Insurance Insights June 2026

KPMG updates

Solvency II reform: what insurers must know

KPMG’s Insurance team has launched our 2026 Inside Insurance series. It features insightful interviews that explore the evolving insurance landscape. Join us as we navigate the upcoming Solvency II changes across all three pillars - and beyond - through a series of videos and podcasts.

Our first three episodes have been published, focusing on Pillar 1, Pillar 2, and Pillar 3, discussing the key areas of change and what they may mean for insurers.

IFRS 18: structured financial performance and disclosures for insurers

IFRS 18 comes into effect from 1 January 2027 and will introduce significant changes to how insurers present and explain financial performance. While it does not change the measurement of insurance contracts, it brings a more structured income statement, new disclosure requirements for management performance measures, and enhanced aggregation and disaggregation requirements.

Read our IFRS 18 publication on the key changes and practical considerations for insurers.

Niall Naughton

Partner, Head of Insurance

KPMG in Ireland

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Central Bank of Ireland updates

Central Bank: Quarterly Bulletin

The Central Bank of Ireland (Central Bank) has published its second Quarterly Bulletin of 2026, highlighting a deterioration in the near‑term economic outlook driven by higher energy prices and ongoing geopolitical uncertainty. Inflation forecasts have been revised upwards significantly, reflecting the impact of elevated oil and gas prices and their broader transmission through the economy.

The report indicates that higher energy costs are weighing on household incomes and consumer confidence, leading to weaker consumption growth in 2026.

Central Bank: Governor Speech

The Central Bank has published a speech from Governor Gabriel Makhlouf, outlining the rationale for the recent increase in interest rates, highlighting that the decision reflects rising inflationary pressures driven by energy price shocks linked to geopolitical developments.

The Governor emphasises that inflation has increased across the euro area, with further upward pressure expected as higher energy and input costs continue to feed through supply chains.

From an Irish perspective, the speech highlights the economy’s exposure to external shocks, particularly through energy dependency, and notes that headline economic data can be volatile due to the impact of multinational activity. Overall, the speech reinforces the importance of maintaining economic resilience in a highly uncertain and rapidly changing environment.

Central Bank of Ireland

On 16 June, the Central Bank hosted an insurance industry event on the Solvency II Review and the Insurance Recovery and Resolution Directive (IRRD). The presentation slides (PDF, 1.2MB) and a ‘Pre-application Process (PDF, 426KB) for the use of Proportionality Measures by Non Small and Non-Complex Undertakings’ are now available on the Communications page of the Insurance & Reinsurance section of the Central Bank’s website.

European Insurance and Occupational Pensions Authority Updates

EIOPA: Financial Stability Report

EIOPA has published a press release presenting its June 2026 Financial Stability Report, assessing the resilience of the European insurance and occupational pensions sectors in a challenging macro‑financial environment.

EIOPA notes that insurers and pension funds continue to face pressures from persistent geopolitical tensions, inflation dynamics and evolving risk drivers, including climate change and digital transformation. While profitability and funding positions have remained stable, exposure to market volatility, claims inflation and changes in risk premia remain key areas of focus.

The report also examines broader systemic risks, including growing interconnectedness across financial sectors and increasing activity in private markets, which may introduce additional complexity and potential transmission channels. In parallel, technological developments such as artificial intelligence (AI) are identified as both an opportunity and a source of new operational and cyber risks.

Overall, the report concludes that while the sectors are currently resilient, continued vigilance is required as risks evolve in an increasingly uncertain and interconnected financial environment.

EIOPA: Report on Oversight Activities in 2025

The European Insurance and Occupational Pensions Authority (EIOPA) has published a report (PDF, 527KB) outlining its oversight activities in 2025, highlighting efforts to strengthen supervisory convergence and coordination across the European Economic Area (EEA).

The report notes that EIOPA enhanced its engagement with national supervisors through country visits, technical assessments and participation in colleges of supervisors, covering a broad range of prudential and conduct issues as well as cross‑border supervision.

It also reflects an expanded scope of oversight following the implementation of the Digital Operational Resilience Act (DORA), including a focus on cyber resilience, incident reporting and crisis preparedness.

The report also highlights continued collaboration through joint inspections, comparative analyses and engagement with supervisory initiatives at both EU and international level.

Other European and International Supervisory Authority Updates

IAIS: Newsletter May 2026

The International Association of Insurance Supervisors (IAIS) published (PDF, 2MB) its newsletter for May 2026. The newsletter highlights the ongoing global supervisory work focused on key themes such as climate risk, technological innovation and strengthening resilience in the insurance sector, alongside continued engagement with international bodies including the G7.

IAIS: FSI and IAIS publish note on the cyber insurance market

The Financial Stability Institute (FSI) and the IAIS published a joint Insights note on the cyber insurance market. The joint FSI–IAIS note highlights that cyber risk is rapidly increasing in scale and complexity, driven by factors such as digitalisation, AI and geopolitical tensions, with potential implications for financial stability. While cyber insurance can support resilience and absorb losses, the market remains underdeveloped, with key challenges including limited coverage, pricing uncertainty and accumulation risk, contributing to a persistent protection gap. Overall, the note underscores the need for careful development of the market and enhanced supervisory focus to ensure cyber insurance evolves in a sustainable and robust manner.

ESAs: ESAs publish the first report on DORA major ICT-related incidents

On 3 June, the European Supervisory Authorities (EBA, EIOPA and ESMA - the ESAs) published their first annual overview (PDF, 848KB) of major ICT-related incidents in the EU financial sector based on a reporting mechanism established by the Digital Operational Resilience Act (DORA). It shows that ICT risks are increasingly borderless and interconnected. The authorities also note that the recent evolution of highly capable AI-driven tools should encourage financial entities to strengthen cybersecurity measures to maintain their resilience going forward.

EIOPA Q&A Updates

11 May: S.08.01

EIOPA clarified in Q&A (#3515) that derivatives must be reported at fair value regardless of daily clearing / margining.

11 May: S.08.01

EIOPA clarified in Q&A (#3499) that corporate bonds that do not meet any of the requirements of CIC 21 – 28 categories, should be reported under CIC 29.

22 May: S.06.02

EIOPA clarified in Q&A (#3518) that US government bonds should be reported under CIC 1.

27 May: S.06.02

EIOPA clarified in Q&A (#3483) that vanilla bonds with ordinary call options should be classified as CIC 21. EIOPA gave further guidance that decisions on whether a bond should be considered special should be taken from a risk perspective.

27 May: PFE.02.01

EIOPA clarified in Q&A (#3542) that guarantee and margin accounts held by IORPs in connection with derivative positions should be reported under R0200 (“Other investments”) in the PFE0201 balance sheet. EIOPA gave further guidance that the correct code in PFE0602 is ##09.

27 May: 166,167(2a)

EIOPA clarified in Q&A (#3550) that they will publish basic interest rate risk shocked term structures for all relevant currencies.

UK updates

FCA: Credit rating agencies multi-firm review

On 15 May 2026, the FCA published their insights from their multi-firm review of UK-registered credit rating agencies. They have considered good practices and areas for improvement across the surveillance, methodologies and internal controls applied by rating agencies. In addition, the FCA expects rating agencies to be transparent in how they consider ESG factors in their ratings.

PRA: PS13/26 – Insurance third-country branches: policy implementation and other updates

On 21 May 2026, the PRA published responses to the feedback received on the consultation paper 20/25 – Insurance third-country branches: policy implementation and other updates.

FCA: Handbook Notice No. 141

On 29 May 2026, the FCA published (PDF, 459KB) the changes to the FCA handbook made by the FCA on 23 April and 28 May. The following instruments underwent changes:

Collective Investment Schemes
Consumer Credit
Supervisor Manual
Technical Standards
Short Selling Rule Sourcebook

PRA: Firm Feedback Survey

On 15 May 2026, the PRA published the results of the firm feedback survey 2025. This provides firms the opportunity to comment on their experience of being supervised by the PRA.

PRA: Frontier AI models

On 15 May 2026, the PRA published a statement on Frontier AI models and cyber resilience: “Frontier AI models represent a step-change in capability, with significant implications for cyber security and operational resilience.”