Financial Services Regulation & Compliance - Insurance May 2018

DOMESTIC 

Central Bank publishes Policy Notice, Handbook and Guidance on third-country branches 

On 4 May 2018, the Central Bank of Ireland (CBI) published a Policy Notice in relation to branches of third-country insurance undertakings. The Policy Notice provides an overview of how the CBI intends to approach the authorisation and supervision of third-country branches. On the same date, the CBI published a suite of additional materials relating to third-country branches including:

  • a new Handbook for third-country branches
  • Guidance (including a Checklist) on submitting applications for authorisation
  • an addendum to the CBI's Domestic Actuarial Regime and Related Governance Requirements; and
  • a Feedback Statement on Consultation Paper 115 concerning the authorisation and supervision of third-country branches

Cost of Insurance Working Group publishes latest quarterly update

On 11 May 2018, the Cost of Insurance Working Group (CIWG) published its fifth quarterly update covering the first quarter of 2018. This latest update reports on progress in implementing the recommendations contained in the Report on the Cost of Motor Insurance and, for the first time, the Report on the Cost of Employer and Public Liability Insurance. On the same date, the CIWG published its second Motor Insurance Key Information Report which provides information on overall claims cost trends from 2011 to 2016.

Public consultation on the feasibility of an insurance claim-by-claim register

The Department of Finance has launched a public consultation in relation to the feasibility of establishing and operating an insurance claim-by-claim register in Ireland. In its Report on the Cost of Motor Insurance, the CIWG recommended establishing a National Claims Information Database (currently being developed) to collect and make available aggregated claims data in an effort to improve transparency in relation to claims and the cost of insurance. The CIWG also considered a claim-by-claim register but identified a number of potential difficulties in relation to how such a register would work (e.g. in relation to data protection). The CIWG therefore recommended carrying out a feasibility study. The consultation seeks the views of all stakeholders including insurance undertakings and intermediaries by Friday, 22 June 2018.  

EUROPEAN

European Commission proposes changes to the Motor Insurance Directive

On 24 May 2018, the European Commission published a proposal for a new European Directive amending the Motor Insurance Directive. The proposal is primarily aimed at ensuring that third party victims of motor vehicle accidents will be compensated, even where the relevant insurer is insolvent. In cross-border situations, it is proposed that the compensation body in the victim's Member State of residence will pay the claim and be reimbursed by the equivalent body from the insurer's home Member State. This aims to ensure that financial responsibility is borne by the insurance sector of the home Member State of the insurer, whilst at the same time allowing for quick payments to victims. The proposal also seeks to introduce measures aimed at ensuring that there is no discrimination as between residents of different Member States in relation to how claims history is taken into account in calculating insurance premiums.  

EIOPA launches latest insurance stress test

On 14 May 2018, the EIOPA launched its fourth EU-wide insurance stress test aimed at assessing vulnerabilities in the European insurance sector in a number of adverse scenarios including:

  • a yield curve up shock combined with lapse and provisions deficiency stress
  • a low yield shock with longevity stress, and
  • a natural catastrophe scenario.  For the first time, exposure to cyber risk and best practice in dealing with cyber risk will also be assessed  


EIOPA issues Opinion on risks to the solvency position of insurers in light of Brexit

On 18 May 2018, EIOPA issued an Opinion on the solvency position of insurance and reinsurance undertakings in light of the pending withdrawal of the UK from the European Union. The Opinion calls on national supervisors to ensure that all risks to the solvency position of insurers arising from the fact that the UK will become a third country for the purposes of applying the Solvency II framework are properly addressed. In particular, the Opinion emphasises the importance of ensuring that insurers identify and report risks arising from Brexit and include them in their Own Risk and Solvency Assessments.

EIOPA publishes study on the modelling of market and credit risk

On 22 May 2018, EIOPA published an EU-wide comparative study on how insurance undertakings model market and credit risk.  Given that market and credit risk is similar for most undertakings, EIOPA expects a higher level of convergence in terms of how they are modelled compared to other types of risks. It is, however, acknowledged that there are a variety of appropriate modelling approaches and that this is, to some extent, beneficial in helping to mitigate herding behaviour. The study is a first step towards developing a European supervisory tool for market and credit risk modelling in order to support and foster supervisory convergence in this area.  ​​​​​​​
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Insurance Europe publishes GDPR information materials

Insurance Europe has published some helpful and easy to follow GDPR information materials for insurers including an infographic on data protection and privacy in the insurance sector and an overview of the obligations of insurers under GDPR (with links to where more detailed information can be found). Both documents are available on Insurance Europe's website. 

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

Date Published: 8 June 2018