Central Bank addresses IBA – highlights key developments/evolution in insurance sector
On 17 November 2016, the Central Bank of Ireland's Director of Insurance Supervision addressed the Irish Brokers Association Annual General Conference. In the speech delivered (which is available on the Central Bank's website), the Central Bank highlighted key features of the evolving insurance environment. Notably, it emphasised the European Insurance and Occupational Pensions Authority's (EIOPA) preparatory guidelines on product oversight and governance (which, it stated, will apply from 3 January 2017) and the implementation of the product-related requirements under the Insurance Distribution Directive. Other topics highlighted include rising motor premiums and the impact of evolving technologies (and connected cyber risk) on insurance.
Central Bank publishes updates to Solvency II reporting materials
On 10 November 2016, the Central Bank published updates to its materials relating to reporting under Solvency II. This follows identification of minor issues with the pre-existing version (1.1.0). The Central Bank's Release notes specify the updates made. The Central Bank's reporting template materials, 'NST.02 Life Income Statement', were also updated during November 2016. Details are available on the Central Bank's website.
Insurance Ireland calls for reform of life assurance levy and exit tax
On 10 November 2016,Insurance Ireland renewed its call for the abolition of the current 1% life assurance levy and reform of the life assurance exit tax. Insurance Ireland states that these measures disproportionately affect life assurance savings and investment products availed of by middle income earners (and views the levy as creating a two-tier system for Irish investors as it does not apply to high-end investment products). Insurance Ireland believes that small and medium sized savers and investors are also being penalised by the failure to reduce exit tax on life assurance products in line with the reduction in DIRT in the recent Budget. Insurance Ireland has called on the Government to use the Finance Bill as a means to reform this.
Insurance Ireland welcomes recommendations to address rising cost of insurance
On 21 November 2016, Insurance Ireland issued a statement welcoming the publication of a list of emerging recommendations based on the work of the Cost of Insurance Working Group led by the Minister of State for Financial Services, eGovernment and Public Procurement. Insurance Ireland called for the recommendations to be implemented as a matter of priority; in particular, with regard to the level of awards made by Courts (which it believes will assist in addressing the escalating cost of claims). Insurance Ireland intends to continue to work with the Minister to ensure the volatility in the cost of claims is brought under control.
Solvency II Implementing Regulation – calculation of technical provisions & basic own funds
On 11 November 2016, the European Commission adopted an Implementing Regulation (EU/2016/1976) on the calculation of technical provisions and basic own funds for the purpose of Solvency II reporting (for the period 30 September 2016 until 30 December 2016). The Implementing Regulation was published by the European Commission in the Official Journal of EU on 16 November 2016; and it entered into force on 17 November 2016.
EIOPA publishes monthly technical information for Solvency II
On 9 November 2016, EIOPA published technical information on (a) the symmetric adjustment of the equity capital charge, and (b) relevant risk free interest rate term structures, as required under the Solvency II Directive; with reference to the end of October 2016 in both cases.
ECON comments on EIOPA's review of method to calculate ultimate forward rate
On 16 November 2016, the European Parliament's Committee on Economic and Monetary Affairs (ECON) published a letter (dated 15 November 2016) commenting on EOIPA's review of the method of calculating the ultimate forward rate (UFR) under Solvency II. ECON clarifies that its comments do not necessarily criticise the underlying calculation method proposed by EIOPA. However, it stresses (a) the importance of undertaking a proper impact assessment and (b) the risks involved in speedy implementation of, and annual changes to, the method in circumstances where the subject matter is long term in nature (and requires consideration of market experience over a period of time).
PRIIPs – Proposed postponement and other developments
On 9 November 2016, the European Commission proposed a one year postponement of the date of application of the Regulation on Key Information Documents for Packaged Retail and Insurance-Based Investment Products (EU/1286/2014). The proposed new application date is 1 January 2018. Online media reports state that the European Parliament has now approved the postponement (at its plenary sessions of 30 November 2016 and 1 December 2016). On 10 November 2016, the European Commission also wrote to the European Supervisory Authorities or 'ESAs' (i.e. the European Securities and Markets Authority, the European Banking Authority and EIOPA) regarding its proposed changes to the draft regulatory technical standards (RTS) on PRIIPS. The ESAs submitted the draft RTS to the European Commission in April 2016; but these were subsequently rejected by the European Parliament. The European Commission invited the ESAs to submit a formal opinion on the proposed changes to the RTS (which are based on the amendments outlined by the European Parliament) within six weeks. The ESAs have also been requested to develop guidance on the practical application of credit risk mitigation factors under the RTS for insurers.
EIOPA letter on proposed timetable for Solvency II technical advice
On 7 November 2016, EIOPA published a letter (dated 13 October 2016) relating to the European Commission's formal request (dated 18 July 2016) for advice on review of the Commission Delegated Regulation (the CDR) under Solvency II. Amongst other matters, EIOPA supports proportionate and simplified application of the rules in the CDR and removal of any technical inconsistencies. EIOPA expects to deliver final advice by the end of February 2018; which is to be based upon reported data under Solvency II as well as information it intends to gather from stakeholders in late 2016 and early 2017.
Insurance Europe comments on Paris Climate Change Agreement
On 4 November 2016, Insurance Europe published a press release welcoming the Paris Climate Change Agreement having come into force. This emphasises that action is required by policymakers and public authorities to ensure that the agreement is fully implemented. Notably, it mentions that insurers are already involved in climate change initiatives (such as advice provided to policymakers on climate change adaption projects, risk awareness initiatives, and Apps to inform consumers of potential risk of extreme weather events).