Financial Services Regulation & Compliance - Insurance Jan 2018
Report published on Cost of Employer and Public Liability Insurance
On 25 January 2018, the Cost of Insurance Working Group (CIWG) published its report on the Cost of Employer and Public Liability Insurance. The report, which follows on from CIWG's 2017 report into the cost of motor insurance, makes a number of recommendations and associated actions, including:
- exploring the possibility of imposing caps on damages for personal injuries
- tackling fraudulent/exaggerated claims
In a press release issued on the same day, Insurance Ireland (II) welcomed publication of the report, noting it can help bring stability to employers' liability and public liability insurance, but called for an acceleration of the pace of reform.
Central Bank introduces new quarterly insurance data set
On 24 January 2018, the Central Bank of Ireland (CBI) published an article, "Insurance Corporation Statistics in Ireland: Introducing the New Quarterly Statistics". It details a new set of insurance statistics to be published on a quarterly basis from March 2018, together with background information on their compilation and methodology. Points of interest include:
- 243 insurers were operating in Ireland as of June 2017 (including 41 branches of insurers headquartered in other Member States), with estimated total assets of €303bn
- the vast majority of branches located in Ireland are of insurers headquartered in the UK
- 85% of Irish headquartered insurers' premium was earned outside of Ireland
Central Bank publishes statistics on health insurance complaints
On 24 January 2018, the CBI published a Consumer Protection Bulletin, focussing on trends in health insurance complaints. Among other matters, it highlights that health insurers received a total of 7,709 complaints in the first half of 2017, with 48.1% of those complaints relating to claims. The Bulletin also notes that 98% of complaints were resolved within 40 days.
Insurance Ireland publishes Factfile 2016
On 24 January 2018, Insurance Ireland published its Factfile 2016, which provides key facts and figures in respect of the Irish insurance industry. Notable trends identified include an increase of 13.7% in the level of gross premium income for non-life insurance, when compared with 2015; as well as a decrease of 8.7% in the level of gross premium income for life business. The report also notes an operating profit in the non-life insurance market of €16m (after investment income is added), compared to an operating loss of €216m in 2015.
Update on delayed application of the Insurance Distribution Directive
The European Parliament's (EP) Committee on Economic and Monetary Affairs (ECON) recently published a letter (dated 9 January 2018) sent by its Chair to the Chair of the Council of the EU's Permanent Representatives Committee concerning the proposed directive to delay application of the Insurance Distribution Directive (IDD) to 1 October 2018 (Proposed Directive). ECON welcomed the Proposed Directive and further noted that the EP is "considering positively" Member State suggestions that the transposition date (currently 23 February 2018) also be delayed to a later date, such as 1 July 2018. ECON also confirmed its intention to steer adoption of the Proposed Directive in an expedited manner and to cooperate concerning any possible amendment to the transposition date. The EP is due to consider the Proposed Directive at its plenary session to be held from 28 February to 1 March.
EIOPA publishes report on group supervision
On 25 January 2018, the European Insurance and Occupational Pensions Authority (EIOPA) published a report on the application of group supervision under Solvency II. This follows a request from the European Commission that EIOPA assess group supervision across a number of areas (detailed in the Annex to the report). Among other matters, the report notes that:
- The definition of groups under Solvency II has generally worked well, with difficulties usually relating to access to information about ownership and relationships between entities higher up in a group structure.
- There is scope for greater convergence in approach as well as increased collaboration and task sharing in supervisory colleges.
- There is a need for greater consistency in the approach to internal models.
EIOPA consults on draft regulatory technical standards concerning professional indemnity insurance under the IDD
On 1 February 2018, EIOPA issued a consultation on draft regulatory technical standards adapting the amount of professional indemnity insurance (PII) to be maintained by intermediaries under the IDD. The consultation also proposes amendments to the minimum financial capacity for intermediaries (financial capacity is one of a number of possible Member State options to protect consumers from the inability of an intermediary to transfer premium or proceeds of claims). The proposed new amounts are €1,300,370 per claim, and €1,924,550 in aggregate for PII, and €19,510 for financial capacity. Comments are invited until 27 April 2018; the draft regulatory standards are to be submitted to the Commission by 30 June 2018.
EIOPA publishes risk dashboard for third quarter of 2017
On 25 January 2018, EIOPA published its risk dashboard for the third quarter of 2017. The dashboard is EIOPA's quarterly risk assessment based on financial stability and prudential reporting data from EU insurance groups and solo undertakings. According to the dashboard, the risk exposure of the insurance sector remained stable overall; as in previous updates, risks related to low interest rates and potential credit risk mispricing remain major concerns.
EIOPA publishes translations of guidelines on complex insurance-based investment products
On 19 January 2018, EIOPA published official translations of its Guidelines on insurance-based investment products (IBIPs) that incorporate a complex structure (first published in October 2017). Publication of the translated guidelines commenced a two month period during which relevant supervisors must confirm whether they intend to comply with the guidelines.
Insurance Europe publishes response to EIOPA's second consultation on amendments to Solvency II
On 25 January 2018, Insurance Europe (IE) published its response to EIOPA's second set of draft advice on possible amendments to Commission Delegated Regulation (EU) 2015/35 (the Solvency II Delegated Regulation). In its accompanying press release, IE raised concerns regarding EIOPA's review of areas not mandated for review (such as the interest rate risk and loss absorbing capacity of deferred taxes). IE noted that it was inappropriate to review interest rate risk at this point as this would be a key focus of the Solvency II review due to take place in 2020. IE also recommended that an overall impact assessment of proposals be included, rather than individual assessments per area of review.
Insurance Europe publishes position papers on amendments to ESA and ESRB regulations and Solvency II
On 26 January 2018, IE published position papers on European Commission proposed amendments to the Solvency II Directive and EU regulations on the European Supervisory Authorities (including the EIOPA Regulation (Regulation 1094/2010)) and the European Systemic Risk Board. On amendments to the EIOPA Regulation, IE raised concerns regarding (among other matters) proposals to increase EIOPA's powers, noting that, in its view, EIOPA had sufficient power to carry out its duties.
On amendments to Solvency II (which concern EIOPA's role in internal models), IE agreed with EIOPA's role in ensuring convergence in the supervision of internal models but stated that EIOPA should not interfere where models have already been approved, and should not be able to issue quasi binding opinions on individual internal model approvals of its own accord.
European Commission publishes final report on sustainable finance
On 31 January 2018, the European Commission published its final report on financing a sustainable European economy. The report sets out strategic recommendations for a financial system that supports sustainable investments and includes specific recommendations to enable insurers to have a stronger role in equity, long-term and infrastructure investment. The recommendations, which include investigating how Solvency II might be adapted to facilitate more long-term investment, were welcomed by IE in a press release issued on the same day.
For more information please contact a member of the Financial Regulation team.
Date published: 8 February 2018