Ireland: Insurance Regulatory Update - March 2014

Last Updated: 7 April 2014
Article by Elizabeth Bothwell and Jennifer McCarthy
Most Read Contributor in Ireland, October 2018

CENTRAL BANK PUBLISHES SUMMARY REPORT OF PAYMENT PROTECTION REVIEW

On 7 March 2014, the Central Bank published a Summary Report in respect of a review of payment protection insurance (PPI) together with a Q&A for Consumers on PPI and information on the review undertaken. Inspections by the Central Bank in 2011 raised concerns that 11 credit institutions had not complied with the Consumer Protection Code (the CPC) during the PPI sales process. The purpose of the review was to identify where the CPC had not been complied with in respect of the sale of PPI (or where the credit institution could not demonstrate such compliance).

An independent third party was engaged to oversee each of the reviews in the 11 credit institutions. The results of the review indicated that 22% of the PPI sales reviewed were not proved to be in compliance with the CPC. This resulted in €67.4 million (including interest of €4.9 million) being identified for refund to approximately 77,000 policyholders who were sold PPI since 1 July 2007.

A link to the summary report is here.

CENTRAL BANK CONSULTS ON ITS HANDLING OF PROTECTED DISCLOSURES

On 19 March 2014, the Central Bank published a consultation paper (CP79) on its Handling of Protected Disclosures following on from the enactment of the Central Bank (Supervision and Enforcement) Act 2013 (the Act). The Act provides for individual "whistleblowers" to report alleged breaches of financial services legislation to the Central Bank. The Act also places a positive obligation on certain persons occupying pre-approval controlled function roles within regulated financial service providers to report on any contraventions of the Act. Such reports are referred to as "protected disclosures" in the Act.

The purpose of CP79 is to seek views in relation to the policies and procedures which the Central Bank intends to put in place regarding the receipt and handling of protected disclosures. CP79 proposes establishing a central "Whistleblower Desk" to deal with protected disclosures which will include a dedicated email and telephone line. The desk will serve as the primary point of contact for whistleblowers wishing to make a disclosure. The Central Bank will record all calls to this line. Protection will be offered to those who make a disclosure. Whilst the Central Bank will accept anonymous disclosures, it encourages any person who makes a report to provide their name and contact details. The Central Bank does not intend to inform whistleblowers of what action, if any, has been taken as a result of their disclosure to protect the rights of all parties involved in line with statutory requirements. The closing date for submissions is 19 June 2014.

A link to the Consultation Paper is here.

INSURANCE IRELAND AND THE OPW SIGN MEMORANDUM OF UNDERSTANDING ON FLOOD DEFENCE DATA

On 24 March 2014, Insurance Ireland and the Office of Public Works (OPW) announced the details of their Memorandum of Understanding (MOU) on the exchange of information on flood defence works. The MOU outlines the principles of agreement between these two bodies regarding how information on how flood defence works would be provided and used by the insurance industry from 1 June 2014. Kevin Thompson, CEO of Insurance Europe, stated that the MOU is the start of a process which will help insurers make flood insurance more widely available in areas benefitting from flood defences built to the desired standard of 1:100 years. The sharing of information between the OPW and insurers will allow insurers to take this data into account when assessing flood risk. The announcement of signing the MOU follows on from Insurance Ireland's "surprise and disappointment" in relation to a government proposal to introduce a levy on non-life insurance policies to create a distress fund to help the Irish consumers who cannot buy flood insurance cover. The additional levy on home, motor and other policies would bring total levies on non-life insurance products to 6%.

IN EUROPEAN AND INTERNATIONAL NEWS...

UK FCA TO INVESTIGATE FAIR TREAMENT OF CUSTOMERS IN CLOSED LIFE INSURANCE FUNDS

The Financial Conduct Authority (FCA) has announced its intention to investigate the treatment of long standing customers in closed funds of UK life insurers. The regulator has stressed that its probe is "discovery work" which means it has not found problems yet. However, it is concerned that insurers may have taken advantage of long standing customers (some of whose investments date back to the 1970s) by imposing high charges and inflexible contracts on old products. The FCA estimates that thirty million policies may be involved including personal pensions, endowments and whole-of-life policies. It will also look at information given to customers, service levels and whether the investment is still appropriate to a particular customer's circumstances. This review, which was widely reported in the media on 28 March last, is part of the FCA's 2014 Business Plan, where it states that it will focus much more regulatory attention on the treatment of customers in the area of life insurance generally.

A link to the FCA statement is here.

UK FCA TACKLES "ADD-ON" INSURANCE INDUSTRY

On 11 March 2014, the UK FCA published the result of its first market study into general insurance "add-on" products.

The FCA announced that it was undertaking a market investigation in July 2013 after previous work highlighted consumer concerns in relation to whether add-ons represented value for money and a general lack of understanding as to what add-on insurance policies covered. The focus of the study was on the state of competition in the market focusing on five distinct add-on markets namely: (1) travel; (2) gadget; (3) Guaranteed Asset Protection (GAP); (4) Home Emergency; and (5) Personal Accident Cover. The FCA analysed a range of information about firms, intermediaries and consumers in these five distinct markets.

The study concluded that there is a lack of competition in these five markets for general insurance add-ons and this can lead to poor customer outcomes. The FCA stated that there is a "clear" case for intervention and proposed a number of remedies including the prevention of the sale of GAP as an add-on at the same time as the sale of the primary product banning pre-ticked boxes for the sale of add-ons and a requirement that firms publish claims ratios. The Association of British Insurers (ABI) has criticised the methodology used by the FCA and disagreed with the FCA's conclusions. The ABI did however welcome the renewed focus on price comparison websites in providing consumers with good information about the add-ons offered.

Interested parties have until 8 April 2014 to submit comments on the FCA's provisional findings and proposed remedies. The FCA aims to publish its consultation on remedies before end of 2014.

A link to the study is here.

EUROPEAN PARLIAMENT ADOPTS OMNIBUS II

On 11 March 2014, the European Parliament adopted the Omnibus II Directive. The text adopted by Parliament was published on 18 March. The European Council must now formally adopt Omnibus II which will enter into force after publication in the Official Journal. When it voted on 11 March 2014, the Parliament adopted the "trilogue text" of Omnibus II, agreed on 13 November 2013 (the features of which were reported in the November 2013 bulletin).

In the January bulletin, we also reported on the Central Bank's publication of "key dates" for the implementation of Solvency II. The decision of Parliament on Omnibus II demonstrates the Solvency II implementation date of 1 January 2016 is on track. The next step is the Commission's adoption of the Delegated Acts, which will set a large number of the detailed implementing rules for Solvency II, scheduled for summer 2014.

A link to the Commission's press release is here.

INSURANCE EUROPE – "DRAFT SOLVENCY II DELEGATED ACTS DILUTE THE AIMS OF EU LEGISLATORS"

Insurance Europe has issued a press release in response to the Parliament's approval of the Omnibus II Directive. Insurance Europe welcomed the adoption of Omnibus II as an important step towards implementing Solvency II. However, it raised concerns with the current draft Commission Delegated Acts. Insurance Europe believes the (as yet unpublished) Delegated Acts that are currently being drafted are inconsistent with the intention of the law-makers of Solvency II. In the press release, Insurance Europe highlighted eight priority areas of concern with the current draft of the Delegated Acts, including (1) the method for setting the level of the credit risk adjustment; (2) the manner in which the volatility adjustment is applied to portfolios; and (3) the level of the risk charges for long term investments. However, Insurance Europe emphasised that workable solutions exist without delaying the implementation date for Solvency II.

A link to the relevant press release is here.

EBA, ESMA AND EIOPA PUBLISH JOINT CONSULTATION PAPER ON SUPERVISORY PRACTICES FOR FINANCIAL CONGLOMORATES

On 12 March 2014, the EBA, ESMA and EIOPA published a joint consultation paper in respect of the draft Guidelines on the convergence of supervisory practices relating to the consistency of supervisory coordination arrangements for financial conglomerates. The guidelines are addressed to competent authorities as defined by the Financial Conglomerates Directive. Financial conglomerates are subject to additional supervision to that of banking or insurance groups in order to address two main concerns, firstly double gearing of capital and secondly, to allow for better monitoring of complex group risks. The purpose of the draft Guidelines is to ensure a greater level of consistency and cooperation on a cross-border and crosssectoral basis between the competent authorities throughout the EU for such financial conglomerates. The public consultation will run until 12 June 2014. The draft Guidelines cover the activities where close co-operation is needed in order to achieve the objectives of supplementary supervision.

The draft Guidelines cover the following areas: (1) mapping the conglomerate structure and written agreements; (2) coordination of information exchange in going concern and emergency situations; (3) supervisory assessment of financial conglomerates; (4) supervisory planning and coordination of supervisory activities in going concern and emergency situations; and (5) other decision making processes among the competent authorities.

A link to the Consultation Paper is here.

EIOPA UPDATES Q&A ON SOLVENCY II GUIDELINES

During March, EIOPA updated its Questions and Answers template on the Guidelines for preparation for Solvency II. Again, a number of answers have been provided to questions raised in relation to the Submission of Information to National Competent Authorities, particularly addressing confusion around the information to be provided in certain cells of the template documents. In addition, a new set of Questions and Answers has been published on the Forward Looking Assessment of Own Risks (FLAOR). The two questions raised so far focus on national guideline commentary and FLAOR reporting.

A link to the Questions and Answers is here.

EIOPA PUBLISHES "ONE MINUTE GUIDE" TO COMPLAINTS HANDLING BY INSURANCE INTERMEDIARIES

In late November, EIOPA published Guidelines on Complaints Handling by Insurance Intermediaries, attaching a report on Best Practice in the area. The Guidelines were addressed to the national authorities responsible for supervising complaints handling by insurance intermediaries. This new Guide is intended as an illustrative guide only for insurance intermediaries to understand what the Guidelines mean for them.

The particular focus of the Guide is to ensure a proportionate approach is taken towards compliance by smaller insurance intermediaries, and in particular sole traders. The Guide sets out EIOPA's view on a number of elements of the Guidelines including what a complaint management policy is and how a complaints management function should be implemented.

The Guide also explains EIOPA's view of how intermediaries should register complaints and how intermediaries should report to national competent authorities/national ombudsmen on complaints. The Guide also explains EIOPA's expectation regarding the information that should be provided to complainants and the nature and provision of that information and also, how intermediaries should follow up on internal complaints from a process perspective.

ENGLISH AND SCOTTISH LAW COMMISSIONS (THE LAW COMMISSIONS) CONDUCT FURTHER LIMITED CONSULTATION ON DRAFT CLAUSES FOR INSURANCE CONTRACTS BILL

In the February bulletin, it was noted that the Law Commissions were carrying out a limited public consultation on the initial draft clauses for the proposed Insurance Contracts Bill. This four week public consultation ended on 21 February 2014. On foot of this, the Law Commissions carried out an additional limited consultation on further draft clauses: (1) warranties; (2) insurers' remedies for fraudulent claims by members of group insurance schemes; and (3) contracting out. This second consultation closed on 21 March 2014.

The draft warranties clause has the effect of abolishing 'basis of contract' clauses in non-consumer contracts meaning that it will no longer be possible to convert all representations by a proposed insured during the placement process into warranties and in order to be effective parties must agree warranties in relation to particular matters. Furthermore, it is proposed that the existing rule that breach of warranty discharges an insurer's liability will be abolished and a new remedy suspending liability for breach of warranty is proposed for both express and implied warranties. The draft clauses on group insurance schemes provide that where a fraudulent claim is made by a group member there are only consequences for that group member rather than the group as a whole. The draft contracting out clauses propose that the default provisions embodied in the draft Bill will be mandatory for consumer contracts. In the case of non-consumer contracts it is proposed that non-consumers can contract out of the reforms and substitute their agreed terms, subject to the insurer complying with the transparency requirements proposed in the draft clauses. In addition, there are two exceptions which will continue to be mandatory for non-consumer contracts and which cannot be contracted out of namely, the rule prohibiting basis of contract clauses and any provision whereby an insurer attempts to contract out of liability for a deliberate or reckless breach of the implied term to pay insurance monies within a reasonable time period. A draft bill is expected by Summer 2014.

A link to the consultation is here.

This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions