A roundup of the developments affecting the insurance industry from the past month including EIOPA launching an EU-wide thematic review on big data in the motor and health insurance markets, the International Underwriting Association publishing a second Brexit continuity clause and the FCA consulting on clarification to the PPI commission disclosure rules.


General Update

FCA launches new series with evaluation of 2015 GAP insurance intervention

The Financial Conduct Authority (FCA) has published Evaluation Paper 18/1, in which it evaluates its September 2015 add-on guaranteed asset protection (GAP) insurance intervention. This is the first of a new series of evaluations of the FCA's past interventions, which will be made available on its website.

FCA, 31 July 2018

IAIS launches consultation on ComFrame, including ICS Version 2.0

The International Association of Insurance Supervisors (IAIS) has issued two major public consultation documents collectively addressing ComFrame in its entirety, with one focused on the qualitative components and the second on the risk-based global Insurance Capital Standard (ICS) Version 2.0. The deadline for comments is 30 October 2018.

IAIS, 31 July 2018

EIOPA publishes discussion paper on national insurance guarantee schemes

The European Insurance and Occupational Pensions Authority (EIPOA) has issued its discussion paper on resolution funding and national insurance guarantee schemes. This has been issued as a follow-up to the EIOPA Opinion on the harmonisation of recovery and resolution frameworks for (re)insurers across the Member States published in 2017.

EIOPA, 30 July 2018

IAIS and SIF release Issues Paper on climate change risks to the insurance sector

The International Association of Insurance Supervisors (IAIS) and the Sustainable Insurance Forum (SIF) have released an Issues Paper on Climate Change Risks to the Insurance Sector. The objectives of the Issues Paper are to raise awareness for insurers and supervisors of the challenges presented by climate change, including current and contemplated supervisory approaches for addressing these risks.

IAIS, 30 July 2018

FCA seeks views on first experiences of the PRIIPs Regulation

The Financial Conduct Authority (FCA) is seeking input from firms and consumers on their initial experiences of the requirements introduced by the Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation. The FCA aims to publish a feedback statement on the call for input in early 2019. The responses will also inform its future engagement on the PRIIPs legislation with the European Supervisory Authorities and other national competent authorities. Feedback is sought by 28 September 2018.

FCA, 26 July 2018

IAIS stakeholder events on climate risk, digital technology, and index-based insurances announced

The International Association of Insurance Supervisors (IAIS) has announced that, subject to executive committee action at its meeting in Moscow on 25 July 2018, it will hold a number of stakeholder events on climate risk, digital technology, and index-based insurances.

IAIS, 20 July 2018

ESAs update guidance on PRIIPs key information documents

The European Supervisory Authorities (ESAs) have published further guidance on the key information document (KID) requirements for packaged retail and insurance-based investment products (PRIIPs). The guidance seeks to promote common supervisory approaches and practices based on ongoing work to monitor the implementation of the KID. It supplements material published in 2017 prior to implementation.

ESAs, 20 July 2018

EIOPA reviews consumer protection issues in travel insurance

The European Insurance and Occupational Pensions Authority (EIOPA) has launched a thematic review of consumer protection issues in travel insurance. EIOPA aims to assess potential sources of consumer detriment stemming from how travel insurance products are designed, distributed and sold within the EU to find possible actions to ensure better consumer protection.

EIOPA, 17 July 2018

Report seeks to address causes of insurers’ failures and near misses

The European Insurance and Occupational Pensions Authority (EIOPA) has published a report giving an overview of the causes and early identification of failures and near misses in insurance. EIOPA suggests that the reasons insurers—as well as banks—were affected by the financial crisis included inappropriate investment decisions by insur­ers, which led to significant losses, the interconnectedness with banks or, in general, evidence of poor governance.

EIOPA, 17 July 2018

IE seeks clarity from supervisors on codes of conduct under GDPR

Insurance Europe (IE) is urging the European Data Protection Board (EDPB) to issue guidance to clarify as swiftly as possible that the approval and implementation of a code of conduct does not require the establishment of a monitoring body pursuant to Article 41 of the General Data Protection Regulation (GDPR).

IA, 13 July 2018

EIOPA seeks evidence on use of big data in the motor and health insurance markets

The European Insurance and Occupational Pensions Authority (EIOPA) has launched an EU-wide thematic review on big data in the motor and health insurance markets. EIOPA aims to gather empirical evidence on the use of big data by insurance undertakings and intermediaries along the whole insurance value chain, ie in pricing and underwriting, in product development, in claims management, as well as in sales and marketing.

EIOPA, 6 July 2018

FCA consults on clarification of PPI commission disclosure rules

The Financial Conduct Authority (FCA) has issued a consultation paper on new guidance about the handling of certain regular premium payment protection insurance (PPI) complaints. The FCA’s proposed guidance deals with an uncertainty that has emerged since the rules were made following the Supreme Court judgment in Plevin v Paragon Personal Finance Limited [2014] UKSC 61. The guidance clarifies that firms should assess commission disclosures not only at the point of sale but on an on-going basis, and that this should be assessed under the FCA’s general complaint handling rule. Feedback is sought by 4 September 2018.

FCA, 4 July 2018

Insurance Distribution Directive 

FCA Handbook Notice No.57

The Financial Conduct Authority (FCA) has published Handbook Notice No. 57 which includes Insurance Distribution Directive Instrument 2018 (FCA 2018/38) which contains some amendments to FCA 2018/25 including in respect of AR forms and changes for professional firms.

FCA, 27 July 2018

EIOPA Q&As on the Insurance Distribution Directive

The European Insurance and Occupational Pensions Authority (EIOPA) has published the first set of Q&As providing practical guidance on the application of the Insurance Distribution Directive and its implementing regulations.

EIOPA, 11 July 2018

RICS introduces new rules for regulating firms’ insurance distribution activities

The Royal Institute for Chartered Surveyors (RICS) has published new rules for its Designated Professional Body (DPB) scheme, to comply with new requirements in the EU’s Insurance Distribution Directive and the Markets in Financial Instruments Directive. The DPB scheme permits RICS to regulate the general insurance distribution activities of its firms, for the UK Financial Conduct Authority.

RICS, 3 July 2018

Brexit

Trade associations call for personal data transfer guarantees post-Brexit

Insurance Europe has written a joint letter to the European Commission calling for legal certainty about the transfer of personal data between the UK, the EU and the European Economic Area (EEA) ahead of Brexit to avoid business disruption and adverse effects for European consumers. The letter was co-signed by DigitalEurope, the Trans-Atlantic Business Council and the European Association of Craft, Small and Medium-sized Enterprises (UEAPME).

Insurance Europe, 31 July 2018

IUA issues second Brexit contract continuity clause

The International Underwriting Association (IUA) has issued a second Brexit contract continuity clause. In June 2018 the IUA published a policy clause to help companies manage insurance contracts as the UK leaves the EU, and this has now been followed up with a supporting document for when risks are underwritten on a subscription market basis.

IUA, 27 July 2018

Commons Committee raises concerns regarding PEPP and Brexit for insurance and pensions

The House of Commons European Scrutiny Committee has published its summary and conclusions regarding the European Commission's proposal for a Regulation on a pan-European Personal Pension Product (PEPP), which was considered by the Committee on 11 July 2018. The Committee decided to retain the proposal under scrutiny, while raising concerns about the implications of Brexit for the UK insurance and pensions industry more generally.

House of Commons European Scrutiny Committee, 18 July 2018

Solvency II

Solvency II implementing regulation for the calculation of technical provisions and basic own funds published in the Official Journal

Commission Implementing Regulation (EU) 2018/1078 of 30 July 2018 has been published in the Official Journal of the EU. It lays down technical information for the calculation of technical provisions and basic own funds for reporting with reference dates from 30 June 2018 until 29 September 2018 in accordance with Directive 2009/138/EC (Solvency II).

European Union, 31 July 2018

PRA consults on technical changes related to SM&CR extension to insurers

The Prudential Regulation Authority (PRA) has published a consultation paper (CP18/18) setting out its proposed rules for a technical correction to the Solvency II firms: Insurance General Application Part of the PRA Rulebook, along with some consequential changes and minor administrative amendments related to the extension of the Senior Managers and Certification Regime (SM&CR). The consultation closes on 1 October 2018.

PRA, 31 July 2018

EIOPA publishes third paper on systemic risk and macroprudential policy for insurers

The European Insurance and Occupational Pensions Authority (EIOPA) has published the third in a series of papers with the aim of contributing to the debate on systemic risk and macroprudential policy. The new paper builds on and supplements the previous ones by carrying out an initial assessment of other potential tools or measures to be included in a macroprudential framework designed for insurers.

EIOPA, 31 July 2018

PRA issues modification by consent of Solvency II Group Supervision rules 20.1 and 20.2 for US-parented undertakings

The Prudential Regulation Authority (PRA) has issued a modification by consent of the Solvency II Group Supervision rules 20.1 and 20.2 with reference to US-parented undertakings. This modification is available to insurance and reinsurance undertakings authorised by the PRA, the parent undertaking of which is an insurance holding company or mixed financial holding company which has its head office in the United States.

PRA, 27 July 2018

PRA publishes policy statement on changes to Solvency II reporting format

The Prudential Regulation Authority (PRA) has published policy statement 21/18: Solvency II: Changes to reporting format, which provides feedback on the responses to consultation paper 11/18: Solvency II: Changes to reporting format, and contains the PRA's final policy.

PRA, 26 July 2018

EIOPA dashboard says EU insurance risk stable, but highlights potential threats

The European Insurance and Occupational Pensions Authority (EIOPA) has published its risk dashboard based on Q1 2018 data. EIOPA say the results show the risk exposure of the insurance sector in the EU remains stable overall with a decline in macro and insurance risks and an increasing trend in market risks.

EIOPA, 24 July 2018

Treasury Committee comments on PRA's response to Committee's inquiry on Solvency II

The Treasury Committee (the Committee) has published a letter which it has sent to the chief executive of the Prudential Regulation Authority (PRA), Sam Woods, responding to the PRA's comments in relation to the Committee's inquiry on Solvency II (Directive 2009/138/EC). The Committee states that it welcomes the PRA's constructive approach to the matters raised by the Committee's inquiry.

Treasury Committee, 11 July 2018

PRA makes final changes to insurance reporting requirements

The Prudential Regulation Authority (PRA) has published policy statement (PS) 16/18: Changes in insurance reporting requirements. It provides feedback on the responses to consultation paper (CP) 2/18, and contains the PRA’s final policy. The PRA has also published supervisory statement (SS) 6/18, setting out its expectation of firms when completing their submission of national specific templates (NSTs), and updated SS11/15 on regulatory reporting and exemptions under Solvency II.

PRA, 6 July 2018

EIOPA updates the symmetric adjustment of the equity capital charge for end-June 2018

The European Insurance and Occupational Pensions Authority (EIOPA) has published the monthly update of the symmetric adjustment of the equity capital charge for Solvency II, as at end-June 2018.

EIOPA, 5 July 2018

EIOPA publishes June technical information for Solvency II relevant risk-free interest rate term structures

The European Insurance and Occupational Pensions Authority (EIOPA) has published technical information on the relevant risk-free interest rate (RFR) term structures with reference to the end of June 2018. No issues were encountered during production.

EIOPA, 5 July 2018

Key contacts

Brian McDonnell

Brian McDonnell

Partner, Financial Regulation
London

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Richard Wise

Richard Wise

Partner, Head of Insurance Disputes
London

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Robert Garwood

Robert Garwood

Managing Associate, London
United Kingdom

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Bethany Rugen

Bethany Rugen

Associate, Financial Regulation
Leeds

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