This month's roundup of developments affecting the insurance industry sees EIOPA publish a paper on a potential macroprudential approach to the low interest rate environment in the context of Solvency II.
- HM Treasury - Budget 2016
- ABI & BIBA react to IPT increase in Budget
- FOS updates technical resources on insuring and buying cars
- Preparing for the General Data Protection Regulation (GDPR): 12 steps to take
- ICO update on action taken over nuisance calls
New Legislation and Consultations
- HM Treasury consultation on Insurance Linked Securities
- Insurance Europe response on Retail Financial Services Green Paper
- Insurance Europe on forthcoming IORP II trialogues
- European Commission requests EIOPA technical advice on IDD
- FCA reports on fair treatment of long-standing customers in the life insurance sector
- FCA announces pilot of GI claims scorecard
- PRA modification of non-Solvency II firms SIMR functions
- FCA welcomes competition compliance efforts by pension providers
- EIOPA looks at potential macroprudential approach to low interest rate environment in context of Solvency II
- EC publishes Solvency II equivalence decisions for Bermuda and Japan
- EIOPA Chairman sets out challenges to Solvency II implementation
HM Treasury - Budget 2016
The Chancellor of the Exchequer gave his Budget to Parliament on Wednesday, 16 March 2016, which contained a number of announcements relevant to the insurance sector, including:
- a measure providing powers to make statutory instruments to deal with the treatment of insurance linked securities issued in the UK;
- amendments to the Finance Act 2012 in relation to the taxation of life insurance companies (to prevent excessive tax charges arising on life insurance policies, changes will be made to current tax rules for part surrenders and part assignments); and
- an increase of the standard rate of Insurance premium tax (IPT) from 9.5% to 10%, for premiums received on or after 1 October 2016
HM Treasury, 16 March 2016
ABI & BIBA react to IPT increase in Budget
The Association of British Insures has responded to the Budget, saying that a further increase to Insurance Premium Tax is disappointing. The British Insurance Brokers' Association has also reacted to the increase by expressing its astonishment. Association of British Insurers & British Insurance Brokers' Association, 16 March 2016
FOS updates technical resources on insuring and buying cars
The Financial Ombudsman Service (FOS) has published the following new or updated online technical notes in relation to insuring and buying cars:
The Financial Ombudsman Service, 7 March 2016
Preparing for the General Data Protection Regulation (GDPR): 12 steps to take
An Information Commissioner's Office (ICO) checklist highlights 12 steps that organisations can take to prepare for the General Data Protection Regulation (GDPR), which intends to strengthen and unify data protection for individuals within the European Union (EU). The GDPR has yet to be formally adopted but the final text was agreed by the EU Parliament, the EU Council and the EU Commission on 15 December 2015.
Information Commissioner's Office, 14 March 2016
ICO update on action taken over nuisance calls
The Information Commissioner's Office (ICO) has reported that last year it received 166,665 complaints concerning unsolicited cold calls. The regulator fined ten companies a total of nearly £1m in 2015 and expects to issue a further £1m in fines before the end of the financial year. They report on their work with other regulators like Ofcom and work with local government trading standards team to pursue culprits. The ICO is taking a firm stance against nuisance calls and has its eye set on this and other areas such as privacy notices and third party marketing.
The ICO has published detailed guidance for companies carrying out marketing – explaining their legal requirements under the Data Protection Act (DPA) and the Privacy and Electronic Communications Regulations (PECR). The guidance covers the circumstances in which organisations are able to carry out marketing over the phone, by text, by email, by post or by fax. Companies are advised to revise this guidance.
To see the full statement click here.
Information Commissioner's Office Blog, 19 February 2016
New Legislation and Consultations
HM Treasury consultation on Insurance Linked Securities
HM Treasury has published a consultation setting out their thinking on the key features that will be needed to attract ILS vehicles to the UK. In particular, it examines what will be needed for an effective and competitive approach to the authorisation and supervision, corporate structure and taxation of ILS vehicles.
HM Treasury, 1 March 2016
Insurance Europe response on Retail Financial Services Green Paper
Insurance Europe, the European (re)insurance federation, has responded to a consultation on the European Commission Green Paper on Retail Financial Services. It points out that whilst the digitalisation of the European insurance industry will reshape the way insurers interact with their customers, it cannot remove all barriers to increasing the volume of cross-border insurance. Insurance Europe emphasised that the expansion of cross-border insurance within the EU should remain market-driven. Insurance Europe, 21 March 2016
Insurance Europe on forthcoming IORP II trialogues
Insurance Europe has published details of the forthcoming trialogue discussions between the European institutions to be held on the revised directive on Institutions for Occupational Retirement Provision (IORP II). It points out that IORPs play an important role in providing retirement income to workers and that the trialogues offer opportunities to safeguard members and beneficiaries.
Insurance Europe, February 2016
European Commission requests EIOPA technical advice on IDD
The European Commission has published a letter requesting EIOPA to provide technical advice on possible delegated acts concerning the Insurance Distribution Directive (IDD). As previously reported in this publication, the IDD came into force on 22 February 2016 and it regulates the point of sale of insurance contracts. It empowers the European Commission to make level 2 delegated acts based on guidance and advice from EIOPA.
The European Commission, 3 March 2016
FCA reports on fair treatment of long-standing customers in the life insurance sector
The FCA has published a report on the findings from its thematic review of the fair treatment of long-standing customers in life insurance. The review assessed the treatment of closed-book customers against four high level customer outcomes, focusing on how customers are being treated now. The FCA found a mixed picture with firms demonstrating good practice in some areas and poor practice in others. The FCA is now undertaking further work in relation to this matter and consulting on non-Handbook guidance to ensure closed-book customers are treated fairly in future. The consultation closes on 3 June 2016.
FCA, 3 March 2016
FCA announces pilot of GI claims scorecard
The FCA has announced that it will pilot the publication of general insurance "scorecards" on a small number of products. The FCA will collect data from firms and publish it on its website, allowing interested parties, including consumer groups, to use the information to compare both products and firms. This will seek to demonstrate how often consumers are likely to claim on a product, how likely those claims are to be accepted and the average claims payout. The pilot will launch in summer 2016.
FCA, 1 March 2016
PRA modification of non-Solvency II firms SIMR functions
The PRA has issued a modification by consent in relation to the Senior Insurance Managers Regime (SIMR) rules in the Senior Insurance Management Functions part of the PRA Rulebook. The change relates to dormant insolvent insurers.
Bank of England: PRA, March 2016
FCA welcomes competition compliance efforts by pension providers
The FCA has published a release on its website explaining that, as part of the Retirement Income market study, it has reviewed a number of distribution arrangements and strategies from different pension providers to ensure that they comply with competition law. Whilst the majority of the arrangements raised no issues as regards competition, the FCA had some concerns about a few and it engaged with the relevant firms to obtain further information, sending letters to put some of them on notice of the potential for infringements of competition law. As a result, some firms have now undertaken a number of initiatives to strengthen competition compliance and these initiatives have been welcomed by the FCA.
FCA, 11 March 2016
EIOPA looks at potential macroprudential approach to low interest rate environment in context of Solvency II
EIOPA has published a paper on a potential macroprudential approach to the low interest rate environment in the context of Solvency II.
EIOPA, 23 March 2016
EC publishes Solvency II equivalence decisions for Bermuda and Japan
EC, 4 March 2016
EIOPA Chairman sets out challenges to Solvency II implementation
EIOPA has published a speech by its Chairman, Gabriel Bernardino, on the implementation of the Solvency II Directive.
EIOPA, 3 March 2016