Central Bank of Ireland publishes Business Interruption Insurance Supervisory Framework
On 5 August 2020, the Central Bank of Ireland (CBI) published its COVID-19 and Business Interruption Insurance Supervisory Framework. In summary, the framework sets out:
- the CBI's expectations of firms in handling COVID-19 related business interruption claims and litigation
- the CBI's engagement with firms to date on the subject of business interruption
- the CBI's intended approach to analysing information provided by firms and supervisory engagement/escalation following its analysis
Upon publication, the CBI noted that while it could not publically comment on the specific supervisory work undertaken as part of the framework, it would be examining all possible options within its powers and would intervene where appropriate.
CBI publishes thematic assessment of diversity & inclusion in insurance firms
On 29 July 2020, the CBI published the results of its Thematic Assessment of Diversity & Inclusion (D&I) in Insurance Firms. The report found that sufficient priority is not being given to D&I and that firms have a significant way to go in ensuring their organisations are sufficiently diverse and inclusive. Following the assessment, each of the 11 firms reviewed were issued with specific findings and are required to submit an outcome focused strategy to the CBI. This strategy must be supported by an implementation plan mitigating the issues identified and enhancing the firm's approach to D&I for the future.
CBI publishes findings of a thematic review of the Retail Intermediary Annual Return
On 27 August 2020, the CBI published the findings of a Thematic Review of the Retail Intermediary Annual Return. The findings of the review showed improvement in retail intermediaries’ compliance with annual return reporting requirements; however, some material instances of incorrect reporting in certain categories were identified, including:
- financial position (net asset position)
- gross income/turnover
- commission and fee income
- professional indemnity insurance
In the majority of cases, the cause of the incorrect reporting was due to either a lack of understanding of reporting requirements or human error. The CBI expects firms to assess their procedures and controls to address the specific issues identified and to mitigate against any further incorrect reporting going forward.
The review identified a small number of firms that were unaware of their obligation to produce audited accounts. In addition to a number of firms not actively trading and retaining their authorisation for future use were identified. The CBI is engaging with these firms.
EIOPA outlines key financial stability risks of the European insurance and pensions sector
On 30 July 2020, EIOPA published its July 2020 Financial Stability Report of the (re)insurance and occupational pensions sectors in the European Economic Area. The report details the impact the COVID-19 pandemic has had on the (re)insurance sector and the potential future risks as the pandemic continue while also highlighting the work of EIOPA and national supervisory authorities in response to the pandemic. The report consists of two parts, the first part detailing the key risks identified for the (re)insurance sector. The second part provides two thematic articles focusing on the EU sustainable finance taxonomy from the perspective of the (re)insurance sector and the impact of EIOPA statements on (re)insurer's dividends.
EIOPA launches its Solvency II Single Rulebook
On 31 July 2020, EIOPA launched its first Single Rulebook. EIOPA describes the Single Rulebook as an online tool focused on Solvency II that ensures the consistent application of the regulatory framework for (re)insurance across the EU. The Single Rulebook enables navigation across different sources including the Solvency II Directive, the Commission Delegated Regulation, relevant regulatory and implementing technical standards adopted by the European Commission as well as EIOPA Guidelines, Opinions, Recommendations and Supervisory Statements.
EIOPA publishes monthly technical information
On 5 August and 14 August 2020, EIOPA published technical information on the symmetric adjustment of the equity capital charge and risk free interest rate term structures for Solvency II purposes with reference to the end of July and 11 August 2020 in both cases. It also updated the representative portfolios that will be used for calculation of the volatility adjustments to the relevant risk-free interest rate term structures for Solvency II.
On 17 August 2020, EIOPA also published its updated Risk Dashboard based on the first quarter of 2020 Solvency II data. The results show that the risk exposures of the EU insurance sector remain generally high compared to April because of the COVID-19 outbreak.