FSPO) published the Digest of Decisions on private health insurance complaints in November. This summarised the decisions issued between 2018 and 2022, highlighting the issues experienced by consumers that gave rise to complaints to the FSPO. As well as publishing the digest, the FSPO published the full text of over 1,850 decisions in its Database of Decisions, which is available on the FSPO website.
EIOPA publishes Risk Dashboard for Q2 2022
On 4 November 2022, EIOPA published its updated risk dashboard based on data from the second quarter of 2022. The main concern for the sector, based on the data collected, is insurers' exposures to macro and market risks with both noted as being at a high level. All other risks categories, such as credit, climate, profitability and solvency remain at medium levels.
EIOPA publishes monthly technical information for Solvency II risk-free interest rate term structures and on the symmetric adjustment of the equity capital charge
On 7 November 2022, EIOPA published monthly technical information on the relevant risk free interest rate term structures with reference to the end of October 2022. This technical information is used for the calculation of technical provisions for (re)insurance obligations.
EIOPA also published technical information on the symmetric adjustment of the equity capital charge for Solvency II with reference to the end of October 2022.
EIOPA publishes staff paper answering FAQs on its proposal for an Insurance Recovery and Resolution Directive
EIOPA published a staff paper on 10 November 2022 on its proposal for an Insurance Recovery and Resolution Directive (IRRD) which was published in September 2021. The staff paper provides an overview of the most pertinent aspects of the proposal and is seeking to provide answers to some questions frequently asked by different stakeholders. The staff paper answers 15 questions on the IRRD including; why the IRRD is needed, whether the IRRD is too similar to the Banking Recovering and Resolution Directive, and how it will be decided what undertakings go into resolution and which would go into liquidation.
EIOPA publishes staff paper comparing the recovering and resolution frameworks in banking and insurance
EIOPA published a staff paper comparing IRRD with the Banking Recovery and Resolution Directive (BRRD) on 10 November 2022. The aim of the staff paper is to provide further understanding on the IRRD proposal. The analysis identifies similarities and differences between the two legal texts with a view of demonstrating the rationale behind them.
The staff paper while confirming that there are some similarities between the two, also maintains that there are significant difference which reflect the specificities of the insurance sector. Similarities include (among others):
penalties for breach or non-compliance
Differences listed include (among others):
the scope of entities expected to prepare recovery and resolution plans
resolution tools proposed
recovery and resolution funding
IRRD does not consider setting up a central resolution authority
EIOPA - Trying times and their effect on insurers (speech - 16 November 2022)
EIOPA Chairperson, Petra Hielkema, delivered a speech at S&P Global's European Insurance Conference 2022 on 15 November 2022. She explained that although the economic forecast had appeared bright at the beginning of 2022, changes in consumer spending, the Russian invasion of Ukraine and action by the Federal Reserve and European Central Bank had resulted in a more pessimistic outlook.
Petra Hielkema then discussed specific threats and where vulnerabilities may impact insurers, including inflation, interest rates and volatility across financial markets.
She concluded by promoting insurers acting prudently amid high uncertainty but also noted that despite the economic turbulence, the two overarching challenges of digitalization and sustainability must remain priorities.
EIOPA underlines its commitment to supporting the insurance and pensions sectors in tackling climate change
On 18 November 2022, EIOPA reiterated its dedication to support the insurance and pension sectors in combatting climate change.
EIOPA noted that sustainability has been a central tenet of its work for a long time and that it was now moving from considering what should be done to defining how it can be achieved. EIOPA referenced the guidance it has issued on the own risk and solvency assessment (ORSA) and its intention to provide guidance on the application of the Sustainable Finance Disclosures Regulation (SFDR) in the context of sustainability. In line with its commitment at COP 26 in Glasgow, EIOPA also announced its plan to publish a European-wide dashboard on the natural catastrophe insurance protection gap, in December 2022.
The statement concluded by announcing that EIOPA will present a full overview of it latest work on sustainable finance at its Sustainable Finance Conference on 7 December 2022.
EIOPA consults on cyber component in its insurance stress testing framework
EIOPA published its discussion paper on Methodological Principles of Insurance Stress Testing with a focus on cyber risk on 24 November.
The paper is aimed at structuring an assessment of the financial resilience of insurers in the event of severe but plausible cyber incidents, focusing mostly on financial consequences of such scenarios. The paper focuses and elaborates on two core points:
Cyber resilience - i.e. the ability of insurers to cope with the financial impact of an adverse cyber event.
Cyber underwriting risk - i.e. the ability of insurers to cope with the financial impact of an extreme but plausible adverse cyber event that affects underwritten business, from a capital and solvency perspective.
EIOPA has requested that stakeholders provide their feedback no later than 28 February 2023.