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FIG Top 5 at 5 - 04/04/2024

DATE: 04/04/2024

1. Remarks by Central Bank's Deputy Governor, Sharon Donnery, at the Financial Industry Forum

On 28 March 2024, the Deputy Governor of the Central Bank of Ireland ("Central Bank"), Sharon Donnery, gave opening remarks at the third meeting of the Central Bank's Financial Industry Forum - International Subgroup. Her remarks focused on the development of the financial sector and the Central Bank's work on transforming Regulation and Supervision. Deputy Governor Donnery noted that the Central Bank is taking a more integrated view of risks and is committed to being more open with stakeholders on their thinking and plans, as was outlined in the recent Regulatory and Supervisory Outlook Report.

The Deputy Governor detailed a number of examples of what she describes as "the significant change in Ireland's financial sector over the last 7 years". In particular, she highlighted that;

  • despite the consolidation of within the retail banks, total assets are still growing;
  • there has been a 5 fold increase in the assets held by investment banks, and 2 additional global Systemically Important Banks have made Ireland their European headquarters;
  • the number of payments and e-money institutions has tripled, and there has been a 10 fold increase in safeguarded funds;
  • international trading venues have increased from 2 to 7;
  • the number of complex trading firms has increased to 9, and assets in the sector have increased by over 500%; and
  • in 2022, 85% of assets of the financial sector were cross border.

Alongside these developments, the Central Bank has also begun to transform its approach to supervision and regulation. The Deputy Governor identified a number of ways in which this is happening:

  • there has been an increased focus on providing more transparency and clearer expectations in the Central Bank's external engagement;
  • the consultation paper on innovation consultation has closed and the Central Bank expects to publish its feedback statement in May;
  • there have been improvements to the F&P system, which has reduced processing time from 36 to 24 calendar days. The Central Bank intends to publish an authorisation and Gatekeeping report in the coming months which will outline the Central Bank's priorities and expectations, and on how they are evolving their approach; and
  • the Central Bank is also taking a more integrated view of risks and priorities, and the external version of this work, the Regulatory and Supervisory Outlook, was published last month.

2. Central Bank's Insurance Quarterly Newsletter is published

On 26 March 2024, the Central Bank published its insurance quarterly newsletter for March 2024 ("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 of the key highlights from this edition include:

1. Motor Insurance – Review of Pricing and Claims Practice

The Central Bank recently carried out a review which examined a number of pricing and claims practices adopted by domestic motor insurance providers. The following observations were made:

Payment Method

The Central Bank noted that while details on charges and conditions associated with payment options were included by insurers in various formats, the information provided is not always clear or upfront, particularly where the payment method is used by the insurer as a risk rating factor. This can result in an increase in the premium charged for policyholders who have opted to pay by instalments. The Central Bank set out a number of requirements:

  • insurers must present cost comparisons in a way which effectively informs the consumer, such as a side by side direct comparison;
  • where insurers use payment method as a risk factor, it should be clearly disclosed to consumers during the quotation or renewal journey in a manner that will enable the consumer to make an informed decision on the payment method that they use, as it will directly impact the premium price; and
  • insurers must ensure that where payment method is used as a risk-rating factor, such a factor can be isolated and evidenced by the insurer's pricing models.

Insurers should take any necessary actions to bring existing processes in line with the above requirements.

No Claims Discount ("NCD") reinstatement and premium refunds

The Central Bank noted that typically a notified incident can lead to an increased renewal premium as it will impact on a policyholder's NCD. Where no subsequent claim is made, an insurer will provide appropriate refunds and reinstate the NCD. The review identified that in certain instances, policyholders did not receive refunds or NCDs were reinstated at incorrect levels. The Central Bank stated that insurers must ensure the operating effectiveness of such process and controls.

The review also found that while insurers will reinstate the NCD if the policyholder reimburses the insurer the cost of the claim paid out, most insurers do not have formal procedures in place for this. The Central Bank stated that insurers should review and update their processes to ensure an agreed, documented process is in place, which is effectively communicated with policyholders.

Settlement and valuation basis

There are 2 options open to insurers in relation to the basis of indemnity where a total loss materialises:

  • Market value at the time of the loss; or
  • The lower market value at the time of the loss or the value stated in the policy schedule.

When insurers opt for the second option, policyholders may be underinsured through no fault of their own, due to inflation. In a similar way to the expectations set out in the 2022 Review of under-insurance in the home insurance market, the Central Bank expects insurers to adopt a consumer focused approach and ensure that settlement offers to claimants are fair and reasonable.

2. Feedback on Implementation of Solvency II Taxonomy

Commission Implementation Regulations regarding reporting and disclosure were finalised and published on 4 April 2024. The Central Bank undertook a number of preparatory measures to support firms on the implementation of Solvency II Taxonomy 2.8.0 which commenced on 31 December 2023:

  • Revision of the national specific templates; and
  • Data quality checks published on the Central Bank website.

The first reporting submission under the new taxonomy was received in February 2024. The Central Bank provided individual, specific feedback on the data quality of firms' submissions. 93% of (re)insurance firms received individualised feedback 39% of which subsequently revised their submission. In the previous quarter only 20% resubmitted, indicating the challenges of embedding changes into the reporting framework. This has led to increased processing times, and the Central Bank noted that early submissions will benefit from quicker processing times as most submissions are received close to the return deadline.

It also noted that the most common queries related to new data requests due to misinterpretation of reporting requirements. Many ambiguities have been addressed in the EIOPA Q&A repository. The Central Bank will reference the Q&A where relevant, and firms may seek clarification through the "Submit a Question" facility on the EIOPA website.

Issues relating to the consistency of basic information and contents of submissions templates were also common. The Central Bank noted that this was in large part due to a "lack of consistency across reporting periods or where there is a misalignment with the filling indicators".

The Central Bank anticipates that the number of queries will reduce as the new taxonomy becomes more embedded in reporting processes. It also suggests that the issues identified are raised with firms' supervisory teams, and for firms to raise specific reporting issues with EIOPA or the Central Bank directly.

3. Thematic and information requests

The Newsletter outlined a number of thematic and information requests planned for Q2 2024:

  • April 2024: Pricing Review - Review of the governance, methodology, modelling and monitoring of pricing for a number of Domestic Non-Life and Specialty firms;
  • June 2024: National Claims Information Database – Analysis of the cost of claims, cost of premiums, settlements, etc.;
  • Q2 2024: Health Insurance: Review of consumer treatment when purchasing/renewing from health insurance providers; and
  • Q2 2024: Flood Underwriting Data Request.

The Newsletter also outlined a number of planned Insurance Sector Bilateral Engagement & Publications:

  • April: Publication of Findings from Thematic Review on Professionalism in Retail Intermediary Sector;
  • May: Bilateral Meeting between Consumer Protection Division and Brokers Ireland;
  • May: Publication of EIOPA Greenwashing Report;
  • June: Consultation Paper on Consumer Protection Code will close on 7 June; and
  • Q2: EIOPA Consultation on (Re)Assessment of the NatCat Standard Formula.

4. EIOPA Updates

EIOPA Strategic Supervisory Priorities

The Newsletter outlined EIOPA Strategic Supervisory Priorities for 2024-2026. EIOPA's 2 strategic objectives for 2024-2026 are:

  • the financial robustness of insurance; and
  • consumer protection in a disruptive environment.

Alongside these priorities, EIOPA also identified 3 specific areas that it considers to be supervisory priorities for 2024;

  • continuous monitoring of the impact of the macroeconomic environment;
  • risk transfers including the capacity and appropriateness of risk factors; and
  • value for money including in relation to inflation and current macro-economic trends.

EIOPA Staff Paper – Barriers to purchasing Nat Cat Insurance

  • The Newsletter noted that the Staff Paper explored the main barriers that prevent consumers from purchasing insurance against natural catastrophes, and proposes a number of consumer-tested solutions to overcome these difficulties.  

EIOPA's Consumer Trend Report

5. Consumer Protection Code

On 7 March 2024, the Central Bank launched its consultation paper on the revision of the CPC. For more information on the CPC, please see FIG Top 5 at 5 dated 14 March 2024 and Matheson Insight Initial Observations of the Central Bank's Consumer Protection Code.

6. Regulatory and Supervisory Outlook Report

The Newsletter highlighted the key trends and risks facing the financial sector, and the regulatory and supervisory priorities that the Central Bank has set in response. For more information on the Report, please see FIG Top 5 at 5 dated 7 March 2024.

3. FSPO Overview of Complaints 2023

On 27 March 2024, the Financial Services and Pensions Ombudsman ("FSPO") published an overview of the complaints that it received during 2023. The number of complaints was up 29% in 2023, and the FSPO delivered outcomes worth over €4.7million to consumers. Dublin had the highest number of complaints with 1,746 complaints, and Cork had the second highest at 506 complaints.   The key findings for the insurance, banking, investment, market exit, disputed transactions and tracker mortgages are highlighted below.


The insurance sector accounted for 23% of all complaints, amounting to 1,446 complaints.

The top 3 areas of complaints by product were:

  • motor insurance: 498;
  • private health insurance: 215; and
  • home insurance: 183.

The top 3 conducts complained of were:

  • claims handling: 31%
  • rejection of claims: 20%; and
  • maladministration: 11%.


Banking complaints increased by 46% to 3,850 complaints in 2023, accounting for 62% of all complaints.

The top 3 areas of complaints were:

  • bank accounts: 1,747;
  • mortgages: 1,150; and
  • consumer credit: 498.

The top 3 conducts complained of were:

  • customer service: 1,218;
  • disputed transactions: 905; and
  • maladministration: 796.


461 complaints related to investment were made in 2023, up 26% from 2022.

The top 3 complaints by product were:

  • investments: 322;
  • pension related investments: 129; and
  • multiple products and services: 7.

The top 3 conducts complained of were:

  • maladministration: 133;
  • customer service: 121; and
  • mis-selling: 83.

Market Exit

Following the departure of 2 major banks, the FSPO began to track complaints related to the market exit from June 2022. 236 complaints were tagged as market exit complaints, although not all of these were related to the exit of such providers. Of these

  • 162 complaints were closed in 2023;
  • 55 were closed within the Customer Operations and Information Management department;
  • 106 were concluded within the Dispute Resolution Service;
  • 1 complaint was closed in legal services.

Overall the FSPO found that the departure of the 2 major banks did not give rise to high levels of complaints.

Tracker Mortgage

There were 74 complaints made about tracker mortgages in 2023, down from 250 in 2021 and 139 in 2022. Of the 107 legally binding decisions on tracker mortgages issued in 2023:

  • 1 was substantially upheld;
  • 3 were partially upheld; and
  • 103 were not upheld.

117 tracker mortgage complaints were closed without a legally binding decision being issued:

  • 42 were withdrawn;
  • 33 closed on a settlement agreement; and
  • a clarification was issued for 23 complaints.

4. EIOPA launches 2024 EU-wide insurance sector stress test

On 2 April 2024, the European Insurance and Occupational Pensions Authority ("EIOPA") launched its 2024 EU-wide stress test for the insurance sector. Under the stress test, EIOPA will subject insurers in the European Economic Area ("EEA") to a hypothetical scenario of severe but plausible adverse developments in financial and economic conditions. The stress test will involve 48 undertakings from 20 member states and cover over 75% of the EEA market in terms of total assets. Only one Irish insurance undertaking has been chosen to participate in the stress test. EIOPA has stated that the stress test is not a pass or fail exercise, rather the purpose is to assess participants' resilience to the scenario whose shocks go beyond the resilience required under Solvency II.


The scenario was developed by EIOPA and the European Systemic Risk Board and presumes a renewed build-up of geopolitical tensions together with a broad range of knock-on effects. Due to high tensions, the scenario visualises a resurgence of widespread supply-chain disruptions, resulting in sluggish growth and reigniting inflationary pressures. The scenario narrative has been translated into a set of market and insurance-specific shocks to assess the industry's resilience to them from 2 perspectives:

  • a capital assessment, which relied on the Solvency II framework; and
  • a liquidity assessment, based on estimations regarding the sustainability of undertakings' liquidity positions.


Undertakings who are participating in the stress test must estimate their position under 2 assumptions:

  • fixed balance sheet where only embedded management actions are allowed; and
  • constrained balance sheet, where a set of identified reactive management actions are allowed.


  • 8 April: Q&A process begins for a 4 week period;
  • May: end of the Q&A process;
  • Mid-August: deadline for participants' submissions to their national competent authorities;
  • Mid-August to end of October: quality assurance of the results;
  • October to mid-December: analysis of the results and drafting of the report; and
  • December: publication of the report based on aggregated data and individual results relating to a subset of capital-based indicators.

5. EIOPA consults on 2023/2024 reassessment of the natural catastrophe risks in the standard formula under Solvency II

On 3 April 2024, the European Insurance and Occupational Pensions Authority ("EIOPA") published a consultation paper on the 2023/2024 reassessment of the natural catastrophe standard formula under Solvency II. EIOPA is carrying out this reassessment as due to climate change, scientific developments and catastrophic events, it is vital to ensure that the parameters of the standard formula are still valid. The review of Solvency II also included a mandate to EIOPA to carry out a reassessment, and if a substantial discrepancy arises, to carry out a recalibration.

The exercise considers:

  • parameters relating to perils or regions which are already parameterised under Solvency II but need to be reassessed; and
  • parameters relating to perils or regions which are not currently covered, but are being assessed for inclusion in Solvency II.

The main perils being considered are as follows:

  • flood: 7 countries will be reassessed, and 9 countries, including Ireland will be assessed;
  • hail: 6 countries will be reassessed, and 2 countries will be assessed;
  • earthquakes: 5 countries will be reassessed, and no countries are being assessed;
  • windstorm: 6 countries including Ireland are being reassessed, and 1 country is being assessed; and
  • subsidence: 2 countries are being reassessed, and 2 countries are being assessed.

A number of other perils are also being monitored:

  • wildfire: Ireland is one of the main countries identified by national competent authorities to be monitored;
  • coastal flood: all EU countries with a coast will be monitored; and
  • droughts: 4 countries to be monitored.

Next Steps

Comments can be made on the proposals until 20 June 2024. EIOPA will submit its opinion on natural catastrophe risks by the end of 2024, and the Commission will consider this opinion for a potential recalibration of the standard formula parameters.