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FIG Top 5 at 5 - 04/01/2024

DATE: 04/01/2024

1. Central Bank of Ireland’s Insurance Quarterly – December 2023

On 13 December 2023, the Central Bank of Ireland (“Central Bank”) published the Insurance Quarterly (“Newsletter”). The Newsletter is an important communication tool used by the Central Bank to convey news and insights relevant to the insurance sector as well as the Central Bank’s expectations and priorities around existing requirements and views on future developments.

Some key highlights from this edition include:

Update on the Insurance Market

The Newsletter noted that in 2022, €102 billion of premiums were written by the 200+ life, non-life and reinsurance firms regulated by the Central Bank where roughly 73% were written outside Ireland. The sector saw 40% growth in the balance sheets of the Irish (re)insurance industry since 2016. Most of this has happened in an international (re)insurance space which saw an 82% growth between 2019 and 2022.

Risk Environment and Supervisory Priorities for 2024

The Newsletter noted that there are significant risks arising from the uncertain economic and political environment and are expected to remain elevated. It flagged that inflation may increase pricing and reserving risks due to uncertain future non-life claims settlement costs and operating expense pressures. It also noted that operational resilience risks are increasing, particularly cyber risks and vulnerabilities, and recruitment and retention of talent.

The Central Bank’s supervision in 2024 will focus on safeguarding the financial and operational resilience of (re)insurers in an uncertain environment and ensuring consumer protection, and in particular:

  • reserving assumptions in light of 'higher for longer' inflation and interest rate scenarios;
  • governance and underwriting in sectors or lines of business which have been subject to significant growth or changes in risk profile;
  • adequacy of governance arrangements where a branch in a third country is used to conduct regulated functions or activities; and
  • oversight of critical outsourcing relationships of maturity of operational resilience frameworks.

There will also be continued focus on climate change and sustainability considerations for (re)insurers and firms' assessment of 'materiality' of their climate risk exposures. The Central Bank will be taking a forward-looking supervisory approach in ensuring a resilient sector.

Digitalisation is a long term trend and the Central Bank will aim to further engage on innovation to better understand the opportunities and risks.

The Central Bank will also continue to analyse 'key protection gaps' with particular focus on flood risks, given the significance of the flood risk protection gap and may move from medium to long term risk.

Change of Business Plan

The Newsletter noted that the Central Bank Conditions of Authorisation for (re)insurance undertakings require that 'firms shall notify the Central Bank in advance of any material change in the firm's business'. The Central Bank explains that the importance of this has been emphasised by the Central Bank since 2019, and reiterates that firms should still have regard to the fundamental principles set out in the article published in the  2019 September Insurance Newsletter.

The Central Bank indicated in the Newsletter that it intends to provide further clarification and guidance on this process following a review of recent notifications including:

  • the development and publication of a checklist which sets out the specific information required for a material change of business;
  • the carrying out of additional engagement to further outline the review process and clarify their expectations; and
  • when business is transacted in a new territory, additional queries and requests for information may arise from the supervising authority in the new territory.

The Central Bank flagged that firms can take actions to avoid delays in the process including:

  • transparent, early engagement with supervisory teams on the nature and scale of the change in the business; and
  • ensuring adequate time and resources are available to provide information supporting the notification and any subsequent queries.


The Newsletter confirmed that Domhnall Cullinan, Director of Insurance Supervision at the Central Bank was elected as a Member of EIOPA's Management Board on 26 September 2023.

Other areas addressed

The Newsletter also addressed matters relating to climate change risk, CP156 on Innovation Engagement and its Financial System Conference. 

2. Central Bank of Ireland releases a Post Regulations Review on its Differential Pricing Regulations

The Central Bank of Ireland (“Central Bank”) carried out its initial Review of Differential Pricing in the Private Car and Home Insurance Markets (“2021 Review”) in 2021 to assess how differential pricing was used in the private car and home insurance markets in Ireland and its impact on consumers. It found that price walking was particularly evident and that oversight of pricing practices were lacking, while automatic renewal processes lacked transparency. To address some of these risks, the Central Bank imposed additional requirements on insurance undertakings and insurance intermediaries in the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Insurance Requirements) Regulations 2022 (“Regulations”). The Central Bank has now carried out a Post-Regulations Review, details of which were published in December 2023, and the key findings are summarised below.

Price Walking

In its 2021 Review, the Central Bank found that price walking could result in unfair outcomes for some consumers. The Regulations banned price walking from the date of subsequent renewal which prohibited insurance providers from setting a subsequent renewal price that is higher than the equivalent year one renewal price.

In the Post-Regulations Review, the Central Bank found that all in scope insurance providers for home and motor insurance were adhering to the Regulations. The Regulations have also reduced any adjustments to prices for reasons unrelated to the risks or cost of service.

The Regulations do permit undertakings to provide discounts to new business customers and ensure that consumers retain the opportunity to get a better priced premium by switching. In H2 of 2022, 21.1% of consumers switched insurance providers after the Regulations came into force, compared to 18.3% in H1 of 2022 before the Regulations come into force.

Automatic Renewals

In its 2021 Review, the Central Bank found that automatic renewal can benefit consumers, mitigating the risk that a consumer would experience personal detriment by neglecting to renew their policy on time. The Central Bank included enhanced requirements in the Regulations where

  • the consumer must be permitted to cancel the automatic renewal of a policy at any time; and
  • notifications must be issued to consumers in advance of their renewal date with specified information to be clearly set out including the steps necessary to exercise the right of cancellation.

In its Post-Regulations Review, the Central Bank found that all in scope insurance providers have adhered to the new disclosure requirements, although it varied in terms of the prominence of the information. The Central Bank communicated its view of best practices to firms. It found that the proposal relating to prior written consent in relation to automatic renewals required further consideration. They concluded that for motor, health and home insurance, the risk of having an explicit opt-in requirement outweighs any potential benefits in that the impact of an insurance policy lapsing for these types of insurance could be considerable. In contrast, the benefits outweigh the risks for travel, gadget, pet and dental insurance and the Central Bank propose making the automatic renewal opt-in rather than opt out for travel, gadget, dental and pet insurance.

Oversight of Pricing Practices

The 2021 Review identified a number of weaknesses in the adequacy of the oversight and governance relating to pricing practices:

  • differential pricing practices: failure to recognise and/or failure to acknowledge the utilisation of price differentiation in their firm;
  • governance and controls: inadequate governance and controls arrangements; and
  • culture and conduct: insufficient evidence of a consumer-focused culture in respect of pricing decisions and practices.

The Regulations included a requirement for insurance providers to carry out an annual review of their pricing policies and processes to ensure compliance with the Regulations.

In its Post-Regulations Review, the Central Bank found that firms had taken significant steps to better understand their pricing models and in particular the impact of these models on their home and motor insurance customers. It noted that the approach taken varied across firms and set out a number of good practices that it observed in the Annual Reviews.

3. Central Bank amendments to certain Fitness and Probity requirements

On 20 December 2023, the Central Bank Reform Act 2010 (Sections 20 and 22) (Amendment) Regulations 2023 [ S.I. No. 663 of 2023] was signed into law. The SI makes a number of amendments to the list of pre-approval controlled functions ("PCFs") by introducing 3 new PCF roles and amending one existing PCF role in accordance obligations placed on the Central Bank of Ireland (“Central Bank”) pursuant to the Central Bank (Individual Accountability Framework) Amendment Act 2023 (“IAF Act”). These changes are effective as of 29 December 2023.

In addition, the Central Bank Reform Act 2010 (Sections 20 and 22 Holding Companies) Regulations 2023 [ S.I. No. 664/2023] was also signed into law. This SI introduces 2 new PCF roles relating to holding companies based in Ireland, along with clarification as to application of controlled functions (“CFs”) to such entities, which was also an obligation placed on the Central Bank pursuant to the IAF Act. These changes are also effective as of  29 December 2023.

S.I. No. 663 of 2023

Amendments to PCF-16

PCF-16 introduced a materiality threshold so that the Senior Executive Accountability Regime would only apply to larger outgoing branches. It is amended to "Branch Manager of a branch established outside the State but only where the business arising from the branch amounts to 5% or more of, as applicable, the assets or revenues or gross written premium of the regulated financial service provider".

New PCF roles

PCF-54 Head of Material Business Line for insurance undertakings

The Head of Material Business Line in an insurance undertaking, is one that has a significant influence over the performance of a material line e.g. oversees the performance of that business line and the business line in question satisfies either of the following quantitative criteria:

  • has gross total technical provisions (whether positive or negative) equal to or in excess of €10 billion; or
  • accounts for 25 per cent or more of the insurance undertaking’s gross earned premium, if that gross earned premium is above €1 billion per annum.

PCF-55 Head of Material Business Line for investment firms

The Head of Material Business Line in investment firms, is one that has a significant influence over the performance of a material line e.g. oversees the performance of that business line and the business line in question satisfies either of the following quantitative criteria:

  • has gross total assets equal to or in excess of €5 billion; or
  • accounts for 10 per cent or more of the investment firm’s gross revenue.

It is anticipated that the role of Material Business Line would include responsibility for management of a material business line at a firm considered capable of having an impact on the firm due to commercial or strategic importance of that business line. Those who are already pre-approved as PCF-17 Head of Retail Sales or PCF-18 Head of Underwriting would not be required to also seek pre-approval for Head of Material Business Line.

PCF -53 Head of Client Asset Oversight

This PCF is now being introduced for credit institutions.

S.I. No. 664/2023

This introduced 2 new PCF roles relating to holding companies. The holding companies in question are set out in the IAF Act and include credit institutions, insurance undertakings and investment firms. The new PCF roles are as follows:

  • HCPCF1 – the office of the chair of the board of the holding company; and
  • HCPCF2 – the office of director of the holding company.

Section 9 of the IAF Act makes an amendment to Section 20 of the Central Bank Reform Act 2010 to extend the Fitness and Probity ("F&P") Regime to holding companies established in Ireland and to provide the Central Bank with a regulation making power to prescribe CFs and PCFs of these holding companies. As a result, the individuals proposed for PCF roles in existing holding companies will be assessed by the Central Bank under the existing F&P Regime.

Those individuals who are deemed by the holding company to already be performing these roles will be subject to an in-situ process which will be implemented and will not be required to submit an IQ to the Central Bank.

CF role holders will also be required to comply with F&P standards. The 2 CF roles are:

  • HCCF-1: a function which is likely to enable the person responsible for its performance to exercise a significant influence on the conduct of the affairs of the holding company; and
  • HCCF-2: a function which is related to ensuring, controlling or monitoring compliance by a holding company with its relevant obligations.

Individuals who are performing CF roles at a holding company level only will not be subject to the Conduct Standards given that the holding company is not itself a regulated financial service provider.

Central Bank Communication

The Central Bank has updated its website regarding these statutory instruments and has also provided  short guides on the changes, which can be accessed here.

4. Financial Services and Pensions Ombudsman Amendment Bill

On 13 December 2023, the Minister for Finance, Michael McGrath, announced in a press release that he has gained Cabinet approval for the publication of the Financial Services and Pensions Ombudsman ("FSPO") (Amendment) Bill ("Bill").

The Bill aims to improve protections for financial consumers by amending the legislation to ensure that the FSPO can carry out its statutory functions in line with the Constitution. The need for targeted amendments arose from the Zalewski case. The Supreme Court decision in the Zalewski case found that the exercise of power by Adjudication Officers pursuant to Part 4 of the Workplace Relations Act 2015 was the administration of justice under Article 34 of the Constitution, but that such administration of justice is permissible within the meaning of Article 37 of the Constitution as the administration of justice was limited.

Additionally, the Bill clarifies that consumers of financial service providers who have left the Irish market will be able to rely on the consumer protections and access the existing services provided by the FSPO. Minister McGrath welcomed the approval, noting the vital consumer protection that the FSPO provided to consumers and small businesses during the course of its work in resolving complaints against financial service and pension providers. He noted that it will 'provide strong legal clarity for the statutory operation of the FSPO' and reassure consumers about their ability to access the FSPO.

5. European Banking Updates

ECB SSM Supervisory Priorities for 2024-2026

On 19 December 2023, the European Central Bank ("ECB") published its Supervisory Priorities for the Single Supervisory Mechanism ("SSM") ("Priorities"). The Priorities are reviewed annually and are based on a comprehensive assessment of the main risks and vulnerabilities for supervised institutions.

There are 3 key Priorities. Priority 1 is a near-term risk, with Priority 2 and 3 being medium-term challenges. Each of the 3 priorities address 'prioritised vulnerabilities', where strategic objectives have been set and a work programme has been developed to mitigate the underlying risks.

Priority 1: Strengthen resilience to immediate macro-financial and geopolitical shocks including addressing shortcomings in credit risk and counterparty credit risk management frameworks as well as shortcomings in asset and liability management frameworks.

Priority 2: Accelerate the effective remediation of shortcomings in governance and the management of climate-related and environmental risks. This includes addressing deficiencies in management bodies’ functioning and steering capabilities, deficiencies in risk data aggregation and reporting as well as material exposures to physical and transition risk drivers of climate change.

Priority 3: further progress in digital transformation and building robust operational resilience frameworks including addressing deficiencies in digital transformation strategies and deficiencies in operational resilience frameworks, namely IT outsourcing and IT security/cyber risks.

EBA consults on Guidelines on internal policies, procedures and controls to ensure the implementation of European Union and national sanctions

On 21 December 2023, the European Banking Authority ("EBA") launched a public consultation on 2 sets of Guidelines on internal policies, procedures and controls to ensure the implementation of European Union and national restrictive measures.

The consultation consists of 2 sets of Guidelines:

  • the first set of draft Guidelines is aimed at financial institutions and prudential supervisors. It outlines common, regulatory expectations regarding the role of senior management, internal governance and risk management in the restrictive measures; and
  • the second set of draft Guidelines is particularly aimed at payment service providers ("PSPs"), crypto-asset service providers ("CASPs") and their supervisors.. It outlines what PSPs and CASPs should do in order to comply with restrictive measures when performing transfers of funds and crypto-assets, focusing, in particular, on know your own customer screening and due diligence.

Next Steps

The consultation will remain open until 25 March 2024.

EBA updates the Guidelines on the specification and disclosure of systemic importance indicators


On 20 December 2023, the European Banking Authority ("EBA") published its final report on updating Guidelines EBA/GL/2020/14 on the specification and disclosure of systemic importance indicators ("Guidelines").

In November 2020, the EBA set out their methodology on identifying global systemically important institutions ("G-SIIs") which closely followed the approach of the Basel Committee on Banking Supervision ("BCBS") to identify global systemically important banks ("G-SIBs"). In January 2023, the BCBS published a new data template and to ensure consistency, the annex to the Guidelines  has been updated to replicate the Basel reporting template.

Additionally, the Guidelines introduce clarifications, for the Single Rulebook, on which relevant cross-jurisdictional indicators concerning Single Resolution Mechanism jurisdictions should be used for identification and, consequently, reported and disclosed, without being considered ‘memorandum’ or ‘ancillary’ items or indicators for the European Union.

Next Steps

The Guidelines will now be translated into the official EU languages and published on the EBA website. The deadline for competent authorities to report whether they comply with the Guidelines will be 2 months after the publication of the translations.

EBA publishes final Guidelines on the benchmarking of diversity practices under the Capital Requirements Directive and the Investment Firms Directive

On 18 December 2023, the European Banking Authority ("EBA") published the final Guidelines on the benchmarking of diversity practices, ("Guidelines) including diversity policies and gender pay gap under the Capital Requirements Directive ("CRD") and the Investment Firms Directive ("IFD"). The aim of benchmarking diversity practices is to allow competent authorities to monitor diversity trends over time. The information on diversity policies and the composition of the management bodies in terms of gender, age, education and professional background and the geographical provenance of their members will be collected and analysed. The Guidelines include templates for data collection, and the data will be collected through the EBA's data-collection platform ("EUCLID"), while further technical information on submission will be provided separately.

The EBA will analyse the diversity practices and publish a benchmarking report at European Union level  including a country by country analysis every 3 years. The composition of management bodies is not expected to change significantly over the short term, and therefore data will not be collected annually. The EBA Board of Supervisors adopted a decision on the technical aspects that will be considered for the sampling of institutions.

Next Steps

The EBA will implement the Guidelines in their reporting platform in EUCLID. The first data collection under these Guidelines will be conducted in 2025 with a reference date of 31 December 2024.