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
ESG in insurance: A practical guide to sustainability reporting
As part of the environmental, social and governance (ESG) agenda, sustainability reporting requirements are changing the business landscape. For insurance organizations, sustainability reporting has become commercially and strategically important and offers a number of potential benefits to those who can successfully integrate it into their operating model.
In this report, KPMG professionals explain how insurers can drive a successful transition to embed sustainability reporting through the organization. This requires non-financial reporting processes and metrics to be embedded within the operating model so that disclosures become a natural output of how the business functions, rather than an additional onerous effort.
AI in insurance: A catalyst for change
The insurance sector is built on the ability to manage risk and forecast the future. While many organizations are already transforming to meet the expected demands of both regulatory requirements and consumer needs, new and emerging technologies could offer a host of potential benefits to those that are willing to embrace change. Integrating these technologies could further enable precise predictions, manage customer interactions and expand the personalized service and product lines with unprecedented accuracy and speed. KPMG professionals discuss how prepared the insurance industry is to harness the latest technologies to help shape the future.
Digital Transformation in Insurance: A People-centric approach
This report explores some of the key steps that insurance firms should consider as they undergo digital transformations. These include taking a people-centric approach that encompasses clarity, capability, capacity and culture, to ensure people across the whole business are engaged in the transformation process.
Insurance transformation - Modernizing the claims function
In this report, KPMG insurance professionals explore some of the drivers for claims transformation in today’s market, identify the opportunities and barriers, and share key considerations to help insurance organizations on their transformation journey.
P&C Landscape: Shifting risks and evolving strategies for P&C insurers
In the current insurance landscape, insurers are confronted with a multitude of factors that are significantly impacting their operations. In this report, KPMG professionals discuss how economic and social inflation and convective storms are major cost drivers in property and casualty (P&C), impacting both personal and commercial line companies.
DORA - Act now - 5 practical steps to improve your digital resilience journey
The KPMG Technology Risk and Cyber teams, led by Jackie Hennessy and Dani Michaux, share their in-dept views on key actions to help you get ready for DORA.
AI in financial reporting and audit - Understand the expectations for companies and external auditors
In this KPMG report “AI in financial reporting and audit: Navigating the new era” which surveyed 1,800 financial reporting executives, including 100 Irish companies across six industries, ten countries and jurisdictions, we note that we are standing on the cusp of a genuine financial reporting revolution: moving from the “digital age” to the “AI age” in which nothing will ever be quite the same.
Central Bank of Ireland updates
Insurance Industry Event – Responsible use of Big Data and Related Technologies
On 24 June, the Central Bank of Ireland (the “Central Bank”) held an insurance industry workshop where Mr. Gerry Cross, Director of Financial Regulation, Policy & Risk, gave a speech in relation to responsible use of Big Data and Related Technologies. Gerry Cross noted that whilst the rapid and ongoing technological advancements present increased opportunities and benefits, the inappropriate use of data and technology could give rise to unfair treatment of, and negative outcomes for, consumers e.g. bias, inappropriate use of personal data, and data privacy concerns. The Central Bank expects that as part of its overall governance and risk management framework, insurers’ boards should carefully consider the deployment of big data and related technologies and clearly assign responsibility for its use and deployment.
As part of the workshop discussion, the Central Bank sought feedback from the attendees on good practices that could be put in place to mitigate against the risks posed by the use of big data and related technologies from a prudential and conduct perspective.
Quarterly Bulletin No.2 2024
The Central Bank published their most recent assessment of the Irish and euro area economies, on 18 June 2024.
Some of the topics addressed were forecast growth in the Irish economy, steady growth out to 2026, unemployment forecast to remain low until 2026 and finally, a decrease in inflation which is returning to sustainable levels, forecast to decrease to 1.4% by 2026.
Insurance Newsletter – June 2024
Also released on 18 June, was the Central Bank’s quarterly Insurance Newsletter.
The newsletter covers a number of topics, including:
- Insights into natural catastrophe modelling;
- A reminder on the upcoming requirements of the Individual Accountability Framework and its implementation;
- Sustainable insurance updates particularly Double Materiality and Corporate Sustainability Reporting Directive (CSRD);
- Details on EIOPA’s Sustainability Activities;
- The Central Bank’s upcoming engagements for Q3 2024; and
- The Central Bank’s forthcoming thematic and information requests for Q3 2024.
Announces plan to establish an Innovation Sandbox Programme
On 04 June, the Central Bank announced it was establishing an Innovation Sandbox Programme for later this year. The announcement follows a three-month public consultation, and is accompanied by a Feedback Statement to a consultation on the Central Bank’s approach to engagement with innovation in the financial sector. The Programme will provide regulatory advice and support for innovative projects the promote better outcomes for society and the financial system.
European Insurance and Occupational Pensions Authority Updates
EIOPA: Annual Report 2023
On 14 June, the European Insurance and Occupational Pensions Authority (EIOPA) published its Annual Report 2023, which describes EIOPA’s key achievements over the last year, including in relation to sustainable finance, digitalisation, supervision, policy, risk and financial stability, and governance.
EIOPA: Biodiversity Loss Risk for Insurers
EIOPA held a stakeholder event on biodiversity loss risk for insurers on 10 June 2024. The event heard from a number of speakers from EIOPA as well as some guest speakers, including on the regulatory and supervisory perspective on biodiversity loss risk for insurers, as well as industry practices on biodiversity risk management. EIOPA is currently undertaking additional analysis on industry practice in relation to nature risk in the ORSA, with a view to preparing a report for the European Commission on its findings and actions insurers could take to assess the risk in a proportionate manner. EIOPA will be collecting evidence relating to the identification and management of biodiversity loss risk by the insurance industry.
UK Updates
FCA: Implementing the Consumer Duty for closed products and services
On 16 May, the Financial Conduct Authority (FCA) published a letter setting out priority issues and actions firms should be considering ahead of the 31 July 2024 implementation deadline.
PRA: PRA Regulatory Digest - April 2024
On 01 May, the Prudential Regulation Authority (PRA) published their Regulatory Digest which is for people working in the UK financial services industry and highlights key regulatory news and publications delivered for the month.
PRA: Monetary Policy Report - May 2024
On 09 May, the PRA published their quarterly Monetary Policy Report which sets out the economic analysis and inflation projections that the Monetary Policy Committee uses to make its interest rate decisions.
PRA: LASH risk and interest rates
On 17 May, the PRA published working papers which set out research in progress by the staff, with the aim of encouraging comments and debate.
PRA: The PRA’s approach to the authorisation and supervision of insurance branches
On 23 May, the PRA published a statement of policy which outlines the PRA’s approach to the authorisation and supervision of third-country insurance branches, including the approach to determining when a subsidiary would be more appropriate than a branch.
PRA: Monsters in the deep? − speech by Jonathan Hall
On 07 May, the PRA published a speech by Jonathan Hall which raises the question of whether increasing use of AI models could have a negative impact on financial stability.
Other European and International Supervisory Authority Updates
IAIS: Newsletter April 2024
On 25 June, the International Association of Insurance Supervisors (IAIS) has published its Draft Application Paper on how to achieve fair treatment for diverse consumers: “People who are not part of the normative or mainstream consumer profile that insurers and intermediaries most often anticipate and cater to. Their needs differ from the normative or mainstream consumer profile due to characteristic(s) of diversity (refer to diversity definition below) and/or circumstances of vulnerability (refer to vulnerable consumers definition below)”. The IAIS made diversity, equity and inclusion (DEI) a key strategic theme, with an aim to promote DEI in the insurance industry. Feedback on the public consultation of the Application Paper is sought by 25 September 2024.
IE: Response to IAIS third public consultation on climate risk supervisory guidance
On 19 June, Insurance Europe (IE) issued a response to the IAIS public consultation on climate risk supervisory guidance – ICP guidance and supporting material.
IE: Annual Report 2023-2024
Insurance Europe published their annual report on 30 May 2024. The report includes a range of opinion pieces sharing insights into some of the most critical issues impacting the insurance industry today, such as regulation, access to data, retail investment, pensions, climate change, and the war in Ukraine.
The report also contains articles on:
- Advancing sustainability and inclusivity;
- Improving financial regulation;
- Serving consumers;
- Supporting digitalisation; and
- Ensuring protection.
ECON: Activity Report 2019-2024
On 30 May, the European Parliament's Economic and Monetary Affairs Committee (ECON) has published the ECON Activity Report 2019-2024 which provides an overview of the main legislative and non-legislative activities carried out by the ECON committee during the 9th legislative term.
European Supervisory Authorities: Joint Committee – Annual Report 2023
On 5 June, the Joint Committee of the European Supervisory Authorities (EBA, EIOPA and ESMA - ESAs) published its 2023 Annual Report, providing an account of the joint work completed over the past year. The Report summarises the joint risks assessments prepared by the Joint Committee in 2023; provides an overview of the work completed in 2023 and planned around sustainable finance and digital operational resilience, including on the implementation of the Sustainable Finance Disclosure Regulation (SFDR) and the Digital Operational Resilience Act (DORA); and highlights the work done by the European Forum for Innovation Facilitators (EFIF), among other items.
EIOPA Q&A Updates
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.
16 May: QRT S.06.02
EIOPA clarified in Q&A (#2649) with regards to the updates within SII taxonomy 2.8.0 and the associated LOG guidance (in the draft business package) that BV1213 has been deactivated
(as per Q&A 2946).
03 May: QRT S.36.01
EIOPA clarified in Q&A (#2774) that there is an overlap as indicated in the general comments of the template “Although interest, dividends are reported in S.36.01, S.36.02 they have to be reported additionally in S.36.05 P&L.". However, S.36.05 does not cover the off-balance sheet items & contingent liabilities nor the insurance/Reinsurance P&L hence there is no duplication on this.
03 May: QRT S.14.01
EIOPA clarified in Q&A (#2969) that S.14.01.01.01 is dedicated to direct business only and as such options 35 and 36 are redundant. EIOPA is aware of the inconsistency between the model and the ITS and plan to address it during the next ITS revision.
Further information
For more on any of the items above, or any Insurance-related queries, contact Brian Morrissey, Head of Insurance. We'd be delighted to hear from you.
