Tracker, Financial Services Regulation & Compliance - Insurance

DOMESTIC

Central Bank of Ireland publishes National Specific Template Regulations
The Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Insurance Undertakings National Specific Templates Reporting Arrangements) Regulations 2016 (Regulations) were signed into law on 11 April 2016. These specify the national specific templates (NSTs) to be submitted to the Central Bank, and the frequency of their submission, by (a) insurers rated 'High Impact' under PRISM, (b) (re)insurers transacting variable annuity business, and (c) EEA insurers with a branch in Ireland where the annual gross written premium in respect of Irish situate risk exceeds €25m. The Regulations apply immediately except in the case of insurers referenced at (c) above, to whom they will apply from 1 January 2017.

Central Bank of Ireland publishes Solvency II Information Note 9
On 15 April 2016, the Central Bank published Solvency II Information Note 9 outlining the Central Bank's position in respect of (re)insurers experiencing difficulties in providing complete and reliable information for the purpose of Solvency II reporting template S.06.03 (Collective investment undertakings – look-though approach). The Note sets out the process which such (re)insurers should follow for Q1 reporting. The Central Bank emphasises that all (re)insurers should make every effort to provide as much detail as possible; and provides guidance on the steps to be taken if completion of the template would not meet the required level of detail.

Central Bank of Ireland publishes information on insurance supervisory objectives and process
The Central Bank recently published a document setting out its insurance supervisory review process. This summarises its methods of supervision and criteria for insurance supervisory assessment. It sets out an overview of the key Solvency II legislation/guidelines with respect to topics including (a) system of governance, (b) technical provisions, (c) capital requirements and (d) quality/quantity of own funds. On the same day, the Central Bank published details of its supervisory objectives for 2016 (together with an overview of the structure of its Insurance Directorate). Some areas emphasised as priorities (including for inspection) are: (a) monitoring of claims environment, (b) adequacy of technical provisions, (c) governance requirements, (d) pricing and reserving risk, and (e) claims underwriting and outsourcing risk.

Central Bank of Ireland publishes guidelines on Online Reporting System
On 1 April 2016, the Central Bank published guidelines on its Online Reporting System (ONR) for (re)insurers. This document provides guidance on the Solvency II XBRL File Upload User Procedure.

Central Bank of Ireland publishes validations on the Statistics National Specific Templates
On 19 April 2016, the Central Bank published a document setting out the validation rules that apply to (re)insurers when uploading the Statistics National Specific Template (SNST) to the ONR. Files must comply with these validations to be loaded onto the ONR. Guidance is provided in relation to (a) uploading the SNST, (b) additional validations to be applied to uploaded data and (c) timelines that should be met. 

Central Bank of Ireland publishes FAQs on 'Day One' Opening Balance Sheet Reconciliation Reporting template
On 14 April 2016, the Central Bank published Frequently Asked Questions on the 'Day One' Opening Balance Sheet Reconciliation Reporting template (FAQs). The FAQs address general issues and provide specific guidance on issues relating to life assurers, non-life insurers, reinsurers and groups of companies.
 

EUROPEAN:

Commission Delegated Regulation (EU) 2016/467 published in Official Journal
On 1 April 2016, Commission Delegated Regulation ((EU) 2016/467)) was published in the Official Journal of the European Union. It amends Commission Delegated Regulation ((EU) 2015/35)) concerning calculation of regulatory capital requirements for several categories of assets held by (re)insurers. The Regulation entered into force on 2 April 2016.

Final regulatory technical standards published on Key Information Documents for Packaged Retail and Insurance-based Investment Products
On 7 April 2016, the European Supervisory Authorities published their final draft regulatory technical standards on key information documents (KIDs) for packaged retail and insurance-based investment products (PRIIPs) (the Draft RTS). Amongst other matters, the Draft RTS provide (a) a three page template KID, (b) details on the obligation to review KIDs and (c) details on conditions for fulfilling the requirement to provide a KID in good time. The Draft RTS have been sent to the European Commission for endorsement and will enter into force on 31 December 2016, at the same time as the Regulation on KIDs for PRIIPs ((EU) 2014/1286)).

Insurance Europe publishes information on Packaged Retail and Insurance-based Investment Products
On 8 April 2016, Insurance Europe published a press release warning that consumers may find the proposed content of PRIIPs KIDs hard to understand and unhelpful when comparing investment products. It also warned that the methodology used to arrive at a risk indicator overstates the risk of PRIIPs. Insurance Europe reiterated its call for a one-year extension of the application date of the Regulation on KIDs for PRIIPs ((EU) 2014/1286). On 26 April 2016, Insurance Europe published an 'insight briefing' critiquing the Draft RTS. In particular, it reiterated its concern about the representation of: (a) how much a PRIIP would cost and (b) how much risk a PRIIPs would pose to consumers. Insurance Europe is particularly concerned about inclusion of the cost element of biometric risk premium (which they argue is not a cost, as it relates to insurance cover).

European Insurance and Occupational Pensions Authority publishes preparatory guidelines on product oversight and governance
On 13 April 2016, EIOPA published preparatory guidelines on product oversight and governance arrangements by insurance undertakings and distributors. The guidelines apply to insurers / insurance intermediaries who manufacture insurance products and to entities that distribute insurance products which they do not manufacture. EIOPA intends that the guidelines will assist national supervisors with their implementation of the Insurance Distribution Directive (IDD). EIOPA will review these guidelines once the deadline for transposition of IDD (23 February 2018) has passed.

European Insurance and Occupational Pensions Authority publishes consultation on Solvency II treatment of infrastructure corporates
On 15 April 2016, EIOPA published a consultation paper on the EU Commission's request for further advice on identification and calibration of 'other infrastructure investment' risk categories. Key points on which EIOPA is seeking input include: (a) the differences between infrastructure corporates and infrastructure projects, (b) whether (and how) a new calibration for infrastructure corporates can be created, (c) criteria that might be used to identify suitable infrastructure corporate investments and, (d) analysis of risk management requirements for infrastructure projects and infrastructure corporates. The consultation will close on 16 May 2016.

European Insurance and Occupational Pensions Authority consult on amendments to Solvency II implementing technical standards and guidelines
On 5 April 2016, EIOPA published a consultation paper on proposed amendments to: (a) Commission Implementing Regulation ((EU) 2015/2450) which contains implementing technical standards (ITS) on templates for submitting information to supervisory authorities and (b) its guidelines on reporting and public disclosure. EIOPA aims to correct drafting errors in the Implementing Regulation, insert a new guideline on qualifying infrastructure investments and ensure that supervisory authorities receive appropriate information for the purposes of the supervisory process. The deadline for responses is 3 May 2016.

European Insurance and Occupational Pensions Authority consults on Ultimate Forward Rate
On 20 April 2016, EIOPA published a consultation paper on its proposed methodology to derive the ultimate forward rate (UFR). The UFR (referenced in Article 77a of the Solvency II Directive, 2009/138/EC) is relevant to the extrapolation of the relevant risk-free interest rate term structure for long maturities. EIOPA explains the proposal and underlying rationale for its methodology and the impact analysis of changing the UFR. EIOPA intends to calculate/update the UFR annually. The deadline for responses is 18 July 2016.

Insurance Europe issues response to EIOPA consultation paper on Ultimate Forward Rate
On 21 April 2016, Insurance Europe issued a press release in response to EIOPA's consultation on the ultimate forward rate (UFR). This notes the requirement that the UFR be stable over time and should only be adjusted due to changes in long-term expectations. Insurance Europe also comments that changes to UFR may have a significant impact on insurers and the UFR should continue to be aligned with the outcome of the long-term guarantee assessment and Omnibus II. It also states that the focus on UFR and changes in the short term is ill-timed and that insurers should be able to focus on Solvency II implementation without further uncertainty.

European Insurance and Occupational Pensions Authority feedback on internet sales of insurance and pension products
On 4 April 2016, EIOPA published a feedback statement on its Opinion on sales of insurance and pension products via the Internet. The report discusses feedback received from national supervisors as to how they are supervising online distribution activities. Most jurisdictions have structured their supervisory measures to apply to all distribution channels, rather than specifically targeting online sales. The feedback statement gives specific examples of NCA actions dealing with issues concerning online distribution channels.

Insurance Europe report on indirect taxation of insurance contracts in Europe
On 31 March 2016, Insurance Europe published an updated version of its booklet on the indirect taxation of insurance contracts in Europe. This sets out statistical information on fiscal/parafiscal taxation on premiums.

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

Date published: 04 May 2016