KPMG Updates

Conducting a consumer-first remediation: Why remediation activity is expected to increase in the financial services sector

In today's financial services industry, ensuring a consumer-centric approach is more important than ever before. The volume of remediation activity is likely to increase from already high levels within the financial services sector, driven by a myriad of reasons such as process errors, questionable pricing strategies, challenges with legacy systems and the increasing levels of migration to a digital customer experience. KPMG Ireland, led by Gillian Kelly (Co-Head of Consulting) and Sean Redmond (Director, Risk Consulting) explores the key principles of remediation in our report below.

Future of insurance: Life and annuities

In our latest report on the Future of insurance: Life and annuities, KPMG International spoke with over 400 decision makers at life insurance and annuity providers around the world, to identify key signals of change sweeping across insurance organizations, and look at four business models expected to dominate the industry. The report is available to download now. 

Economic Headwinds and RD&I: How will the macro-environment impact Ireland’s innovation lifecycle?

Ireland’s Research, Development & Innovation (RD&I) landscape is one characterised by resilience and innovation. KPMG Ireland, led by Eoin McCarthy, PhD (Manager, R&D Incentives Practice) explores how the RD&I sector will fare as the country feels the brunt of global economic headwinds.

Regulatory Horizons: likely continued UK-EU regulatory divergence

In our latest issue of KPMG Regulatory Horizons, KPMG in the Crown Dependencies identifies that the volume of publications by regulators on both sides of the UK-EU channel points towards increased divergence between regulatory regimes, especially given the UK government’s `The Edinburgh Reforms’ collection of announcements.

Guernsey Updates

Guernsey climbs the ranks in latest Global Financial Centres Index

Guernsey has risen 12 places in the latest Global Financial Centres Index. Published by a City of London think-tank, Z/Yen, the Index provides evaluations of competitiveness and rankings for the world’s major financial centres.

Guernsey is one of just two jurisdictions in Western Europe to rise 10 places or more, reflecting the financial centre’s reputation for stability, security and depth of expertise.

Head of Strategy and Sustainable Finance, Stephanie Glover, said the results of this Index are encouraging: “It is gratifying to see Guernsey perform so well in this evaluation. Despite the many unprecedented global challenges of recent years, Guernsey has remained a secure and stable jurisdiction for financial services, boasting impressive breadth and depth of expertise across our various financial services sectors.”

The report reviews five areas of competitiveness - business environment, human capital, infrastructure, financial sector development and reputation. Generally, Western European centres performed well, with the ratings showing a high degree of stability and the average being just 0.18% lower than the last Index. However, Guernsey showed an above average uplift, with an increase of 17 points.

Overall, the Index suggests that, while there is considerable variation across centres, confidence in financial centres and the world economy remains high, despite the instability caused by the continuing war in Ukraine and other macro-economic factors.

The full report can be found here.

Consultation Paper on Rules for Retail General Insurers

On 20 March 2023, Guernsey’s Financial Services Commission issued a Consultation Paper on Retail General Insurers. General, as opposed to life, insurance concerns coverage for house contents, bikes, health costs and so on. Guernsey already offers such insurance on a global basis and aims to grow this business. To support this aim, the Commission intends to develop further the current regulatory regime.

Information on the consultation paper can be found here.

Isle of Man Updates

Thomas Miller Captive Management Launch the Isle of Man’s First Insurance Special Purpose Vehicle Authorisation

Thomas Miller Captive Management has successfully launched the Isle of Man’s first Insurance Special Purpose Vehicle Authorisation (ISPV); the first authorisation of its kind in the Isle of Man. 

Ilex Global Reinsurance Company ISPV Limited “Ilex” was authorised by the Isle of Man Financial Services Authority (IOMFSA) on 8 February 2023, with the application approved by the IOMFSA in just two-and-a-half days from submission. 

Thomas Miller’s announcement can be found here.

March 2023 update from the Financial Services Authority

The IOMFSA has issued the March 2023 edition of its quarterly update for stakeholders.

The bulletin includes an overview from CEO Bettina Roth, further details regarding the IOMFSA’s revised supervisory approach, and news about the Isle of Man’s first insurance special purpose vehicle.

There is also a strong focus on AML/CFT, with updates on a number of key workstreams and details of forthcoming webinars in respect of the AML/CFT statistical returns, beneficial ownership, and the Politically Exposed Persons (PEP) thematic.

Phased implementation of new fees for financial regulation and oversight

The IOMFSA’s phased implementation of a new fee structure for firms regulated or overseen by the IOMFSA took effect from 1 April 2023.

Tynwald Members approved the Fees Orders and Regulations 2023 on 21 March 2023 marking a key milestone in the transition to an updated funding approach for the Island’s finance industry.  Previously, the IOMFSA has not levied or held flat fees for applications, notifications for changes to the control, or annual regulation of regulated entities.

It is anticipated that the fees charged by the IOMFSA will better reflect the nature and scale of activities being carried out by regulated entities and designated businesses.

The legislation sets out the revised fees for regulated entities and designated businesses in 2023/24, 2024/25, and 2025/26. Changes are being introduced over three years to allow fee payers time to adjust.

UK Updates

FCA: Implementing the Consumer Duty in Life Insurance

The Financial Conduct Authority (FCA) published a letter to firms in the Life Insurance sector and their FCA-regulated outsourced service providers (OSPs) to help them implement and embed the Duty effectively.

FCA: DP23/1: Finance for positive sustainable change

The FCA published a DP to gather views on sustainability-related governance, incentives and competence in regulated firms. FCA is committed to supporting the role of the financial sector in enabling an economy wide transition to net zero, and to a sustainable future more broadly. To encourage diversity of thought and wide-ranging debate, this DP also includes commissioned articles from experts with relevant and interesting perspectives on firms’ sustainability-related governance, incentives, competence, and stewardship arrangements. The deadline to respond to this DP is 10 May 2023.

FCA: Implementing the Consumer Duty in the General Insurance and Pure Protection Sectors

The FCA published a letter to firms in the General Insurance (GI) and Pure Protection (PP) sectors to help them implement and embed the Duty effectively. 

PRA: The regulatory foundations of international competitiveness and growth − speech by Vicky Saporta

The Prudential Regulatory Authority (PRA) published a speech by Vicky Saporta, Executive Director of Prudential Policy in which she talks about the Financial Services and Markets Bill on which the Parliament is debating and which will redefine the PRA’s powers and responsibilities. The Bill would give the PRA a new secondary objective that it will require PRA to act when they can to facilitate the UK economy’s international competitiveness and its growth over the medium to long term, subject to alignment with international standards. 

Central Bank of Ireland Updates

Guidance for (re)Insurance Undertakings on Climate Change Risk

Following a public consultation the Central Bank issued on 27 march 2023 the final Guidance for (Re)insurance Undertakings on Climate Change Risk. The Central Bank also published a Climate Guidance Infographic (, a Feedback Statement on Guidance for (Re)Insurance Undertakings on Climate Change Risk – CP151, as well as a number of responses to CP151. The Guidance is designed to clarify the Central Bank’s expectations on how (re)insurers might address climate change risk in their business and to assist (re)insurers in developing their governance and risk management frameworks to appropriately consider and address climate change risk.  The Central Bank expects all (re)insurers, including captives, to assess and manage the climate change risks they are exposed to, and consider the impact that they themselves are having on the climate, through the business that they write, or their investments.

Dear CEO Letter

The Central Bank has published a Dear CEO Letter with regards to the key regulation and supervision priorities for 2023.  Consulting and engaging on regulatory developments under the Consumer Protection Framework and Individual Accountability Framework leading to enhancements in existing and new regulations is one of the Central Bank’s key priorities.

Quarterly Bulletin 2023:1

The Central Bank has published its first Quarterly Bulletin of 2023. The Quarterly Bulletin provides an outlook on performance indicators of the Irish economy. Key takeaways include: 

  • Inflation remains high but has begun to ease, with both headline and core inflation now expected to be lower than previously forecast in 2023, at 5 per cent and 3.5 per cent respectively.
  • The unemployment rate is expected to remain low, averaging 4.4 per cent out to 2025, with tight labour market conditions continuing.  

Modified domestic demand is forecast to grow by 3.1 per cent in 2023, 2.9 per cent in 2024 and 2.6 per cent in 2025.

International Association of Insurance Supervisors Updates

Public Consultation on Issues Paper on roles and functioning of Policyholder Protection Schemes (PPSs)

The International Association of Insurance Supervisors (IAIS)’ Resolution Working Group has published for consultation a paper on issues of roles and functioning of Policyholder Protection Schemes (PPSs). The paper provides an updated overview of global practices regarding PPSs and their roles in insurance resolution and a variety of related activities. This paper describes current practices for PPSs and is intended to serve as a guide for jurisdictions considering establishing a PPS or modifying an existing PPS. Comments are due by the 14th April 2023. 

Climate risk supervisory guidance

The IAIS published a consultation document on part one of draft climate risk supervisory guidance. The IAIS explains that in 2022 it carried out a gap analysis of existing IAIS supervisory material to assess how climate risk is already captured and to identify possible further work in terms of standard-setting and potential future guidance on supervisory practices. This followed the publication in May 2021 of an initial application paper on the supervision of climate-related risks in the insurance sector. Following the gap analysis, the IAIS has decided to consult on changes to guidance on various ICPs and to develop supporting material in several consultations over the next 18 months. 

Insurance Europe Updates

Artificial Intelligence

A group of industry representatives, including Insurance Europe (IE) have published a statement calling on the European Parliament to ensure that its position on the European Commission’s proposed Artificial Intelligence (AI) Act would support innovation and the uptake of the use AI in Europe. The signatories are concerned that negotiations in the Parliament will deviate from the AI Act’s original proposal and goals to establish a risk-based approach to AI.

European Commission for a comprehensive approach to Mental Health welcomed.

Insurance Europe have provided a response to a European Commission call for evidence regarding its ambition to take a comprehensive approach to mental health, which insurers have welcomed. At EU level there is scope to raise awareness of mental health and mental health conditions to encourage citizens to seek appropriate, timely, and adequate treatment. 


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.

16 February: Concentration risk SCR

EIOPA clarified in Q&A (#2408) that the answer to this question is provided by the European Commission.

Delegated Regulation (EU) 2019/981 amended Delegated Regulation (EU) 2015/35, among others, to clarify the sequence of the calculation in the market risk concentration sub-module, namely that “[individual] exposures should […] first be mapped to credit quality steps and relative excess exposure thresholds, and risk factors should subsequently be applied at the level of single name exposures.” (See recital 31 of that Regulation). Where insurance and reinsurance undertakings have exposures of the types referred to in Article 187(4), (4a) or (4b) as well as other exposures not in the scope of the same paragraph to the same counterparty, they should derive an implied credit quality step in order to be able to follow the sequence for the calculation explained above. The implied credit quality step for a specific exposure in the scope of Article 187(4), (4a) or (4b) should be the credit quality step which would produce the same risk factor g_i for a single name exposure pursuant to Article 186(1) as the risk factor g_i for the specific exposure determined in accordance with Article 187(4), (4a) or, as applicable, (4b).

16 February: Spread risk SCR

EIOPA clarified in Q&A (#2401) that the answer to this question is provided by the European Commission.

Article 180(1), (3), (5), (11), (13), (14) and (16) of Commission Delegated Regulation (EU) 2015/35 sets out the rules for the calculation of the capital requirements for specific types of bond and loan exposures. Where not otherwise specified, the general rules for the calculation of the capital requirements for types of bond and loan exposures in Article 176(2) remain relevant. In particular, that paragraph requires that the modified duration should be denominated in years and never be lower than one.

16 February: MCR absolute Floor

EIOPA clarified in Q&A (#2385) that the answer to this question is provided by the European Commission.

The Notice regarding the adaptation in line with inflation of the amounts laid down in the Directive 2009/138/EC of the European Parliament and of the Council on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (2021/C 423/12), published on 19 October 2021, states: “The revised amounts shall be implemented by Member States by 19 October 2022.” This means the revised amounts will come into force as of 19 October 2022. Replying to the question of whether the first calculation using revised amounts should take place in the fourth quarter of 2022 or in the first quarter of 2023, the first calculation of the MCR taking into account the revised amounts should take place in 2022. Therefore, the updated floors indicated in the Notice should be the reference for calculations of the MCR for Q4 2022 and YE 2022 and, if pertinent, for any other calculation of the MCR between 19 October and YE of 2022.

16 February: Credit assessments used in SCR

EIOPA clarified in Q&A (#2373) that the answer to this question is provided by the European Commission.

The term "class of items" does not refer to the classification as rated/unrated exposures by selected ECAIs. Where an external credit assessment is not available from the selected ECAIs (Article 4(2) of Delegated Regulation (EU) 2015/35), an insurer would not be allowed to seek for another available credit assessment from another ECAI in relation to “unrated exposures”, as this would not be in line with the principle laid down in Article 4(3) of Delegated Regulation (EU) 2015/35, under which the use of credit assessments needs not to be used selectively.

16 February: Treatment of credit derivatives in SCR

EIOPA clarified in Q&A (#2317) that the answer to this question is provided by the European Commission.

According to Article 179(3) of Commission Delegated Regulation (EU) 2015/35, credit derivatives which are part of the undertaking's risk mitigation policy shall not be subject to a capital requirement for spread risk, as long as the undertaking holds either the instruments underlying the credit derivative or another exposure with respect to which the basis risk between that exposure and the instruments underlying the credit derivative is not material in any circumstances. Therefore, if any of the examples of derivatives mentioned in the question are part of the undertaking's risk mitigation policy pursuant to that paragraph, the derivative should be treated in the counterparty default risk module and not in the spread risk module. The term credit derivative is not further specified in Commission Delegated Regulation (EU) 2015/35. However, as the explanatory memorandum to the act adopted by the Commission explains, the “Delegated Regulation [was] based on […] technical advice provided by EIOPA in 2009 and 2010“. EIOPA’s advice on the market risk module proposed that credit derivatives, “such as credit default swaps, total return swaps and credit linked notes”, should be dealt with in the spread risk module (see paragraph 4.116). Accordingly, credit default swaps and total return swaps that are not part of the undertaking's risk mitigation policy pursuant to Article 179(3) should be treated in the spread risk module.