KPMG Updates

Diversity, Equity and Inclusion in Insurance

The insurance industry, like most other business sectors, has seen a reshaping of attitudes towards Diversity, Equity and Inclusion (DEI) in recent years and alignment around the need to address it. We have seen major civil society driven movements such as Black Lives Matter (BLM and #MeToo that have brought DEI into the spotlight. Further to this, initiatives in the UK such as the Insurance Women’s Inclusivity network, the Insurance Cultural Awareness Network and the ABI Diversity, Equity and Inclusion Blueprint are having a tangible impact on the sector in this area.

Nevertheless, compared to other industries, the insurance and wider financial services sector are not leaders in DEI.

What more needs to be done to make the insurance industry a fair and inclusive place to work?

Mel Newton, Partner, FS People Consulting, KPMG in the UK discusses how things stand around DEI in Insurance and our new Reshaping DEI in Insurance report developed in collaboration with the Association of British Insurers.

A new era in audit: Audit is changing - are you ready?

A new era in audit is emerging as ESG and reporting regulations challenge business leaders like never before. Audit quality continues to be vital in underpinning trust in the capital markets. All the while, the audit profession is evolving in keeping up with these challenges. Emer McGrath, Head of Audit at KPMG Ireland, says that the key change is how we collaborate – in teams, with colleagues and with clients. 

A Global Minimum Tax - Are Insurers Ready?

Ensuring appropriate levels of corporate tax are paid by multi-national companies in a digital world has increasingly preoccupied governments over the last decade. We have all seen media stories of world-leading digital technology companies under fire over how much tax they pay relative to their revenue in countries like the UK. Since the financial crisis, pressure has also grown on low-tax jurisdictions that have attracted significant amounts of business by creating tax levels that larger countries cannot compete with.

In July 2021, leaders of 130 countries under the OECD’s Base Erosion and Profit Shifting project approved an outline framework for a global minimum tax regime created by the OECD and called “Pillar 2” for short. Implementation of this regime is now becoming urgent for many firms, including insurers.

Damon Lambert, Tax Partner, Insurance, KPMG in the UK has identified the key areas to focus on ahead of Pillar 2 commencing on 1 January 2024.

Guernsey Updates

Guernsey is now the largest captive domicile in Europe

Guernsey is now the largest domicile for captive insurance in Europe with a total of 201 captives domiciled in the island at the end of 2022.

Last year, Guernsey approved 12 new captive licences and had three surrenders. This overall increase of nine puts Guernsey at the top for captive numbers, overtaking Luxembourg with whom Guernsey tied joint largest European domicile at the end of 2021. Luxembourg reported a total of 195 captives at the end of 2022.

Chief Executive, Rupert Pleasant, said this is tremendous news for Guernsey: “It is testament to the quality and experience of our practitioners. Guernsey is a is globally renowned centre for specialist financial services, a jurisdiction of substance and it is gratifying to reach this milestone. Guernsey has a long history of domiciling captives, with the first captive insurer being incorporated into the island over 100 years ago. Since then, the island’s insurance industry has continuously evolved and innovated to provide the very best infrastructure for its clients, and we were proudly recognised as European Domicile of the Year at the 2022 European Captive Review Awards”

The full update can be found here.

Isle of Man Updates

Authority updating its supervisory approach

The Isle of Man Financial Services Authority is progressing plans to update the way it supervises regulated entities and designated businesses.  Internal restructuring is currently taking place at the financial regulator to support the implementation of an enhanced risk-based supervisory framework.

Bettina Roth, the Authority’s Chief Executive Officer, outlined the changes during Friday 3 February 2023 Manx State of the Nation conference at the Comis Hotel.  The intention is to focus the Authority’s resources on the risks that pose the biggest threat to its regulatory objectives of protecting consumers, reducing financial crime, and maintaining confidence in the Island’s financial services sector.

The revised supervisory methodology has been in development for some time, with the project highlighted as a priority in the Authority’s Strategic Plan and Annual Report.

UK Updates

FCA: Climate Financial Risk Forum Guide 2022

The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) jointly published CFRF Guide 2022 to enable financial services companies, regulators and related stakeholders to identify and address climate-related risks before they crystallise. CFRF explore cases and thematic areas for climate litigation in the following broad categories:

  • The threats posed to enshrined and otherwise internationally recognised human rights
  • Climate-related disclosures and the presence of greenwashing.
  • Corporate responsibility for climate-related damages and harms.
  • Calling out failures of corporations and governments to sufficiently adapt to a low-carbon economy.

Cases seeking to enforce climate standards. 

FCA: Consumer Duty webinar - Insurance

The FCA conducted a webinar on Consumer Duty where it mentioned that the consumer duty will not be as significant a change for the insurance market compared to other areas of financial services. In many areas the consumer duty builds on existing rules in the insurance sector, however; the duty does go further in other areas. Testing outcomes at all stages is key and the principle focus for the coming months is on testing the implementation of existing rules and if firms are meeting the FCA’s cost-of-living expectations.

FCA: Expectations of life insurers in relation to the cost of living

The FCA published a letter on its expectations of life insurers in relation to the cost of living. Consumers across the country continue to be significantly affected by the rising cost of living, which is disproportionately hitting the poorest households. FCA expects life insurers to ensure customers are provided with appropriate product information during all stages of communication, firms to take reasonable steps to make customers aware of their options and the consequences of accessing and stopping or reducing contributions to pensions and long-term savings, ensure anti-scam communications are used to protect customers where possible, expect firms to ensure that these propositions offer fair value to customers.

Central Bank of Ireland (Central Bank) Updates

Opening Remarks by Governor Gabriel Makhlouf at the Hertie School, Berlin

The Central Bank of Ireland (CBI) has published a speech by Governor Gabriel Makhlouf at the Hertie School, Berlin, discussing ‘building resilience over the past decade’ in the European financial system.

Outsourcing Risk for (Re)insurers: Recommendations from the Central Bank on outsourcing risk

The CBI views the management of outsourcing risk as key from both a Prudential and Consumer Protection perspective. KPMG Ireland (led by Leticia Cashin, Director, Actuarial) and John O’Donnell (Managing Director, Insurance Regulatory) discuss how regulated financial service providers in Ireland (“regulated firms”) are expected to have effective governance, risk management and business continuity processes in place in relation to outsourcing, to mitigate potential risks of financial instability and consumer detriment. 

Pre-emptive Recovery Plan for (Re Insurers) CBI Observations

The CBI introduced pre-emptive recovery planning requirements for (re)insurers in 2021 requiring (re)insurers to have a recovery plan in place since 31 March 2022. The Central Bank wrote to insurers in November 2022 setting out the observations from its thematic review of 71 Recovery Plans comprising of all High & Medium-High insurers' Recovery Plans and a sample of Recovery Plans prepared by Medium-Low & Low insurers. The CBI noted that undertakings have made good progress in understanding the recovery planning requirements and guidelines, however noted that there was some variance in the quality of the recovery plans shared with the Central Bank and that they expected that plans will develop further as they become more mature over future iterations. Further details of the review can be found here.

Dear CEO letter: Protecting consumers in a changing economic landscape

On 17 November 2022, the CBI issued a Dear CEO Letter to all regulated financial service providers (“Firms”). KPMG Ireland (led by Gillian Kelly, Aine MacDonnell, Director and Noel Moloney, Risk Consulting Director) discuss the purpose of the Dear CEO letter, which was to draw attention to the key risks previously identified in the CBI Consumer Protection Outlook Report of March 2022 and to emphasise the importance to Firms of meeting its expectations in light of the more challenging economic outlook.

European Insurance and Occupational Pensions Authority (EIOPA) Updates

Consumer Trends

The European Insurance and Occupational Pensions Authority (EIOPA) has published its Consumer Trends Report 2022 in which it examines the financial health of consumers and small businesses through their use of insurance and pension savings products. The findings of the report are underpinned by the results of a flash Eurobarometer survey commissioned by EIOPA and other relevant sources. 

Sustainability Reporting Standards

EIOPA has published its Opinion on the European Financial Reporting Advisory Group’s technical advice concerning European Sustainability Reporting Standards (ESRS) following the request of the European Commission.

Climate-related adaptation measures: Non-life underwriting practices

EIOPA has published a report on the implementation of climate-related adaptation measures in non-life underwriting practices. Climate-related adaptation measures include water-resistant walls or doors in case of flood risks. The report provides an overview of the main findings of a pilot exercise EIOPA carried out with 31 volunteering insurance undertakings in 14 countries to better understand the industry's current underwriting practices regarding climate change adaptation and to assess their prudential treatment under Solvency II. It concludes that implementing climate-related adaptation measures in the underwriting practices of non-life insurance undertakings is a key task to maintain the future availability and affordability of non-life insurance with coverage against climate-related hazards.

Governance arrangements in third countries

EIOPA has published a supervisory statement on the use of governance arrangements in third countries to perform functions or activities. The aim of the supervisory statement is to ensure appropriate supervision and monitoring of the compliance of insurance undertakings and intermediaries with the requirements of the relevant EU legislation in relation to their governance arrangements in third countries.

International Association of Insurance Supervisors Updates

2023-24 roadmap

The International Association of Insurance Supervisors has (IAIS) published its roadmap for 2023-24. The roadmap outlines the projects and activities that form the IAIS' work programme over the next two years, guided by its Strategic Plan 2020-24. The IAIS will prioritise efforts on key multi-year projects while also responding to the various global issues and trends facing the insurance sector. In 2023-24, the IAIS will provide significant work programme continuity with activities focused on, for example, finalising the development of global standards, in particular, the Insurance Capital Standard (ICS) for internationally active insurance groups (IAIGs) and assessing trends and risks in the global insurance sector through the global monitoring exercise (GME), which is an important pillar of the holistic framework for the assessment and mitigation of systemic risk.


The IAIS has published their Newsletter, dated December 2022 – January 2023. This includes endorsement of the IAIS Holistic Framework for the assessment and mitigation of systemic risk in the insurance sector, publication of the 2022 Global Insurance Market Report and the 2023-2024 Roadmap, reporting on diversity, equity and inclusion action in the insurance sector, publications on trends related to FinTech and SupTech. 

Policyholder protection schemes

The IAIS has published a draft issues paper on roles and functioning of policyholder protection schemes (PPSs) for consultation. Issues papers often form part of the preparatory work for developing standards and can contain recommendations for future work by the IAIS. This paper provides an updated overview of global practices on PPSs and their roles in insurance resolution and related activities.

Insurance Europe Updates

Industry welcomes EFRAG’s first set of ESRS and calls for refinements

Insurance Europe (IE) and the European CFO forum have published a set of joint key messages on the European Financial Reporting Advisory Group (EFRAG) technical advice on the first set of the European Sustainability Reporting Standards (ESRS). 

Insurers welcome IAIS work to promote operational resilience good practices and calls for more convergence not new rules

IE has published its response to a consultation conducted by the IAIS on its issues paper on operational resilience. IE welcomes IAIS to promote good practices in operational resilience and agrees with the need for greater convergence in cyber governance and resilience. IE believes digital operational regulations should be principle- and risk-based, as well as proportionate, in order to be flexible enough to stay in line with technological developments. They should also consider the size, business and risk profiles of financial entities.

Time and further regulatory clarification on sustainable finance framework needed to address greenwashing risk not new rules

IE has responded to the European Supervisory Agency’s (ESA) call for evidence on greenwashing. IE notes the insurance sector appreciates the need for significant policymaking action on sustainability and has been supportive of the EC’s sustainable finance agenda. IE believe no new regulation on greenwashing is needed for the sustainable finance framework to deliver on its ambitions while addressing greenwashing risks.


Please see below for EIOPA’s response to a selection of recent questions, as summarised by our colleagues in KPMG UK. EIOPA has responded to queries where uncertainties exist in the Solvency II requirements. The Solvency II requirements may change or become more prescriptive over time.  Click here to search the full list of Q&A questions and responses.  These may have relevance to Guernsey and Isle of Man markets now or in the future.

13 December: SCR

EIOPA clarified in Q&A (#2480) that Article 189(7) of the Delegated Regulation (EU) 2015/35 refers to investment guarantees provided by a third-party to the policyholders. That provision is not applicable to a situation where an asset invested in by an insurance undertaking provides a guarantee to that undertaking, but not to its policyholders. Structured notes can have widely different features. For this reason, there is no general answer about their inclusion in the market concentration risk sub-module and counterparty default risk module; the treatment should be determined on a case-by-case basis taking into account the various underlying components of the structured note (e.g. the fixed income part and a series of derivative components) as well as the corresponding capital requirements as stated in Guideline 5 of the Guidelines on the treatment of market and counterparty risk exposures in the standard formula: “Where the asset can be considered as the composite of discrete components, undertakings should where appropriate apply the relevant stresses to each of these components separately."

13 December: SCR

EIOPA clarified in Q&A (#2330) that as per Article 84(2) of the Delegated Regulations (EU) 2015/35, indirect exposures to market and counterparty risk should be captured within the Solvency Capital Requirement. As per Guideline 2 of the Guidelines on look-through, firms should iterate the look-through approach so as to be satisfied that all direct and indirect risks have been captured. The formulaic calculation of each risk is given in each submodule. The firm should include the indirect exposure to the loan at SPV level in each submodule where there would be a change in own funds arising under the calculation.

14 December: Technical Provisions

EIOPA clarified in Q&A (#2353) that the economic penalties described in the question does not imply that the policyholder is legally enforced, or in other words legally obliged, to pay the premium, thus such penalties should not be considered as an ability to compel the payment of the premiums. The presence of any penalty related to the payment of future premiums does not overrule article 18(5) of the delegated regulation 2015/35. Thus, if the payment of the future premiums cannot be legally enforced, in the absence of a compensation for a specified uncertain event that adversely affects the insured person and of a financial guarantee of benefits, the future premiums will always fall outside the contract boundaries. The fact that these future premiums fall outside the contract boundaries does nonetheless not imply the discontinuance of the concerned insurance policies. The undertaking will, according to guideline 0, still have to take realistic discontinuity options into account.

15 December: Own Funds

EIOPA clarified in Q&A (#2200) that as per Article 15(3) of the Delegated Regulation (EU) 2015/35, a Deferred Tax Asset (DTA) needs to be valued taking into account any legal or regulatory restrictions on the ability to utilise that asset. This should include any restrictions which arise from the existence of ring-fenced funds. After all restrictions have been incorporated within the valuation, netting of the overall DTA and DTL amounts at entity level would be appropriate, and any net amount of DTA can be recognised as Tier 3 own funds. Please find further information related to the reporting in Q&A (#2354). As stated in Article 9 of the Delegated Regulation (EU) 2015/35, insurance and reinsurance undertakings shall value assets and liabilities in accordance with international accounting standards adopted by the Commission pursuant to Regulation (EC) No 1606/2002 provided that those standards include valuation methods that are consistent with the valuation approach set out in Article 75 of Directive 2009/138/EC.

16 December: SII Reporting – S.02.01

EIOPA clarified in Q&A (#2483) that changes in ITS regarding definition of reinsurance recoverable and, respectively, definitions of reinsurance receivables and reinsurance payables, were intended to implement the approach presented by EIOPA in Q&A (#1853). At the same time, EIOPA wants to clarify that the answer in Q&A 1853 regarding the “uncertainty" of the payment was given in relation to claims and not premiums. In case of premiums in most of the cases the amounts are known and mentioned “uncertainty" feature cannot be used as determining whether or not the specific premium payment should be in the receivables/payables or in the best estimate/recoverable. 

Additionally, EIOPA wants to underline that according to Q&A 1853 everything related to the best estimate of the technical provisions should be represented in reinsurance recoverable and respectively according to explanation in ITS amendments to the item “Reinsurance payables" (C0010–C0020/ R0830) for “the “Solvency II value" column all expected payments (due and past-due) from the undertaking to reinsurers that are not included in reinsurance recoverable should be included in this item. 

Therefore, considering the example given by the insurance company in the inquiry according to which the policyholder does not pay the premium and expected payments from policyholder will be reported in receivables (i.e., “Insurance and intermediaries receivables") and not in the technical provisions – EIOPA confirms that in this case the appropriate reinsurer's share should be reported in the reinsurance payables and not in reinsurance recoverable.