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Brian Morrissey, Head of Insurance, and our insurance team have compiled a collection of KPMG's latest publications and articles which focus on developments in, and issues facing the insurance industry. Also included are recent publications from the CBI, EIOPA, and other European bodies.

KPMG Updates

International standard on auditing (Ireland) 315 (Revised 2019)

The International Auditing and Assurance Standards Board (“IAASB”) has issued a revised International Standard on Auditing (“ISA”) 315, Identifying and assessing the risks of material misstatement. ISA 315 has been revised to require a more systematic risk identification and assessment process, which in turn promotes better responses to the risks identified. 

KPMG (led by Elaine Stafford, Director) has outlined why the standard is being amended, the aim of the new standard, key changes and first impressions.

Has risk culture been appropriately considered in your business?

Academics, regulators, investors and the public have become increasingly aware of the links between culture and risk. As such, culture is top of the agenda for Boards and is included today in most discussions involving strategy and risk. The prominent nature of culture in today’s world is further reinforced by the environmental, social and governance (“ESG”) agenda and its emphasis on good governance. The KPMG Risk Consulting team (led by Gillian Kelly, Co-Head of Consulting) explain the issues and note that while many organisations recognise the need to manage or change culture, they don’t always know where to start or how to tackle the problem. An organisation’s culture must be considered through both a people and risk lens, to ensure a unified approach.

Consumer reform: A series exploring consumer-related topics

The New Consumer Agenda was published by the European Commission (“EC”) in November 2020 and provides a consolidated view of Consumer Policy within EU member states for the next five years, 2020 to 2025. Consumer protection is at the forefront of this Agenda and the Central Bank of Ireland’s priorities for 2021. KPMG (led by Gillian Kelly) will be releasing a series of publications discussing a number of the key consumer-related topics as part of our consumer reform series. We invite you to follow this series and contact us with any questions you may have.

International Data Transfers: the new SCCs December 2022 deadline

The Schrems II Case led to the invalidation by the Court of Justice of the European Union (“CJEU”) of the Privacy Shield as a data transfer mechanism between the EU and the US. The invalidation of the EU-US Privacy Shield in July 2020 meant that all transfers relying on the Privacy Shield had to immediately cease. The case also scrutinised the effectiveness of the Standard Contractual Clauses (“SCCs”). Schrems II has significant implications for your organisation if you transfer personal data outside of the EEA. The deadline to identify, assess and remediate all existing contracts with the new SCCs is 27 December 2022.

KPMG (led by Tom Hyland, Director) has outlined the key steps to follow in the next few months to help you with the task.

Data Privacy Matters – International

The Trans-Atlantic Data Privacy Framework is the EU-US data flow agreement "in principle" announced in April 2022 which replaces the invalidated Privacy Shield Framework. KPMG (led by Tom Hyland) explain the following: 

  • EU-US Transfers: The Trans-Atlantic Data Privacy Framework (“TADPF”)
  • USA: Algorithmic Accountability Act of 2022 introduced to House of Representatives
  • US Senate passes omnibus Cybersecurity Bill
  • India Personal Data Protection Bill raises concerns

Data Privacy Matters – Ireland

In February 2021, the Data Protection Commission (“DPC”) published its annual report. The report highlights the government's increase in funding of the DPC, and makes note of the DPC's roles and responsibilities, as well as queries and complaints made to the DPC. KPMG (led by Tom Hyland) explain the following:

  • Data Protection Commission highlights
  • Whistleblowing Bill enhances the protections for whistle-blowers

Key indicators to assess insurer conduct

Conduct and culture have become a key focus of insurance regulators and governing bodies in recent years. The International Association of Insurance Supervisors (“IAIS”), a voluntary membership organisation of insurance supervisors and regulators, has highlighted these key areas as part of its 2020 – 2024 Strategic Plan.

As part of its plan, the IAIS calls for a more comprehensive approach to conduct risk to be adopted by insurer supervisors; noting that conduct and culture issues within the insurance industry have the potential to lead to financial soundness and stability concerns. Therefore, both conduct and culture should be of utmost importance to insurers. KPMG (led by Gillian Kelly and Brian Morrissey (Head of Insurance and Actuarial) have highlighted findings from the report IAIS recently released, new measures and next steps.

Central Bank of Ireland (CBI) updates

Speech: Gabriel Makhlouf

The Central Bank of Ireland (“Central Bank”) has published a speech by Governor Gabriel Makhlouf: German-Irish economic relationship at Consulate General of Ireland and IHK Frankfurt events. The speech outlines aspects of the transition of the financial services ecosystem including the developments in the Irish financial services sector and the challenges this transition presents for the regulatory community. 

Bulletin in relation to Virtual Asset Service Providers

The Central Bank has published a bulletin in relation to Virtual Asset Service Providers (“VASPs”), seeking to assist applicant firms to strengthen both their applications for registration and their Anti-Money Laundering and Countering the Financing of Terrorism (“AML/CFT”) frameworks.

(Re)insurance undertakings on Intragroup Transactions and Exposures

The Central Bank has published a Consultation Paper seeking stakeholders' views on proposed Guidance for (re)insurance undertakings on Intragroup Transactions and Exposures. The aim of the Guidance is to provide clarity on the Central Bank’s expectations with regard to intragroup transactions and exposures of (re)insurance undertakings supervised by the Central Bank and in doing so to promote a level playing field in this regard. 

The proposed Guidance focuses on material intragroup financial links through intragroup loans, intragroup reinsurance, and centralised treasury management functions. Interested stakeholders are invited to provide feedback on or before 23 September 2022.

Consumer protection expectations of firms providing Direct Debit Services

The Central Bank has engaged with financial services firms to set out and reinforce its consumer protection expectations of all regulated firms, including insurers, that also operate as Direct Debit originators (“DDOs”). This follows a review of plans submitted from the financial services firms that are amongst the top 20 DDOs in Ireland, which set out the measures they are taking to support their customers through the large-scale migration of customer bank accounts currently underway.

Central Bank (Individual Accountability Framework) Bill 2022

The Central Bank has published a statement welcoming the publication of the Central Bank (Individual Accountability Framework) Bill 2022. The Central Bank and the Department of Finance are to continue to work together throughout the stages of the legislation process. The Central Bank intends to publicly consult on the Individual Accountability Framework once the Bill has been enacted. 

Consultation on climate change risk guidance for the Insurance Sector

The Central Bank has commenced a public consultation on proposals to introduce guidance on climate change risks for the insurance sector. The proposed Guidance aims to clarify the Central Bank’s expectations on how (re)insurers address climate change risks in their business and to assist them in developing their governance and risk management frameworks to do this.

The Central Bank has also created an infographic to provide a visual overview of the approach to the assessment and ongoing management of a (re)insurer’s exposure to climate change risk set out in the Guidance. Interested stakeholders are invited to provide feedback on or before 26 October 2022. 

European Insurance and Occupational Pensions Authority (EIOPA) updates

Integrating customer’s sustainability preferences within a suitability assessment

The European Insurance and Occupational Pensions Authority (“EIOPA”) has published its guidance on integrating the customer’s suitability preferences in the suitability assessment under the Insurance Distribution Directive (“IDD”). The guidance is based on Commission Delegated Regulation (EU) 2021/1257 and aims at easing the implementation of the Delegated Regulation by national competent authorities ("NCAs") as well as by insurance undertakings and intermediaries providing advice on insurance-based investment products ("IBIPs").

The guidance is complemented by a feedback statement, which addresses the comments received from stakeholders in a public consultation on draft Guidelines on integrating the customer’s sustainability preferences earlier this year. 

Proposal for an Insurance Recovery and Resolution Directive

EIOPA has published a staff paper on the European Commission's (“EC”) legislative proposal for the Insurance Recovery and Resolution Directive (“IRRD”). In the staff paper, EIOPA confirms that it welcomes the proposal. It believes that the approach to the Directive and its main elements should remain broadly as they are, although it acknowledges that there are several technical issues that could be subject to debate, such as how the tools will work in practice. 

Supervisory statement on differential pricing practices

EIOPA has launched a three-month-long public consultation relating to a draft supervisory statement on differential pricing practices. EIOPA notes differential pricing practices as those pricing techniques in which consumers with similar risk and cost of service characteristics are charged different premiums for the same insurance products. Stakeholders are invited to provide their feedback on the consultation paper until 7 October 2022 by responding to the questions via the online survey.

In the consultation paper, EIOPA sets out its expectations of competent authorities in their supervision of the relevant product oversight and governance (“POG”) requirements in Articles 17, 20 and 25 of the IDD and the POG Delegated Regulation. The deadline for responses is 7 October 2022.

Peer review report: Outsourcing

EIOPA has published a report following its peer review on outsourcing. The findings show that EU undertakings are making increasing use of outsourcing, mainly in the field of technology, and that the level of outsourcing varies greatly across the EEA. EIOPA will consider how to best reflect the overall results of its peer review in its work on supervisory convergence. In addition, it will also consider the results of the peer review in the implementation of the proposed Regulation on digital operational resilience for the financial sector (“DORA”) (when applicable).

Voluntary disclosure of principal adverse impact under the SFDR

The Joint Committee of the three European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs) published the first annual report on the extent of voluntary disclosure of principal adverse impact under the Sustainable Finance Disclosure Regulation – Article 18 of Regulation (EU) 2019/2088. Based on a survey of National Competent Authorities, the ESAs have developed a preliminary, indicative and non-exhaustive overview of good examples of best practices, and less good examples of voluntary disclosures

Consultation on governance arrangements in third countries

EIOPA has published a consultation paper on a draft supervisory statement on the use of governance arrangements in third countries (for example, third-country branches), to perform functions or activities to serve EEA policyholders.

The draft supervisory statement notes that EIOPA has previously underlined the need for EEA insurance undertakings not to display the characteristics of an empty shell company and instead demonstrate an appropriate level of corporate substance in the EEA, including the presence of key decision-makers, function holders and staff to an extent proportionate to the nature, scale and complexity of the firm's business in the EEA.

Feedback to the draft supervisory statement can be provided until 31 October 2022 by providing a response to the questions set out in an accompanying online survey

Risk Dashboard on Solvency II Data

EIOPA published a Risk Dashboard based on Solvency II data following the first quarter of 2022. The results show that insurers’ exposures to macro, market and digitalisation risk are currently the main concern for the insurance sector. Other risk categories such as insurance as well as profitability and solvency are noted to be at medium levels.   

Application guidance on how to reflect climate change in ORSA

EIOPA published a final version of the application guidance on materiality assessments and climate change scenarios within the Own Risk and Solvency Assessment (“ORSA”). The publication followed a public consultation on the topic as well as a pilot exercise in which stakeholders were invited to participate. 

Other European and International Supervisory Authority updates

IAIS: Welcomes global climate-related financial disclosure

The IAIS has welcomed a global standard on the disclosure of climate related financial disclosures published by the International Sustainability Board (”ISSB”). The IAIS noted the importance for insurers of a globally consistent baseline climate reporting standard, both as users and preparers of climate-related disclosures. IAIS members aim for insurers to continue to improve the level and quality of disclosure in the clear direction as set by the new ISSB standard. 

IAIS: June Newsletter

The IAIS has published its June newsletter. The Newsletter includes updates from the IAIS Global Seminar in relation to mapping the resilience of the insurance sector in wake of challenging times and the momentum for key forums. It also includes updates in relation to news, publications, consultations, recent and upcoming events and forums, appointments, committee and sub-committee activities and access to the insurance initiative (A2ii) report.


Insurance Europe (“IE”) has published its comments on the review of the revised payment services framework (“PSD2”). Insurance Europe welcomes the stated intentions of the European Commission to carry out a comprehensive review of the application and impact of PSD2, including an overall assessment of whether it is still fit for purpose and what challenges have arisen in its application. IE notes that it is important to ensure that lessons are learned and that policymakers quantify and qualify the increased costs of such a framework compared to the actual benefits and risks faced by the financial sector. 

IE: Country Fact Sheets

Insurance Europe has published a series of country fact sheets that highlight the trade and market access barriers that European (re)insurers face in Argentina, Brazil, Canada, India and Indonesia. IE remarks that removing these barriers is vital to reduce protection gaps and to avoid dangerous concentrations of risk in these jurisdictions. Furthermore, IE argues that to avoid a build-up of climate-related risks in any one jurisdiction and to facilitate the sharing of natural catastrophe risk across global (re)insurance markets, it is more important than ever that discriminatory barriers to trade and market access are removed.

Aligning draft guidelines on GDPR fines with international accounting standards

Insurance Europe has responded to a consultation conducted by the European Data Protection Board (“EDPB”) on its draft guidelines on the calculation of administrative fines under the General Data Protection Regulation (“GDPR”). IE acknowledges that the aim of these guidelines is to create a harmonised basis from which the calculation of administrative fines in individual cases can be made by national supervisory authorities, but also notes that while the draft guidelines provide more detail on the factors considered for the calculation, they do not make the level of fines more predictable.

Supervisory and regulatory approaches to climate-related risk

Insurance Europe has responded to a consultation by the Financial Stability Board (“FSB”) on its consultative report on supervisory and regulatory approaches to climate-related risk. The FSB highlighted the lack of climate-related data from the real economy for policymakers and supervisors to assess climate-related risks effecting the insurance industry and other financial institutions. IE argues that this data gap, along with inconsistencies in the data that is available, are deterring financial institutions from effectively addressing climate-related financial risks and delivering on the Paris Agreement.

Scope of shared public sector datasets

Insurance Europe has published its response to a consultation by the European Commission on its draft Implementing Regulation laying down a list of specific high-value datasets and the arrangements for their publication and re-use. Insurance Europe welcomes the initiative as it would ensure that a common EU-wide layer of public sector datasets is easily and freely available for re-use, which could lead to significant benefits for society, the environment, and the economy.

EC open finance framework

Insurance Europe has published its response to a targeted consultation conducted by the European Commission on an open finance framework, where it outlined its views on how to ensure a sound and effective open finance framework in the EU. Insurance Europe stressed the importance of respecting the principle of “same activities, same risks, same rules” and the need to strive for a true level playing field. 

Exclusions in insurance products for risks arising from systemic events

In a response to a EIOPA consultation on a Supervisory Statement on exclusions in insurance products for risks arising from systemic events, Insurance Europe has made recommendations for how to clarify the scope and objectives of the Supervisory Statement. In its response to the consultation, Insurance Europe stresses that clear communication and thorough product reviews are the key to building solid and long-lasting relationships with customers. 

Non-affirmative cyber exposures

EU insurers and insurance associations are increasingly taking actions to reduce the industry’s exposure to non-affirmative cyber risks — risks that are neither expressly covered nor excluded from property and liability insurance policies. In a response submitted to a consultation on EIOPA draft supervisory statement on the management of non-affirmative cyber underwriting exposures, Insurance Europe highlights that addressing, managing and reducing exposure to non-affirmative cyber risks may free up capacity to offer affirmative cyber risk coverage. 

Directive on Distance Marketing of Consumer Financial Products

Insurance Europe has submitted its response to the EC’s consultation on its proposal to repeal the Directive on Distance Marketing of Consumer Financial Products (“DMD”) and to introduce a new section on distance marketing of financial services in the Consumer Rights Directive (“CRD”) regarding financial services contracts entered at a distance. Insurance Europe is generally supportive of the EC’s intention, although it notes that it would be preferable to transfer the remaining provisions of the DMD to sector-specific legal acts. 

UK updates

Solvency II: Definition of an insurance holding company

Prudential Regulatory Authority (“PRA”) published PS6/22 on the definition of an insurance holding company under Solvency II. It provides feedback to the responses to CP17/21 and contains the final rules and policy. The PRA made some minor changes to the draft policy, including: 

  • delaying implementation of the policy until 12 months after publication (the policy and amendment to the PRA Rulebook will therefore come into effect on Friday 7 July 2023). 
  • Adding that there will be supervisory discretion to determine whether to apply the most appropriate measure between net versus gross assets, or between net versus gross revenues; and 
  • Clarifying what constitutes a ‘trigger event’ which may require the PRA to reconsider the classification of a holding company. 

It’s the risk management, stupid! − speech by Anil Kashyap

PRA published a speech by Anil Kashyap (Member of the Financial Policy Committee) in which he talks about PRA’s work to make sure UK banks and insurers understand the risks they face from climate change. He highlights how these firms need to improve the way they report climate risks and has set out the questions that management boards need to ask to keep firms on the right track. Firms must address these challenges now and not doing so will cause serious problems for the financial system in the future. 

How the UK will regulate for the future

Financial Conduct Authority (“FCA”) has published a speech by Nikhil Rathi, Chief Executive, delivered at the Peterson Institute for International Economics. He highlighted that intensive dialogue between all nations is essential to ensure that consistent outcomes are delivered. Having departed from the EU, the UK now has a vital opportunity to adapt its regulatory system to respond to today’s challenges and to bolster the global reach of our wholesale markets. He mentioned that FCA is investing in its data and tech platforms to improve how it uses analytics and insights to support its decision-making. FCA is also continuing to consider further regulatory interventions on diversity and inclusion.  

The new Financial Services and Markets Bill - Queen’s Speech

HM Treasury (HMT) published a speech delivered by Her Majesty the Queen in which she announced the new Financial Services and Markets Bill. One of the main elements of the bill is revoking retained EU law on financial services and replacing it with an approach to regulation that is designed for the UK. This includes the Solvency II legislation governing the regulation of insurers, which the government has committed to reform.

Addressing challenges of Solvency II Review

Institute and Faculty of Actuaries (“IFoA”) published its responses to the Solvency II Review as well as the results of its accompanying research which reviewed the purpose of the Fundamental Spread (“FS”) where it has looked at some potential “evolutionary” and “revolutionary” approaches that could be considered for any reform of the FS. 


Please see below for EIOPA’s response to 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.

01 July: Cash holdings within CIUs – applying look through approach

EIOPA clarified in Q&A (#2371) that as cash holdings are exposed to risk of counterparty default, undertakings should include these where look-through is being applied, as Article 84 of the Delegated Regulation (EU) 2015/35 does not exclude cash from the underlying assets that should be the basis of the SCR calculation. If look-through is not possible and Article 88 is complied with, Article 84 (3) allows the undertaking to calculate the SCR based on the target underlying asset allocation or the last reported asset allocations. 

01 July: Treatment of non-payment insurance as a credit derivative

EIOPA confirms in Q&A (#2376) that non-payment insurance is not a credit derivative, and so should not be treated as if it were a credit derivative. 

01 July: Requirements applicable to FoE and FoS 

EIOPA clarified in Q&A (#2361) that before insurance undertakings can start business in another Member State on the basis of the freedom to provide services, they have to comply with the notification obligations foreseen under Articles 147 and 148 of Solvency II. Before insurance intermediaries can take up activities of insurance distribution, they need to be registered with a competent authority in their home Member State (Article 3(1) of the IDD) and must possess appropriate knowledge and ability to complete their tasks and perform their duties adequately (Article 10(1) of the IDD).

Insurance undertakings and insurance intermediaries that manufacture insurance products that are offered for sale to customers ('manufacturers'), must comply with the product oversight and governance requirements foreseen under Article 25 of the IDD and Commission Delegated Regulation 2017/2358.

Where an insurance intermediary and an insurance undertaking are both manufacturers, they must sign a written agreement which specifies their collaboration as provided for in Article 3(4) of the Commission Delegated Regulation 2017/2358.

Neither the IDD nor Commission Delegated Regulation 2017/2358 include any provisions that generally restrict the co-manufacturing of insurance products to collaborations between domestically authorised insurance undertakings and insurance intermediaries or between those who are authorised to pursue business under the FoE or FoS. 

08 July: Guidelines on reporting and public disclosure

EIOPA clarified in Q&A (#2318) that the definition for CIC 21 defines corporate bonds as bonds issued by corporations, with simple characteristics, usually covering the ones referred to as 'plain vanilla'. The inflation linkage is not covered in the description in the CIC subcategories 22 to 28. As clarified in the ITS, structured notes "combine a fixed income with a series of derivative components" and "have embedded one or a combination of categories of derivatives". It is therefore enough if the bond has one derivative component, like to link to inflation, to be classified as structure note. 

12 July: S.06.03 Look through approach

EIOPA clarified in Q&A (#2372) that for S.06.03. the look through shall be performed, under consideration of the thresholds described in the ITS on reporting. For funds where the look-through approach is not possible for the purpose of SCR calculation and that are therefore classified as type 2 equity, the template S.06.03 still needs to be reported based on the best available data. It also clarified that the CIC classification needs to be done independently from the applied look-through approach. An AIF needs to be classified, given the guidance of the ITS on reporting, as CIC Category 4*. The CIC classification should not be changed to reflect cases where the look-through is not applied for the purpose of SCR calculation. 

31 July: Own Funds – Exception to rule about redemption/repayment before 5 years

EIOPA clarified in Q&A (#2364) that article 73 Paragraph 5 of the Delegated Regulation provides for an exception to the rule that the basic own fund should not allow repayment before 5 years - namely this is subject to regulatory approval and linked to unexpected events (change in applicable tax treatment and disrecognition of the item for regulatory purposes). 

31 July: Guidelines on valuation of technical provisions – Treatment of kickbacks

EIOPA clarified in Q&A (#2430) that generally, reimbursements of investment management expenses or kickbacks should not be changed in the expense-stress. However, in case of agreements that are defining kickbacks as a fixed percentage of the fund management expense, kickbacks should follow percentage change of the expense flow and rise proportionally. 

31 July: Correlation coefficients for windstorm risk in the Czech Republic

EIOPA clarified in Q&A (#2443) that the correlation coefficient is 0,75 and not 0,8.

Transition to IFRS 17

Every month KPMG Ireland’s IFRS team produces an update on the progress of the industry to date on the implementation of the new insurance accounting standard.

Further information

For more on any of the items above, or any Insurance-related queries, contact Brian Morrissey, Head of Insurance.

Further reading