Financial Services Regulation and Compliance - Insurance Oct 2021
General Scheme of Insurance (Miscellaneous Provisions) Bill 2021 published
On 20 October 2021, the General Scheme of the Insurance (Miscellaneous Provisions) Bill (the General Scheme) was published. The aim of the proposed Bill is to address several insurance-related issues that have come to light since the Action Plan for Insurance Reform was published in December 2020.
The General Scheme states that the proposed Bill will provide for the following:
- Amendments to the Central Bank (National Claims Information Database) Act 2018 enabling the Central Bank of Ireland (CBI) to collect data on any deductions from compensation payments by insurers that relate to public monies, with the exception of those made under the Social Welfare and Pensions Act 2013.
- A requirement for the CBI to submit a report to the Minister for Finance setting out any steps taken to regulate the practice of 'price walking' and whether further action is required.
- Amendments to the Consumer Insurance Contracts Act 2019 (CICA) to address technical and legal issues identified in CICA and create a requirement for insurers to disclose to consumers any deductions of public monies from insurance claims settlement amounts (with the exception of those made under the 2013 Act).
- Amendments addressing issues identified by the CBI with the Temporary Run-off Regime for UK and Gibraltar-based insurers in the European Union (Insurance and Reinsurance) Regulations 2015.
The proposed Bill will undergo pre-legislative scrutiny and will be drafted on the basis of the General Scheme published.
EIOPA sets out its strategic priorities for the coming year
On 5 October 2021, EIOPA published its Single Programming Document 2022-2024 which outlines its strategic priorities for 2022. Key priorities include the ongoing effects of COVID-19, the market situation and political priorities (in particular supporting the digital and green recovery). With the objective of ensuring consumer protection and safeguarding financial stability, EIOPA will pursue six strategic areas:
- integrating sustainable finance considerations across all areas of work
- supporting the market and supervisory community through digital transformation
- enhancing the quality and effectiveness of supervision
- ensuring technically sound prudential and conduct of business policy
- identifying, assessing, monitoring and reporting on risks to the financial stability and conduct of business and promoting preventative policies and mitigating actions
- providing effective recruitment, management and development of EIOPA’s human capital
EIOPA launches phase 2 of its study on Diversification in Internal Models
On 5 October 2021, EIOPA launched phase two of its study on diversification in internal models. Its objectives are:
- to gain an overview of the current approaches in the market and, on a best effort basis, analyse and compare the levels of diversification
- to facilitate a better understanding of modelling dependencies, aggregation and resulting diversification benefits
- to enhance quality and convergence of supervision on diversification in internal models
The deadline for insurance undertakings to submit results to their group national supervisory authority is 10 January 2022. The deadline for national supervisory authorities to report to EIOPA is 22 January 2022.
EIOPA examines further aspects of insurers’ failures and near misses
On 8 October 2021, EIOPA published its second failures and near misses in insurance report (the Report), comprising of 219 relevant cases from the European insurance sector. The purpose of the Report is to enhance supervisory knowledge on the prevention and management of insurance failures.
The Report is divided into two parts. The first part analyses the most common recovery and resolution actions adopted by insurers and national competent authorities (NCAs) when insurers begin to enter into difficulty. The second part focusses on the most common issues arising from the resolution or liquidation of cross border insurer failures.
The findings of the Report support EIOPA’s views on the need for a common recovery and resolution framework at the EU level and a minimum harmonised network of insurance guarantee schemes across the EU.
EIOPA welcomes Solvency II proposals on sustainability
On 18 October 2021, EIOPA welcomed the European Commission's proposals on Solvency II, which includes providing mandates to EIOPA for further action on sustainable finance. EIOPA also noted the inclusion of climate change scenarios in the Own Risk and Solvency Assessment (ORSA), which reflects EIOPA’s own position as detailed in its opinion on the supervision of the use of climate change risk scenarios in ORSAs issued on 19 April 2021.
EIOPA noted that it is essential to foster a forward-looking management of climate change-related physical and transition risks to ensure the long-term solvency and viability of the insurance industry. EIOPA is also of the view that the European Commission's proposals would contribute positively to a transition to a more sustainable economy and that insurers, in their role as investors and risk managers, can facilitate this transition.
EIOPA publishes report on the independence of National Competent Authorities
On 18 October 2021, EIOPA published a report on the independence of National Competent Authorities (NCAs). It noted that NCA independence is key to achieving effective and efficient supervision as well as the consistent application of EU rules.
In the report, NCAs independence is analysed in consideration of the operational, financial and personal independence as well as the principles of accountability and transparency, in line with the principles and criteria as approved by the EIOPA Board of Supervisors.
For more information on these topics please contact any member of A&L Goodbody's Insurance & Reinsurance team.
Date published: 11 November 2021