Insights Blog

The Central Bank of Ireland (CBI) recently published its insurance newsletter for June 2023. The main highlights were:

  • Product Oversight and Governance (POG) inspection – following a thematic inspection of POG arrangements in six non-life insurers, the CBI identifies a number of good practices which others may wish to consider, such as the Chief Risk Officer acting as ‘gatekeeper’ for considering the materiality of product changes, establishing a dedicated wording committee, a formal schedule of product reviews and implementing control systems over policy wordings and non-standard endorsements.
  • UL products survey – EIOPA published a supervisory statement in November 2021 on the assessment of the value for money of unit-linked (UL) insurance products, following concerns raised by national competent authorities. In 2022, UL products represented 82% of the GWP of life insurers authorised by the CBI. The CBI notes that value for money can be a difficult concept to define, but it has focused on the deductions (i.e. commissions and charges) aspect of value for money, particularly to identify any outliers with higher deductions. In July 2022, the CBI issued a survey to all life insurers authorised by the CBI that currently sell UL products in Ireland or elsewhere and the analysis of the responses received concluded that in general the deductions being made by such life insurers are not undue. However, the newsletter warns that this conclusion does not mean that the CBI will not review commission levels or product benefits in future (particularly in the context of the upcoming review of the Consumer Protection Code).
  • Reinsurance – following increasing engagement with the CBI on reinsurance transactions and a Europe-wide trend towards a wider variety of reinsurance arrangements, the CBI cites some examples of good practice when assessing the impact of proposed reinsurance:
    • document how the requirements of Articles 208-215 of the Commission Delegated Regulations are satisfied before allowing for the benefit of a risk-mitigation technique (RMT) in their SCR and involve legal experts in this process where necessary;
    • consider the risk of lack of availability or increased prices for RMTs or termination of the RMTs, the impact this would have on the SCR coverage ratio, the feasibility of remedial actions and if this impacts the overall efficacy of the reinsurance as an RMT.
  • Forthcoming information requests – the CBI is planning to shortly issue a financial sanctions questionnaire to some (re)insurers, as well as information requests in relation to investment risk, IT risk, claims management (to assess the impact of the Personal Injuries Guidelines) and the home insurance market.