Financial Services Regulation and Compliance – Insurance March 2022

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DOMESTIC

Central Bank implements new insurance regulations

On 15 March 2022, the CBI issued the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Insurance Requirements) Regulations 2022 (the Regulations) which will come into force on July 1, 2022. The regulations result from a CBI-led review of differential pricing, which focused on the motor and home insurance markets. The CBI found that differential pricing could lead to unfair results for some consumers. Accordingly, the CBI proposed the Regulations to address a range of issues identified during the review. The Settlement applies to auto and home insurance policies sold to consumers. The main requirements include:

  • a ban on price-stepping in auto and home insurance as of July 1, 2022;
  • a requirement for insurers and intermediaries to conduct an annual review of their home and auto insurance pricing policies and processes (to ensure they do not discriminate against consumers based on seniority, or that they do not systematically exceed the price charged to consumers renewing for the first time when they offer longer renewals (land consumers); and
  • Termination-related changes from 1 October 2022 (for example, allowing consumers to terminate automatic renewals of non-life insurance policies without change and informing consumers of this right).

Quarterly Insurance Bulletin – March 2022

The CBI published the latest issue of its quarterly insurance newsletter on March 24, 2022. The newsletter covered a range of industry issues, including the crisis in Ukraine and the digital maturity of the Irish insurance market. The CBI also reported on its review of the use of exempt auxiliary insurance intermediaries (EAII) in the insurance sector; highlighting areas needing improvement in this context (e.g. compensation arrangements and recording of grounds for policy cancellation). The newsletter also provided updates on the regulations mentioned above; the use of service companies in the insurance sector; and recent law enforcement cases relevant to the insurance industry (eg in the area of ​​fitness and probity).

Central Bank of Ireland Insurance Company Statistics

The Central Bank of Ireland (CCR) released its latest insurance company statistics on March 8, 2022. Key indications based on the statistics included a considerable upward trend in total premiums recorded. The statistics also showed a notable increase in the total number of requests. In addition, while overall life insurance technical provisions (RTIs) liabilities have increased significantly; on the other hand, the ITRs in non-life insurance fell.

EUROPEAN

EIOPA – Draft Amendments to Prudential Reporting and Disclosure Requirements

On March 31, 2022, EIOPA submitted draft Implementing Technical Standards (HIS) under Solvency II at the European Commission. These include proposals to (a) simplify quarterly reporting for all businesses, (b) remove certain annual reporting templates for all businesses, (c) implement new thresholds to encourage reporting based on risks and proportionate and (d) adjust reporting requirements for captives to better reflect their business model.

EIOPA recommendations on insurance stress tests

Following its report on the 2021 insurance stress test, EIOPA published recommendations for supervisory authorities on March 21, 2022. EIOPA advised national supervisory authorities to review the excessive reliance on transition measures from Solvency I to Solvency II and whether risks among insurers resulting in significant declines or (near) overshoots of SCR ratios were being managed. He also recommended that supervisors investigate why insurers have not taken steps to manage areas of risk identified in their stress tests. Supervisors were also asked to assess the viability of actions taken by insurers that deviated from the actions discussed during the pre-validation phase. Finally, EIOPA advised NCAs to take monitoring measures (eg on-site inspections) to assess the quality of data provided to NCAs.

EIOPA – Long-term priorities on digital transformation and innovation

EIOPA published its digital transformation strategy in December 2021. More recently (March 18, 2022), EIOPA launched dedicated web pages relating to each of the five key long-term priorities identified in this strategy, namely (1 ) open insurance/finance, (2) AI and big data analytics, (3) financial stability and resilience, (4) digital single market benefits and (5) surveillance technology. Web pages provide an overview of each focus area; and describe how EIOPA proposes to remedy it. Among other things, EIOPA says it will proactively assess the changes, opportunities and challenges that transformation and innovation bring.

ECON – Solvency II, Insurance Recovery and Resolution

On 7 March 2022, the Committee on Economic and Monetary Affairs of the European Parliament (ECON) has published a paper on its work on Solvency II and the Insurance Recovery and Resolution Directive. This is intended to stimulate debate and suggests topics for discussion/focus under these initiatives (including the aim and achievement of proportionality in insurance regulation).

EIOPA – Results of the study on internal models

The results of EIOPA’s annual study on the modeling of market and credit risk in internal models were published on March 10, 2022. EIOPA highlighted the need for continuous prudential supervision at national and European (and confirmed its intention to further develop appropriate monitoring tools and to develop consistent monitoring approaches in this space). The results indicate considerable variation between insurers in terms of the combined credit and market risk requirements applied in their calculations (partly due to different risk management approaches/preferences).

EIOPA – Terminological structure of the Russian ruble RFR

EIOPA issued an alert on March 25, 2022 stressing that it would publish the risk-free interest rate of the Russian ruble (RFR) structures per term (to be used in the calculations at the end of March 2022). EIOPA also confirmed that it was following the development of Russian ruble interest rates and Russian government bond trading throughout the month and would continue to monitor the situation until the end of the month. March.

Monthly technical information EIOPA (Solvency II)

The European Insurance and Occupational Pensions Authority (EIOPA) released its February 2022 Technical Information for Solvency II on March 3, 2022. This included updated information to be applied in calculations regarding volatility corrections; symmetrical adjustment of the capital charge for Solvency II; and relevant term structures of risk-free interest rates.

Sanctions imposed in response to the crisis in Ukraine

During February and March, the EU imposed a number of sanctions in response to the crisis in Ukraine. As the crisis develops and sanctions continue to evolve, the CBI is publishing details of new restrictive measures/sanctions adopted in this regard, along with any associated EU/UN guidance, on their dedicated webpage.

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