A roundup of developments affecting the insurance industry from the past month including the FCA publishing guidance clarifying its expectations on the handling PPI complaints, the CMA's consultation on the PPI Variation Order and the FCA updating its approach on the temporary permissions regime for inbound passporting EEA firms.


General Update

EIOPA releases EU—US Insurance Dialogue Project papers 

The European Insurance and Occupational Pensions Authority (EIOPA) has published four papers in relation to issues such as cybersecurity and big data which have been created as a result of the EU—US Insurance Dialogue Project. In addition EIOPA has issued new sets of Q&As on various regulatory issues including a paper on 'the submission of information to the supervisory authorities. 

EIOPA, 1 and 7 November 2018

FCA publishes final PPI guidance and consults on mailing requirements 

The Financial Conduct Authority (FCA) has issued final guidance that sheds light on its level of expectation of the handling of premium payment protection insurance (PPI) complaints. For example, by stating that firms should assess any commission disclosures on an on-going basis and not only at the point of sale. The FCA has also proposed new rules in relation to firms mailing rules, which require firms to write to around 150,000 consumers who had previously complained unsuccessfully to let them know that they can make a new complaint and remind them of the deadline. 

FCA, 7 November 2018

IAIS consultation: Application paper on proactive supervision of corporate governance

The International Association of Insurance Supervisors (IAIS) has published a draft application paper on proactive supervision of corporate governance. The paper sets out good practice in relation to the function of the supervisor in order to promote a proactive and sufficiently robust form of corporate governance.

IAIS, 8 November 2018

FCA survey highlights shift in attitudes towards consumer complaining 

The Financial Conduct Authority (FCA) has published results of a survey which shows that more than 15 million people in the UK miss out on refunds, replacement products and getting various problems sorted due to them lacking the confidence to make the complaint. These results have been published in order to urge people to check if they were mis-sold PPI and make sure they do not miss the deadline to complain – 29 August 2019.

FCA, 8 November 2018

PRA publishes final rules and policy statement on extension of SM&CR to insurers 

The Prudential Regulation Authority (PRA) has published policy statement PS27/18, 'Strengthening accountability: Implementing the extension of the SM&CR to insurers (Part 2)'.The statement gives feedback on the responses to consultation paper CP20/18 and provides a final set of rules for the implementation of the extension of the Senior Managers and Certification Regime (SM&CR) to insurers. 

PRA, 9 November 2018

PRA update on letter to specialist general insurers regarding market conditions 

The Prudential Regulation Authority (PRA) has submitted an update regarding responses from firms following the letter sent from Anna Sweeney regarding the market conditions facing specialist general insurers. The PRA stated that the majority of respondents felt that the letter presented clear risks to market participants. Although some firms stated that the issues do not apply to them, the evidence supporting this was not convincing. 

PRA, 9 November 2018

IAIS publishes revised insurance core principles and application papers 

The International Association of Insurance Supervisors (IAIS) has published the revised insurance core principle (ICP) 6 that was adopted at its AGM in Luxembourg, as well as draft revised ICPs 8, 15, 16 and 20 which have been endorsed by the Executive Committee of the IAIS. 

IAIS, 9 November 2018

IAIS papers examine the increasing use of digital technology on insurance

The International Association of Insurance Supervisors (IAIS) has published an application paper on both the use of digital technology in inclusive insurance, providing guidance to supervisors, regulators and policymakers in implementing practices as well as an issues paper on the increasing digitalisation of insurance and its potential impact on consumer outcomes, in light of Insurance Core Principle 19 on Conduct of Business. 

IAIS, 13 November 2018

CMA consults on the PPI Variation Order 

Following a consultation on the Variation Order, the Competition and Markets Authority (CMA) has decided that the new Insurance Distribution Directive (Directive (EU) 2016/97) has instigated such a significant change in circumstances that a variation of the Payment Protection Insurance (PPI) Market Investigation Order 2011 is now justified to allow for the production of an insurance product information document (IPID) for all PPI providers to replace the policy summary. A draft Variation Order and a formal Notice of Intention to Vary have also been published together with the final decision. 

CMA, 13 November 2018

PRA consults on periodic and transaction fees for DIFs, life insurers and general insurers 

The Prudential Regulation Authority (PRA) has issued a consultation paper (CP) 28/18 entitled 'PRA fees and levies: Changes to periodic and transaction fees'. The consultation paper contains proposals aiming to ensure that the various methods engaged for establishing PRA fees for designated investment firms (DIFs), life insurers and general insurers are in proportion to the risks these firms pose to the PRA’s objectives. Other changes set out in the consultation paper aim to ensure that fees relating to Solvency II models are applied consistently. Feedback on the consultation is sought by 7 January 2019. 

PRA, 14 November 2018

IAIS launches public consultation on holistic framework for systemic risk in the insurance sector 

The International Association of Insurance Supervisors (IAIS) has launched a public consultation on a draft holistic framework for systemic risk in the insurance sector. The consultation provides an opportunity for stakeholders to give feedback on the overall holistic framework, in order to assess the systemic risk in the insurance sector. 

IAIS, 14 November 2018

European Court of Auditors highlights shortcomings in EU insurance supervision 

The European Court of Auditors (ECA) stated in a special report that the European Insurance and Occupational Pensions Authority (EIOPA) has made an 'important contribution to a common supervisory culture and financial stability in the insurance sector'. Nevertheless the ECA acknowledges that there are some systemic challenges still in place with regards to the supervision of cross-border business and internal models. 

EIOPA, 15 November 2018

IASB votes to propose one-year IFRS 17 delay 

The International Accounting Standards Board (IASB) has voted for a one-year deferral of the effective date for the International Financial Reporting Standards (IFRS) 17, the new insurance contracts standard, to 2022. The IASB has also proposed to extend the temporary extension for insurers to apply the financial instruments standard, IFRS 9 to 2022 so that IFRS 9 and IFRS 17 are implemented at the same time. The deferral is open to public consultation, which will take place in 2019. 

IASB, 16 November 2018

IAIS publishes draft revised ICP 8 and updated ICPs 

The International Association of Insurance Supervisors (IAIS) recently published a draft revised insurance core principle (ICP) 8 on the subject of risk management and internal controls, as well as a collective document containing the current versions of all the ICPs. 

IAIS, 18 November 2018

EIOPA publishes European Insurance Overview 2018 

The European Insurance and Occupational Pensions Authority (EIOPA) has published its first annual European Insurance Overview report, which is based on annually reported Solvency II information. 

EIOPA, 27 November 2018

Brexit

EIOPA update on insurers’ Brexit-related contingency planning 

Following the opinion issued by the European Insurance and Occupational Pensions Authority (EIOPA) in 2017 on service continuity in insurance linked with Brexit, EIOPA has announced that it is closely monitoring the Brexit-related contingency planning of insurance undertakings, in particular of the undertakings from the UK and Gibraltar with cross-border business in the European Economic Area countries (EEA30). EIOPA stated that although the majority of insurers with the largest cross-border business in the EEA30 countries have taken steps towards the continuity of cross-border insurance contracts, 124 undertakings from the UK and Gibraltar with cross-border business in EEA30 jurisdictions have insufficient contingency plans. 

EIOPA, 5 November 2018

FCA updates notification process for temporary permissions regime 

The Financial Conduct Authority (FCA) has shared an update with regards to its approach on the temporary permissions regime for inbound passporting EEA firms and funds. The regime would provide a backstop to ensure that firms and funds can continue business with a minimal amount of disruption in the event that the passporting regime does not continue when the UK leaves the EU. The regime is to include a direction regarding the notification process for firms which is given by the FCA under regulation 14(2) of the EEA Passport Rights (Amendment, etc., and Transitional Provisions) (EU Exit) Regulations 2018. 

FCA, 9 November 2018

Central Counterparties (Amendment, etc, and Transitional Provision) (EU Exit) Regulations 2018 

The SI 2018/1184 enactment came into force partly on 14 November 2018. The enactment exercises the legislative powers under the European Union (Withdrawal) Act 2018 in preparation for Brexit and amends EU Regulation (EU) 648/2012 on over the counter (OTC) derivatives, central counterparties and trade repositories in relation to the recognition of third country counterparties (in anticipation of it being retained in UK law after Brexit). 

EU, 14 November 2018

Draft Statutory Instruments published regarding insurance distribution 

HM treasury has issued a draft text of a statutory instrument covering insurance distribution which would be laid under the EU (Withdrawal) Act which relates to deficiencies in retained EU law in connection with the Insurance Distribution Directive that arise from the UK exiting the EU. 

EIOPA, 21 November 2018

Solvency II

Commission consults on changes to Solvency II delegated regulation 

The European Commission has launched a consultation on proposed amendments to the implementing rules in Commission Delegated Regulation (EU) 2015/35, supplementing Directive 2009/138/EC (Solvency II). The Commission has proposed to introduce criteria that would minimise the capital charges in the standard formula for insurers' unrated debt and unlisted equity investments. 

EU, 9 November 2018

Technical information for Solvency II reporting published in Official Journal 

The EU Commission Implementing Regulation (EU) 2018/1699 of 9 November 2018 which sets out information on the calculation of technical provisions and basic own funds for reporting with reference dates from 30 September 2018 until 30 December 2018 in accordance with Directive 2009/138/EC (Solvency II) has been issued in the Official Journal. 

EU, 13 November 2018

PRA publishes Solvency II templates for the disclosure of aggregate statistical data year-end 2017 

The Prudential Regulation Authority (PRA) has published templates A and B for the disclosure of aggregate statistical data in relation to undertakings and groups supervised under Directive 2009/138/EC (the Solvency II Directive). 

PRA, 13 November 2018

EIOPA assesses supervisory practices and application of key functions through peer review 

The European Insurance and Occupational Pensions Authority (EIOPA) has published its peer review assessing how national competent authorities (NCAs) supervise in relation to Solvency II, with a particular emphasis on proportionality and identifies some recommended best practices for 18 NCAs. 

EIOPA, 15 November 2018

ESRB publishes report on macroprudential provisions, measures and instruments for insurance 

The European Systemic Risk Board (ESRB) has published a report on macroprudential provisions, measures and instruments for insurance and reinsurance. The report acts as a contribution to Solvency II discussions on strengthening the regulatory framework for (re)insurers from a macroprudential perspective. 

ESRB, 26 November 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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