Financial Services Regulation & Compliance - Insurance July 2018

DOMESTIC

Central Bank (National Claims Information Database) Bill 2018 published

On 12 July 2018, the Central Bank (National Claims Information Database) Bill 2018 was published. Among other matters, the Bill proposes that the CBI:

(a) collect and study data from insurers concerning the income and costs associated with carrying on certain classes of non-life insurance business in Ireland, and
(b) publish a report, at least annually, for the purposes of (among other matters) providing information on the relationship between premiums and related costs, identifying current and emerging trends, and identifying factors that cause movements in the price of relevant classes of non-life insurance.

In an associated press release, the Department of Finance noted that the CBI is near finalising the technical specifications for the National Claims Information Database to be used by the CBI in performing the above function. The database is expected to be established in 2019, with the first report also to issue in 2019.

Insurance (Amendment) Act 2018 enacted

The Insurance (Amendment) Act 2018 was signed into law on 24 July 2018. The Act makes a number of amendments to the Insurance Act 1964 and is intended to clarify the role of the Insurance Compensation Fund (ICF) in light of the Setanta case. Among other matters, the Act:

  • increases the level of coverage for third party motor claims to 100% for personal injuries and to €1,220,000 per claim in respect of property; and
  • provides for a new Motor Insurers Insolvency Compensation Fund (MIICF) which will be funded by a levy on motor insurers and reimburse the ICF for payments over and above the current level of cover for third party claims (i.e. the lesser of 65% or €825,000)

The provisions of the Act establishing the MIICF will come into operation on a day to be appointed by the Minister for Finance.

EUROPEAN

EIOPA launches EU-wide thematic review on consumer protection issues in travel insurance

On 17 July 2018, EIOPA launched a thematic review on consumer protection issues in travel insurance. EIOPA will use the review to (a) assess potential sources of consumer detriment arising from the design, distribution and selling of travel insurance products, as well as the impact of emerging distribution and business models, and (b) identify possible actions to ensure better consumer protection. The review will be conducted in collaboration with national supervisors. Key findings will be published in early 2019.

EIOPA publishes discussion paper on national insurance guarantee schemes

On 30 July 2018, EIOPA published a discussion paper on resolution funding and national insurance guarantee schemes (IGSs). This examines the potential advantages of introducing a degree of harmonisation in respect of IGSs. EIOPA's preferred option is to establish a European network of IGSs which are adequately funded and sufficiently harmonised. EIOPA is seeking feedback on its assessment and on the design features of IGSs. Comments are invited until 26 October 2018.

EIOPA launches Big Data review

On 6 July 2018, EIOPA launched a thematic review on the use of Big Data by insurers and intermediaries in areas including pricing, underwriting, product development, claims management and sales/marketing. The review focusses on motor and health insurance and will examine potential benefits and risks in the use of Big Data for industry and consumers. The review will be carried out in cooperation with national supervisors during July and August, with the findings to be published in the first quarter of 2019.

EIOPA publishes third paper on systemic risk and macro prudential policy in the insurance sector

On 31 July 2018, EIOPA published its third in a series of papers on systemic risk and macro prudential policy in the insurance sector. EIOPA's third paper carries out an initial assessment of potential tools and measures to be included in a macro prudential framework for insurers in order to mitigate systemic risk.

The analysis focussed on four categories of tools:

(a) capital and reserving based tools
(b) liquidity based tools
(c) exposure based tools
(d) pre-emptive planning, and includes an assessment of whether specific instruments should be further considered.

EIOPA examines causes of insurers' failures and near misses

On 17 July 2018, EIOPA published a report on "Failures and near misses in Insurance: Overview of the causes and early identification". The report is the first of a series aimed at enhancing supervisory knowledge of the prevention and management of insurance failures. According to the report, the most common reported causes of failure/near miss are linked to underlying internal risks of the insurer, namely:

(a) management or staff lacking the necessary skill, experience or professional qualities
(b) inadequate or failed systems of corporate governance and overall control.

The findings are based on 180 cases dating from 1999-2016 in 31 European countries.

EIOPA publishes risk dashboard for first quarter of 2018

On 24 July 2018, EIOPA published its updated risk dashboard for the first quarter of 2018. This is EIOPA's quarterly risk assessment based on financial stability and prudential reporting from EU insurance groups and solo undertakings. Key observations include:

(a) risk exposures for the insurance sector remained stable during Q1 2018
(b) continuing low interest rates and increased protectionism should not be neglected 
(c) higher volatility in bond markets since March led to an increase in market risk (which continues to be at a medium level) and
(d) positive market perceptions were counterbalanced by an underperformance of insurance stocks relative to the overall market

EIOPA submits corrections and amendments to reporting and disclosure ITS

On 16 July 2018, EIOPA published a letter to the Commission attaching draft ITS proposing a number of technical amendments and corrections to the ITS on reporting and disclosure. EIOPA note that the aim of the amendments, which were consulted on in March, is to provide legal certainty and to facilitate correct reporting as well as the disclosure process for insurance undertakings. The proposals will now be considered for endorsement by the Commission.

Council non-objection to delegated regulation on STS securitisations

The Council of the EU confirmed in its meeting on 13 July 2018 that it does not intend to object to the Commission's delegated regulation amending Commission Delegated Regulation (EU) 2015/35 so as to align with Regulation 2017/2402 (the STS Regulation). The amendments will apply with effect from 1 January 2019 if not objected to by the European Parliament.

For further information please contact a member of the Financial Regulation team.

Date Published: 13 August 2018