1.1 Which government bodies/agencies regulate insurance (and reinsurance) companies?
The Central Bank of Ireland (the "CBI") is responsible for authorising and supervising all financial institutions in Ireland, including insurance and reinsurance companies.
1.2 What are the requirements/procedures for setting up a new insurance (or reinsurance) company?
In order to set up a (re)insurance company in Ireland, it is necessary to incorporate a company and obtain authorisation from the CBI. When establishing a new (re)insurance company, promoters are permitted to adopt different types of corporate organisations (e.g. a public limited company, a private limited company in the form of a designated activity company ("DAC"), a company limited by guarantee, an unlimited company or a European Company (SE)). However, the most common form of company used is a private limited company in the form of a DAC. The incorporation process involves an application to the Companies Registration Office and a company can be incorporated within five business days of an application being made.
DACs were introduced into Irish law in June 2015 by virtue of the Companies Act, 2014 and are private companies limited by shares that are similar in form and substance to limited liability companies ("Ltds"). DACs have a "constitution" comprising of: (i) a memorandum of association; and (ii) articles of association. However, unlike Ltds, a DAC's constitution has a main objects clause, which sets out the activities that the (re)insurance company has the corporate capacity to undertake.
To obtain authorisation from the CBI, the promoters are required to submit certain information, including a "scheme of operations", which comprises a detailed business plan for the proposed (re)insurer. The business plan should contain financial projections for a three-year period on a pessimistic, realistic and optimistic basis. It should also include comprehensive details of the nature of the (re)insurance products that it is proposed the (re)insurer will write, the intended market for the products and distribution channels. Draft policy documentation should be submitted as part of the application. The CBI has issued detailed guidance on the authorisation process, i.e. explaining the process and timing for the submission of the application for authorisation, together with a "Checklist" (discussed below) of the matters that should be addressed in the application and the supporting documents to be included in the application. The authorisation process takes between three and six months from the date the fully completed application is made. The process is iterative and typically there is a high degree of engagement with the CBI. It is advisable for applicants for authorisation to meet with the CBI in advance of submitting their application for authorisation.
The Checklist referred to above sets out the information to be contained in the applicant's business plan, as well as the broader information that the CBI require in assessing the application. Set out below are some of the key areas to be addressed in the business plan:
ownership structure of the company's parent/group; legal structure of the company; underwriting strategy, outward reinsurance, outsourcing and investment strategy; capital and solvency projections; and governance structures (audit, risk management, compliance, financial, management and internal controls).
The role of director and certain senior management positions in (re)insurers constitute "controlled functions" or "pre-approved controlled functions" under the CBI's Fitness and Probity Regime, and any person who it is proposed will occupy a pre-approved controlled function must complete an online Individual Questionnaire.
Once the CBI is satisfied with an application, they issue an authorisation in principle with conditions to be satisfied. Once the conditions are satisfied and the CBI has granted formal approval, the (re)insurer can commence writing business.
1.3 Are foreign insurers able to write business directly or must they write reinsurance of a domestic insurer?
In accordance with the EU passporting provisions, an insurer authorised in another EEA Member State can write business directly in Ireland on a freedom of services or freedom of establishment basis. Generally, non-EEA insurers cannot write business directly in Ireland; however, they may apply to the CBI for authorisation under the European Union (Insurance and Reinsurance) Regulations 2015, which enable third country insurers to establish a branch in the state ("Third Country Branch"). Third Country Branches do not have the right to passport into other EEA Member States and so a Third Country Branch that has been authorised by the CBI can only carry on business in Ireland.
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Previously published in the International Comparative Legal Guide
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.