On 7 February, the Central Bank issued a letter to the boards of insurers.

The letter outlines that in June 2016, the Central Bank initiated a review of key life insurance pricing and reserving assumptions (the Review). The Review found that generally boards are not fulfilling their role in relation to oversight and governance of the assumptions.

The Central Bank notes that the board is ultimately responsible for oversight of the assumptions and ensuring compliance with the regulations in accordance with Regulations 43 and 44 of the European Union (Insurance and Reinsurance) Regulations 2015 (S.I. No. 458 of 2015) and that it is not possible for the responsibility for the assumptions to be delegated to the Heads of Actuarial Function (HoAF).

The Central Bank expects boards to have visibility of the key judgements made in the assumption setting process so that they can be understood and robustly challenged. Boards should challenge the consistency of assumptions between reserving, the ORSA and business plans. In order to facilitate the Board having oversight of the key assumptions and monetary strategy an appendix to the letter sets out certain actions that HoAFs should undertake when carrying out experience analysis, communicating options and recommending assumptions to the board.

A link to the letter is here.