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
Driving change through conduct risk
In today’s fast-paced landscape where Environmental, Social and Governance (“ESG”) considerations are shaping investor perceptions, corporate reputation and sustainable business practices, the focus on Conduct Risk has never been more intense.
Whilst navigating the landscape of ethical conduct is complex, there are profound implications for an organisation’s ESG performance if prompt action is not taken. The KPMG team (led by Gillian Kelly, Head of Consulting and Patrick Farrell, Risk Consulting Partner) explores why organisations need to adapt swiftly to stay ahead of the curve to manage and mitigate the drivers of poor conduct and culture.
Getting ready for DORA
With less than one year until the introduction of the EU Digital Operational Resilience Act (“DORA”), KPMG, led by (Jackie Hennessy, KPMG Risk Consulting Partner and Technology Risk Services Lead) looks at the scope of the Act, the risk of non-compliance and what challenges financial services companies will face in applying this new regulation. KPMG's EMA Cyber Leader Dani Michaux highlights some cyber security issues to consider.
Conversations with Auditors – Opinions that matter
This is the KPMG audit podcast series, where we explore the relevant issues, opportunities and new ways of working shaping the audit profession's future.
Central Bank of Ireland updates
Revision of the Consumer Protection Code
On 7 March 2024, the Central Bank of Ireland announced they have launched a Consultation Paper on the revision of the Consumer Protection Code. The Central Bank is proposing to issue two new regulations which will replace the Consumer Protection Code, the Standards for Business Regulations, and the Conduct of Business Regulations, as well as Guidance on Securing Customers’ Interests and Guidance on Protecting Consumers in Vulnerable Circumstances. Interested parties have until the 7 June 2024 to consider and provide feedback on the proposals. It is anticipated that the final Regulations will be issued early in 2025.
Quarterly Bulletin
On 12 March, the Central Bank published its first Quarterly Bulletin of 2024 (PDF, 4.6 MB). On the launch of the Quarterly Bulletin, Robert Kelly, Director of Economics and Statistics said: “Global headwinds and domestic capacity constraints are affecting the growth of the Irish economy. Disinflation has been significantly progressing and external price pressures have largely passed. However, domestic price developments – especially in the services sector – have been more persistent. With moderate growth in the domestic economy anticipated out to 2026, increased focus remains on enhancing supply conditions to bolster resilience and support a sustainable growth in living standards.”.
New Regulatory and Supervisory Outlook
On 29 February, the Central Bank published its Regulatory and Supervisory Outlook 2024 (RSO) (PDF, 2.1 MB). The Central Bank noted that the RSO will be an annual report which will set out its view on the key trends and risks facing the financial sector, as well as the Central Bank's regulatory and supervisory priorities.
The Central Bank’s supervisory priorities are focused on achieving proactive risk management and consumer-centric approach from leaders of firms. Priorities include putting in a revised and modernised Consumer Protection Code, implementing the Individual Accountability Framework and continued work to deepen their analysis and understanding of macroprudential risks in the non-bank sector.
EIOPA updates
EIOPA: Supervisory Priorities: 2024-2026
The European Insurance and Occupational Pensions Authority (EIOPA) has published a document (PDF, 201 KB) setting out its EU-wide strategic supervisory priorities for 2024 to 2026. EIOPA identifies three specific areas that it wants National Competent Authorities (NCAs) to prioritise in 2024:
- Continuous monitoring of the impact of the macro-economic environment..
- Insurance risk transfers, including reinsurance capacity and appropriateness.
- Value for money, including as regards inflation and current macro-economic trends. It explains that insurance product manufacturers are expected to ensure they implement customer-centric product design processes that ensure that life and non-life insurance products offer value for money.
EIOPA will revise these areas in 2025 and 2026 to capture recent developments and trends.
Monthly update of the symmetric adjustment of the equity capital charge for Solvency II – end-February 2024
EIOPA published the technical information on the symmetric adjustment of the equity capital charge for Solvency II with reference to the end of February 2024. Click here to view the documentation.
Monthly technical information for Solvency II Relevant Risk-Free Interest Rate Term Structures – end-February 2024
On 5 March 2024, EIOPA published technical information on the relevant risk-free interest rate term structures (RFR) with reference to the end of February 2024. All the documents are available on the RFR dedicated section of the EIOPA website.
Other updates
Insurance Ireland welcomes the Action Plan for Insurance Reform
On 29 February, Insurance Ireland welcomed the publication of the fourth implementation report (PDF, 785 KB) of the Action Plan for Insurance Reform. Moyagh Murdock, CEO of Insurance Ireland in welcoming the report said: “Insurance Ireland and its members have consistently supported insurance reform and collaborated with the Government on its Action Plan.” The fourth implementation report of the Action Plan for Insurance Reform, showing approximately 95% of actions in the plan are now being delivered with the remaining initiated.
Insurance Europe response to the second batch of draft DORA Level 2 measures
On 4 March, Insurance Europe responded to the European Supervisory Authorities (ESAs) (PDF, 344 KB) consultations on the Digital Operational Resilience Act (DORA) level 2 second batch of policy measures. These measures included draft Regulatory Technical Standards (RTS), draft Implementing Technical Standards (ITS) and draft guidelines (GL) to complement the DORA legislation, which will enter into force on 17 January 2025. Through the response, Insurance Europe calls for clarification on specific points to promote legal clarity on the text, promote feasibility of implementation and proportionality of the measures.
IAIS: Part 3: Climate Risk Guidance
The International Association of Insurance Supervisors (IAIS) has published its third consultation on climate risk supervisory guidance. In the consultation, the IAIS seeks views on proposed changes to ICP guidance and supporting material to reflect climate risk. The deadline for responses is 19 June 2024.
UK Updates
PRA: Review of Solvency II: Reporting and disclosure phase 2 near-final
On 29 February 2024, the Prudential Regulation Authority (PRA) published a policy statement which sets out feedback to responses to consultation paper 14/22 – Review of Solvency II: Reporting phase 2 as well as Chapter 7: Reporting and disclosure in CP12/23 – Review of Solvency II: Adapting to the UK insurance market.
PRA: The PRA’s approach to insurance group supervision
On 28 February 2024, the Prudential Regulation Authority (PRA) published a statement of policy (SoP) which sets out the Prudential Regulation Authority’s (PRA) approach to certain aspects of insurance group supervision under the Group Supervision Part of the PRA Rulebook.
PRA: Permissions for transitional measures on technical provisions and risk-free interest rates
On 28 February 2024, the Prudential Regulation Authority (PRA) published a statement of policy (SoP) which sets out the PRA’s approach to granting regulatory permissions in relation to the transitional measure on technical provisions (TMTP) and the transitional measure on the risk-free interest rate (TMIR).
PRA: Expectations for meeting the PRA's internal model requirements for insurers under Solvency II
On 28 February 2024, the Prudential Regulation Authority (PRA) published a supervisory statement (SS) which sets out the PRA’s expectations for insurers to meet the PRA’s internal model requirements which arise from Solvency Capital Requirement – Internal Models 10 to 16A.
EIOPA Q&As
Please see below for EIOPA’s response to recent queries which have been raised by the public for further clarification on the Solvency II requirements. The Solvency II requirements may change or become more prescriptive over time.
01 February: QRT S.12.02.01
EIOPA clarified in Q&A (#2960) that in template E.04.01.16 life part, Health SLT LOBs are to be included as in S.12.02.01.
01 February: QRT S.06.02
EIOPA clarified in Q&A (#2918) that in order to report the issuer sector for Mortgages and Loans, other than CIC 87 and CIC 88, the information shall relate to the borrower. In case the reporting line refers to a summarised reporting of loans on policies to individuals 'Total/NA' should be reported.
28 February: QRT S.06.04
EIOPA clarified in Q&A (#2941) that if an insurance undertaking is exempted from reporting annually the template S.06.02 it shall not report both templates S.06.03 and S.06.04. If the insurance undertaking is not exempted from annually reporting the template S.06.02 it shall report S.06.04.
Further information
For more on any of the items above, or any Insurance-related queries, contact Brian Morrissey, Head of Insurance.
