Worldwide: Insurance Regulatory Update, January 2017

Last Updated: 15 February 2017
Article by Elizabeth Bothwell and Jennifer McCarthy
Most Read Contributor in Ireland, October 2018



On 30 January, the Central Bank published guidance and instructions on completion of the annual Pre-approval Controlled Functions (PCF) confirmation return.

The Central Bank has introduced an Annual PCF confirmation return as part of the continuing obligations in relation to fitness and probity. This annual confirmation is required from each regulated financial services provider in respect of each active PCF holder within the firm/funds, confirming that the PCF holder is compliant with the fitness and probity standards.

The requirement for the Board to confirm to the Central Bank of Ireland upon re-election/re-appointment of a PCF holder that his/her circumstances have not changed since pre-approval was granted will be satisfied by the completion of the PCF confirmation return.

A link to the guidance is here.


On 4 January, the Central Bank published the latest version of the Fitness and Probity – Frequently Asked Questions (FAQs) to address commonly asked questions in relation to the operation of the Fitness and Probity Regime. It further addresses certain questions that arise in the context of the amendments made to the Central Bank Reform Act 2010 by the European Union (Single Supervisory Mechanism) Regulations 2014. The December 2016 FAQs (the last version of which was published in July 2015) contain the following updates:

  1. A new section has been added, which addresses FAQs relating to certified persons. Certified persons are not currently within the scope of the Fitness and Probity Regime, however, the section makes clear that the outsourcing exemption does not apply when outsourcing pre-approval controlled functions (PCFs) and controlled functions (CFs) to certified persons.
  2. Additional questions relating to PCFs that were previously published in the Central Bank's Guidance on Fitness and Probity Amendments have been included. The FAQs provide guidance on the following PCFs: Chief Operating Officer (PCF- 42), Head of Claims (PCF-43), Head of Client Asset Oversight (PCF-45) and Head of Actuarial Function as a new PCF introduced under Solvency II. The FAQs also clarify that those persons performing removed PCF roles of Chief Actuary (PCF-20) and Signing Actuary (PCF-44) cannot automatically become Head of Actuarial Function. Such proposed individuals will have to obtain the usual Central Bank pre-approval before being appointed to the role of Head of Actuarial Function.
  3. As part of the IQ process, applicants seeking pre-approval to the roles of Single Director (PCF-01) in a private company limited by shares or Sole Trader (PCF-10) within a regulated financial services provider (RFSP) must now obtain Garda Vetting clearance.
  4. Question 9.13 sets out the procedure for completing the Garda eVetting process that the roles of Single Director (PCF-01) and Sole Trader (PCF-10) are required to undergo. Question 9.1 also clarifies which aspects of the IQ process that are the RFSP's responsibility to complete and which are the responsibility of the proposed individual.

A link to the December 2016 FAQs is here.


Firms using internal or partial internal models approved by the Central Bank to calculate their SCR are required to report their outputs using the relevant SCR template. The relevant reporting template was published by the Central Bank on 11 January. SCR calculations must be made at least once a year and should cover both existing and new business that the firm expects to write over the next twelve months.

The SCR Internal Model Structured Template can be accessed here.


On 18 January, Sylvia Cronin, the Director of Insurance Supervision at the Central Bank, addressed the ACOI on the role of culture in insurance supervision within the Central Bank.

Ms. Cronin emphasised how assessing the culture and behaviours of the firms the Central Bank supervises is an important part of forward looking supervision. She commented that when the Central Bank are performing a review of firms' capital risks, investment risk or operative risks, they will look at how firms make and communicate decisions, the risk management framework and the implementation of action. She commented that Solvency II is a risk based regulatory regime and that a powerful driver in embedding Solvency II will be the risk culture established by insurers. Ms. Cronin stated that the Central Bank will conduct a thematic review of internal audit function in 2017 and culture will be an element of this review.

Ms. Cronin set out in her remarks a non-exhaustive list of factors that the Central Bank have identified and have regard to in identifying what the culture of a firm is like. She stated that regulations such as the Corporate Governance Code, the Fitness and Probity regime and the Consumer Protection Code help to move firms in the right direction in regards to their cultures but that it is ultimately up to each firm to design their own culture around the general principle of "doing the right thing" for all stakeholders. Ms. Cronin also emphasises how imperative it is that companies reflect the principles behind the regulations.

Most large (re)insurers do not have any specific tangible approach towards the culture agenda with very few carrying out specific culture assessments. (Re)insurers often have the right structures in place but the behaviours of the individuals in the firm often do not support this structure. Where the Central Bank sees weakness in a firm's culture the level of supervision may increase. Increased supervision may take the form of an investigation of board effectiveness or an assessment of the embeddedness of risk management in the firm concerned.

Ms. Cronin described what the Central Bank considers to be good practice to develop an effective culture and gave the following six recommendations: (1) ensuring senior figures live the culture; (2) conducting staff surveys to identify the real culture; (3) actively supporting the culture through reward systems; (4) identifying clear roles, responsibilities and accountabilities; (5) measuring and tracking the culture and (6) adhering to the culture in times of pressure and stress.

A link to Sylvia Cronin's remarks is here.


On 23 January, Gerry Cross, the Director of Policy and Risk at the Central Bank, made remarks at the Brexit and Asia: Implications for Financial Services in Ireland event.

The Central Bank has received a substantial number of queries from firms as a result of Brexit. Firms are interested in getting to know the Central Bank as a regulator and the Central Bank is increasing staff numbers to deal with the large numbers of applications it has received.

Mr. Cross expressed that the Central Bank is focused on ensuring that before it authorises a firm in Ireland, it is satisfied that the firm will have a substantial business in Ireland enabling the Central Bank to supervise it effectively.

On the issue of outsourcing, Mr. Cross noted that although an activity may be outsourced, the responsibility for it cannot.

With regard to the Central Bank's opinion on group integrated approaches the Central Bank will want to have a clear understanding of: how risks are accepted, distributed, managed and mitigated within the group; how the local entity fits into this and how group solutions are adapted and suited for local application. The Central Bank will be looking to see that risks are well understood, appropriately tailored, effectively managed and applied locally. The Central Bank will also be solution orientated and their approach will be constructive. They are aware of the practical constrains firms are dealing with regarding logistics and timing and will work with the UK and other authorities to deal with issues efficiently and effectively.

The Central Bank has not ruled out and does not plan to rule out any particular business model on financial stability grounds.

A link to Gerry Cross's remarks can be found here.



On 13 January, Insurance Europe published a position paper in response to EIOPA and the other European Supervisory Authorities' work on non-complex products and comprehension within the frameworks of the Insurance Distribution Directive (IDD) and the packaged retail and insurance-based investment products (PRIIPs) regulation.

The paper points out the difference between insurance-based investment products and other financial instruments under MIFID II. MIFID II financial products often have a high degree of opacity of the connection between the consumer's investment and the possible risks and returns to the customer. They also include elements of gambling. Most insurance-based investment products do not share these traits and the same risks don't apply to consumers. Insurance-based investment products usually reduce risk for customers and can provide a means of protecting them from the volatility of the market.

Insurance Europe advises that insurance-based investment products that reduce risk for customers should be seen as non-complex for the purposes of the IDD and therefore could be sold by means of execution-only transactions. It makes the following comments in regard to insurance-based investment products: whether the product has a guarantee should be taken into account; whether the product is protected by a national insurance compensation scheme should be taken into account; the surrender value of insurance-based investment products is not relevant for complexity; switching clauses should not be put on the same level as converting rights; that beneficiary clauses do not influence the performance or return of the product should be considered; that the relationship between an insurance-based investment product and tax regulations is not relevant should be considered; and it should also be considered the total commitment is fixed and does not vary overtime and that this is something that customers might have difficulty understanding.

The PRIIPs regulation provides for a comprehension alert to be provided to customers when selling a complex PRIIP. The paper sets out criteria which Insurance Europe believes should be taken into account to identify PRIIPs that should be considered as difficult to understand and not simple. These criteria are: the product invests in underlying assets in which retail investors do not commonly invest; it uses a number of different mechanisms to calculate the final return of the investment, creating a greater risk of misunderstanding on the part of the retail investor; and if the investment's pay-off takes advantage of retail investor's behavioural biases, such as a teaser rate followed by a much higher floating conditional rate, or an iterative formula.

A link to the paper is here.


On 13 January, the Commission and the U.S. Department of Treasury released the Covered Agreement (the Agreement) on (re)insurance measures between the EU and the U.S. EIOPA and Insurance Europe welcomed the Agreement.

The Agreement covers three areas of prudential insurance oversight: (re) insurance, group supervision and exchange of information. Insurance Europe believes that the Agreement will help with bilateral trade in (re)insurance, for the benefit of both consumers and economies and hopes all relevant authorities will apply both the provisions and spirit of the Agreement promptly.

A link to the EIOPA press release and the Insurance Europe press statement is here and here.


On 17 January, the European Insurance and Occupational Pensions Authority (EIOPA) and the Bermuda Monetary Authority (BMA) entered into a Memorandum of Understanding (MoU), which aims to formally strengthen cooperation between the two supervisory authorities. The MoU provides for regular exchanges of information on regulatory, supervisory and macro-prudential developments between EIOPA and BMA with a view to enabling optimal supervision for insurance and reinsurance groups with international activities in the EU and Bermuda.

Under the MoU, each authority has committed to support and assist the other when supervising insurance undertakings in their jurisdiction. The MoU may be terminated by either party provided the terminating authority gives ten days' written notice to the other authority.

A link to the MoU is here.

A link to the EIOPA press release is here.


On 17 January, EIOPA met with the US Federal Insurance Office and the European Commission as part of an information exchange initiative known as the EU-U.S. Insurance Project, to discuss the issue of cyber security. Cyber security is a growing and evolving challenge for all sectors, but in particular for insurers who collect and manage large stores of personally identifiable information from consumers, claimants and beneficiaries.

Current initiatives underway in the EU and the US for monitoring the risk of cyber-attacks, protecting critical infrastructure and engaging with insurance sector stakeholders were addressed at the convening. The EU-U.S. Insurance Project aims to conduct further sessions throughout the course of 2017 to obtain further expert and technical input with a view to enhancing international best practices in the field of cyber security.

A link to the EIOPA press release 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

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

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
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 (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

To Use 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.


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.


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