Financial Services Regulation and Compliance - Insurance Sept 2020

DOMESTIC

Consumer Insurance Contracts Act 2019 (Commencement) Order 2020 (S.I. no. 329 of 2020)

On 31 August 2020, the Minister for Finance signed the Commencement Order for the Consumer Insurance Contracts Act 2019 (CICA) bringing the majority of the provisions CICA into operation from 1 September 2020. The changes introduced by CICA will impact contracts of insurance entered into, or varied, between insurers and consumers from 1 September 2020. Sections 8, 9, 12 and 14 will not come into operation until 1 September 2021, allowing insurers time to comply with the requirements contained in those sections. Section 18(4) was not included in this Commencement Order and is currently not in operation or expected to come into operation on 1 September 2021.

Publication of the Central Bank (National Claims Information Database) Regulations 2020 (S.I. No. 336 of 2020)

On 8 September 2020, the text of the Central Bank (National Claims Information Database) Regulations 2020 (S.I. No. 336 of 2020) (the 2020 Regulations) was published in Iris Oifigiúil. The purpose of the 2020 Regulations is to specify additional relevant classes of non-life insurance and the circumstances in which risks falling within the relevant classes of non-life insurance are to be regarded as risks based in the State, for the purposes of the Central Bank (National Claims Information Database) Act 2018 (the 2018 Act). The 2018 Act confers a function on the CBI to collect and study of data from insurance undertakings on the income generated by, and costs associated with, non-life insurance business. The 2020 Regulations came into effect on 30 September 2020.

Central Bank sets out requirements for firms following first phase review of differential pricing

The CBI recently concluded the first phase of its review of differential pricing in the motor and home insurance markets and, on 8 September 2020, issued a 'Dear CEO' letter to the insurance sector outlining its expectations in respect of insurance policy pricing. Having conducted market analysis to establish the extent to which differential pricing is used in the insurance market, the CBI now requires firms to immediately:

  • assess their pricing methodologies against the CBI definition of differential pricing
  • take responsibility at Board level for the impact of differential pricing on customers
  • ensure a fully embedded consumer protection risk framework is in place to manage conduct risk and drive positive behaviours

Proposed run-off period extended by general scheme of Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Bill 2020

On 9 September 2020, the General Scheme of the Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Bill 2020 (the 2020 Withdrawal Bill) was published by the Department of Foreign Affairs. The 2020 Withdrawal Bill provides that the run-off period for certain UK and Gibraltar insurance undertakings and/or insurance distributors operating in Ireland through a branch or by way of passport will be for a period of 15 years (as opposed to 3 years as originally provided in the Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Act 2019). The 2020 Withdrawal Bill is expected to be brought before the Oireachtas for consideration in autumn 2020.

EUROPEAN

EIOPA publishes monthly updates to technical information  for relevant risk free interest rate term structures and symmetric adjustment to equity risk

On 3 September 2020, the European Insurance and Occupational Pensions Authority (EIOPA) published 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 August 2020 in both cases.

EIOPA publishes bi-weekly information for relevant risk free interest rate term structures and symmetric adjustment to equity risk

On 18 September, EIOPA provided 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 15 September in both cases. EIOPA are carrying out these additional calculations on a bi-weekly basis in response to the Covid-19 outbreak in order to support insurance and reinsurance undertakings in the monitoring of their solvency and financial position.

EIOPA launches consultation on Supervisory Statement on the use of risk mitigation techniques by insurance and reinsurance undertakings

On 29 September 2020, EIOPA launched a consultation on its Supervisory Statement on the use of risk mitigation techniques by insurance and reinsurance undertakings. EIOPA's aim is to encourage supervisory convergence on the assessment of the use of risk-mitigation techniques under Solvency II. EIOPA are asking stakeholders to include their views on a number of topics, including "group issues" and "internal reinsurance". The deadline for responses to the consultation is 24 November 2020.

For more information on these topics please contact any member of A&L Goodbody's Insurance & Reinsurance team.

Date published: 7 October 2020