Government proposes changes to Insurance Compensation Fund
On 5 July 2017, the Government published the Heads of the Insurance (Amendment) Bill 2017 to clarify the role of the Insurance Compensation Fund (ICF) in light of the Setanta case. A number of changes are proposed to the ICF including (a) increasing 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 (b) providing for a new Motor Insurers Bureau of Ireland (MIBI) fund which will be funded by a levy on motor insurers and reimburse the ICF for any payments over and above the current level of cover for third party claims (i.e. the lesser of 65% or €825,000).
Government to introduce changes to Personal Injuries Assessment Board
On 30 June 2017, the Government published the Heads of the Personal Injuries Assessment Board (Amendment) Bill 2017 which aims to ensure greater compliance with Personal Injuries Assessment Board (PIAB) and to increase the number of claims settled through it. Several operational changes are proposed in relation to PIAB: notably, PIAB will be required to update the Book of Quantum every three years. Insurance Ireland has expressed concern that the legislation may not go far enough to reduce claims costs or to prevent the by-passing of PIAB, and has repeated its call for the international benchmarking of personal injury awards.
Central Bank publishes motor insurance statistics for 2015
The Central Bank has published its annual report on private motor insurance statistics. The report is based on data relating to 2015. Key findings include: (a) the total number of policy years in the Irish market decreased by 2 per cent; (b) claim frequency continued its downward trend; (c) the average cost of year 1 claims increased by approximately 10 per cent (the report also notes a significant increase of 45 per cent for comprehensive policies since 2010); (d) settlement rates declined marginally for comprehensive cover. Settlement rates increased for third party cover although the report notes that there has been a downwards trend for third party cover since 2008; (e) average premiums increased (comprehensive premiums rose 10%; third party fire and theft premiums rose by approximately 19%).
Cost of Insurance Working Group publishes second quarterly update on cost of motor insurance and first key information report
The Cost of Insurance Working Group published two reports in July: its second quarterly update on the cost of motor insurance (Quarterly Update) and its first quarterly motor insurance key information report (First Key Information Report). The Quarterly Update provides an update on progress implementing the recommendations contained in the Action Plan from the Report on the Cost of Motor Insurance. Those recommendations include the publication of aggregated metrics on claims costs, trends and other key metrics (e.g. relating to premium levels, profitability and settlement channels) pending the establishment of a national claims information database. Those metrics are reported in the First Key Information Report based on data received from Insurance Ireland in June 2017.
Update on the transposition of the Insurance Distribution Directive
On 19 July 2017, the Department of Finance published a number of responses to its public consultation on the transposition of the Insurance Distribution Directive (IDD) including submissions from Insurance Ireland and Brokers Ireland. The consultation sought views on a range of key IDD provisions which allow for national discretion in how they are transposed. Insurance Ireland notes in its submission that existing Irish rules and requirements provide for a high level of consumer protection and that changes will give rise to costs which will ultimately be borne by the consumer. On that basis, unless there is a very strong rationale for change, Insurance Ireland's preferred option is to maintain the status quo insofar as possible in transposing IDD.
European Commission consults on two draft Delegated Regulations supplementing IDD
The Commission has published two draft Delegated Regulations supplementing IDD. The first of the two draft regulations supplements the product oversight and governance requirements contained in IDD for both manufacturers (e.g. in relation to the product approval process, identifying the target market, product testing, product monitoring and review, selection of distribution channels) and distributors. The second draft regulation supplements the information requirements and conduct of business rules applicable to the distribution of insurance-based investment products (e.g. in relation to conflicts of interests and inducements). Comments are invited on both draft Delegated Regulations until 17 August 2017.
European Insurance and Occupational Pensions Authority issues Opinion on supervisory approach to Brexit relocations
On 11 July 2017, the European Insurance and Occupational Pensions Authority (EIOPA) issued an opinion aimed at ensuring consistency among national supervisors in terms of their approach to (re)insurance authorisations in light of the UK withdrawing from the EU. The opinion adopts a series of principles across key overlapping areas dealing with authorisations and approvals, governance and risk management, outsourcing and on-going supervision. Notably, the opinion emphasises the importance of substance and warns of the potential impact of outsourcing in that regard. The opinion also rules out the automatic recognition of PRA authorisations by other supervisory authorities in the context of Brexit relocations.
European Insurance and Occupational Pensions Authority consults on first set of advice to the European Commission on Solvency II Review
On 4 July 2017, EIOPA published a consultation paper seeking feedback on its first set of advice to the European Commission on its review of the Solvency II framework. The consultation paper sets out EIOPA's advice on specific aspects of Commission Delegated Regulation (EU) 2015/35 (CDR) including: simplified calculations, reducing reliance on external credit ratings and risk mitigation techniques. Responses are invited until 31 August 2017. A further consultation paper will be published by year-end on other aspects of the CDR which are under review.
European Insurance and Occupational Pensions Authority calls for a harmonised recovery and resolution framework for EU (re)insurers
On 5 July 2017, EIOPA published an Opinion calling for a harmonised recovery and resolution framework for (re)insurers to be established and applied across the EU. According to EIOPA, the existing fragmented national recovery and resolution landscape could cause significant problems in the resolution of EU (re)insurers, particularly those belonging to cross-border groups. The Opinion proposes four building blocks on which a harmonised framework should be based: (a) preparation and planning; (b) early intervention; (c) resolution; (d) cooperation and coordination.
European Insurance and Occupational Pensions Authority publishes monthly technical information and updates on ECC and RFR
On 6 July 2017, EIOPA published monthly technical information on (a) the symmetric adjustment of the equity capital charge (ECC) and (b) the relevant risk free interest rate term structures (RFR) for Solvency II purposes; in each case, with reference to the end of June 2017. On 19 July 2017, EIOPA also published an updated version of the source code used for the monthly RFR calculation.
European Insurance and Occupational Pensions Authority publishes amendments to ITS (reporting and disclosure) and final Taxonomy
On 17 July 2017, EIOPA published draft amendments to the implementing technical standards (ITS) on: (a) templates for reporting to national supervisors; and (b) the procedures, formats and templates specific to the solvency and financial condition report. On the same date, EIOPA published the final version 2.2.0 of the Solvency II XBRL Taxonomy, which is to be used for reporting with reference dates from 31 December 2017.
European Insurance and Occupational Pensions Authority reports on recent InsurTech roundtable
On 5 July 2017, EIOPA published a report on its recent InsurTech roundtable on how technology is reshaping the insurance landscape. The report summarises the main issues discussed at the roundtable including: the impact of digital technology throughout the insurance value chain; the advent of InsurTech firms as new players in the insurance market; big data; blockchain and smart contracts; peer-to-peer insurance; artificial intelligence; how regulators can encourage financial innovation. EIOPA plans to organise further InsurTech roundtables in the near future. In the meantime, the report notes that EIOPA's immediate focus will be on big data; cyber risks and supervisory approaches to financial innovation.
Insurance Europe responds to report on sustainable finance
On 18 July 2017, Insurance Europe (IE) issued a press release commenting on a report published by the European Commission earlier in the month in relation to financing a sustainable European economy. The report identifies the insurance sector as particularly suited to supporting sustainability but recognises that the willingness and ability of insurers to invest in sustainable assets is not matched by the availability of sustainable financing opportunities. Given the lack of supply in green assets, IE opposes the automatic penalisation of other investments and agrees with the report that further policy discussion is needed in the area of Solvency II with a view to incentivising and facilitating long-term investments.
Insurance Europe publishes feedback on proposed changes to European Market Infrastructure Regulation
On 25 July 2017, IE published feedback on the European Commission's proposal to amend the European Market Infrastructure Regulation (EMIR). IE welcomes the proposed removal of dual-side reporting of exchange-traded derivatives (although it believes that this should be extended to all centrally cleared transactions) and attempts to address the problems faced by small and medium sized insurers face when trying to secure central clearing services. However, IE is concerned that several issues raised by the industry in the past in relation to EMIR have not been addressed including: the simplification of procedures in relation to the exempting of over-the-counter (OTC) intragroup transactions from collateralisation requirements; the requirement to post cash when using central clearing services.
Insurance Europe publishes information exchange templates as required by the PRIIPs Regulation
On 30 June 2017, IE published two templates designed to facilitate the exchange of information between asset managers and insurers in relation to multi-option products, as required under the PRIIPs Regulation. The templates, which are optional, were developed by a European Working Group which includes members of IE and the European Fund and Asset Management Association.