On 18 January, Sylvia Cronin, the Director of Insurance Supervision at the Central Bank, addressed the ACOI on the role of culture in insurance supervision within the Central Bank.

Ms. Cronin emphasised how assessing the culture and behaviours of the firms the Central Bank supervises is an important part of forward looking supervision. She commented that when the Central Bank are performing a review of firms' capital risks, investment risk or operative risks, they will look at how firms make and communicate decisions, the risk management framework and the implementation of action. She commented that Solvency II is a risk based regulatory regime and that a powerful driver in embedding Solvency II will be the risk culture established by insurers. Ms. Cronin stated that the Central Bank will conduct a thematic review of internal audit function in 2017 and culture will be an element of this review.

Ms. Cronin set out in her remarks a nonexhaustive list of factors that the Central Bank have identified and have regard to in identifying what the culture of a firm is like. She stated that regulations such as the Corporate Governance Code, the Fitness and Probity regime and the Consumer Protection Code help to move firms in the right direction in regards to their cultures but that it is ultimately up to each firm to design their own culture around the general principle of "doing the right thing" for all stakeholders. Ms. Cronin also emphasises how imperative it is that companies reflect the principles behind the regulations.

Most large (re)insurers do not have any specific tangible approach towards the culture agenda with very few carrying out specific culture assessments. (Re)insurers often have the right structures in place but the behaviours of the individuals in the firm often do not support this structure. Where the Central Bank sees weakness in a firm's culture the level of supervision may increase. Increased supervision may take the form of an investigation of board effectiveness or an assessment of the embeddedness of risk management in the firm concerned.

Ms. Cronin described what the Central Bank considers to be good practice to develop an effective culture and gave the following six recommendations: (1) ensuring senior figures live the culture; (2) conducting staff surveys to identify the real culture; (3) actively supporting the culture through reward systems; (4) identifying clear roles, responsibilities and accountabilities; (5) measuring and tracking the culture and (6) adhering to the culture in times of pressure and stress.

A link to Sylvia Cronin's remarks is here.