Central Bank Publishes Quarterly Newsletter

The newsletter provides an update of the activities of the Insurance Directorate in Q4 2017. The Central Bank has been focused on how risk culture in firms can be captured and this has cumulated in the development of an Insurance Supervision Risk Culture Model and an accompanying risk culture assessment tool, which will be rolled out during certain onsite inspections in 2018. The newsletter contains a detailed article on the leadership factor of the model, together with some background on culture.

To facilitate public disclosure of Solvency Financial Condition Reports (SFCR), the Central Bank has also created a central repository of 2016 SFCRs, which are now available on the Central Bank’s website. The newsletter also reminds insurers of the two consultations that the Central Bank are currently running in relation to establishment and supervision of third country branches and potential amendments to the Non-Life Insurance (Provision of Information) (Renewal of Policy Insurance) Regulations 2007.

The newsletter contains an update on recent AML and CFT developments and also urges firms to review the Financial Action Task Force Mutual Evaluations Report of Ireland, the European Supervisory Authorities Risk Factor Guidelines (which will apply from 26 June 2018) and the National and Supranational Risk Assessments published respectively by the Department of Finance and the European Commission.

The Central Bank’s insurance quarterly newsletter is here.

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Central Bank Issues Letter to Heads of Actuarial Function

The newsletter provides an update of the activities of the Insurance Directorate in the preceding quarter. The Central Bank is to carry out an assessment of risk culture through a series of onsite inspections in 2018. The newsletter contains a detailed article on the Central Bank’s Insurance Risk Culture Model on which such assessments will be based.

To facilitate public disclosure of Solvency Financial Condition Reports (SFCR), the Central Bank has also created a central repository of 2016 SFCRs, which are now available on the Central Bank’s website. The Central Bank also reminds stakeholders that it is currently running consultations in relation to third country branches and potential amendments to the Non-Life Insurance (Provision of Information) (Renewal of Policy Insurance) Regulations 2007.

The newsletter contains an update on recent AML and CFT developments also urges firms to review the Financial Action Task Force Mutual Evaluations Report of Ireland, the European Supervisory Authorities Risk Factor Guidelines (which will apply from 26 June 2018) and the National and Supranational Risk Assessments published respectively by the Department of Finance and the European Commission.

The Central Bank’s letter is here

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Central Bank’s Deputy Governor Discusses Regulatory Approach and Supervisory Priorities for 2018

On 8 December, Deputy Governor of the Central Bank, Ed Sibley gave a speech to the Financial Services Ireland’s Financial Services Forum. The speech discusses risks and challenges that firms need to address and the Central Bank's supervisory priorities for 2018.

The Deputy Governor stated that recent supervisory experience has highlighted the following operational and governance risks: inadequate system resilience and planning in relation to cyber security threats; ineffective co-ordination with outsourcing firms; insufficient governance arrangements and risk management frameworks; poor work culture that lacks transparency and consumer focus; and a lack of diversity. He added that assessing how such risks are dealt with by regulated firms will remain a key part of the Central Bank's ongoing supervision and inspection work.

The Central Bank's 2018 supervisory priorities for the insurance sector include risk transfer, cross border insurance, internal models and the absence of a resolution framework for insurers, which the Central Bank plans to address in its engagement with European Forums. Brexit preparedness is also a key priority for 2018 and the Deputy Governor indicated that for some firms, further work was needed to prepare for a possible hard Brexit. The Central Bank will continue to prioritise its authorisation activity in 2018 and has expanded its regulatory staff to ensure that it has sufficient resources to deal with the increased demand arising from Brexit.

The Deputy Governor’s speech is here.

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Central Bank Publishes Report on Consumer Experience of Purchasing Gadget Insurance

On 5 December, the Central Bank published a research report on consumer experiences when purchasing gadget insurance. The research also sought to understand the impact of any potential behavioural biases and identify potential risks in this area. The report states that 12% of Irish adults held gadget insurance at the time of the report. The key findings of the report showed that:

  • Most consumers did not plan to buy insurance for gadgets until it was sold to them as an add-on at the point of sale and that the majority of consumers did not understand what was covered;

  • Most purchases were based on verbal explanations by the retail staff selling the gadget and the consumer’s trust in their provider;

  • Consumers largely viewed gadget insurance as a low cost and low risk product and did not shop around;

  • The majority of consumers did not understand their cover and thought it covered more than it did; and

  • Some consumers may be paying for cover they do not need, as 21% of respondents stated that they failed to cancel previous policies after taking out a new policy.

Commenting on the findings of the report, Director General of Financial Conduct at the Central Bank, Derville Rowland said that “our focus is now on completing our inspection of firms, and ensuring that the best interests of consumers are protected.”

The Central Bank’s report is here

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