GOVERNMENT PUBLISHES HEADS OF LEGISLATION TO PREPARE FOR NO-DEAL BREXIT
The Government has published the General Scheme of the Miscellaneous Provisions (Withdrawal of the United Kingdom from the European Union on 29 March 2019) Bill 2019, which outlines various legislative changes that the government intends will take effect if the UK leaves the EU on 29 March 2019 without any deal.
Part 8 of the General Scheme provides for a temporary run-off regime whereby insurance undertakings and intermediaries operating from the UK will be able to continue to fulfil their contractual obligations to their existing Irish customers for up to three years.
The temporary run-off regime is limited and subject to a number of conditions. The relevant undertakings must be authorised in the UK or Gibraltar pursuant to Solvency II. They must be carrying on their business in Ireland pursuant to the right of establishment or the freedom to provide services. They must have ceased to enter into new insurance contracts in Ireland. Finally, they must exclusively administer their existing portfolio of insurance contracts.
CENTRAL BANK PUBLISHES UPDATED GUIDANCE ON DOMESTIC ACTUARIAL REGIME AND RELATED GOVERNANCE REQUIREMENTS UNDER SOLVENCY II
Following its consultation last year, the Central Bank has made changes to the requirements in relation to the actuarial regime affecting all Solvency II (re)insurers.
The new requirements relate to the governance of With-Profits funds in light of an expected increase in the volume of this type of business in Ireland. Each undertaking writing With Profit business will be required to produce With-Profits Operating Principles (Principles), which must be available free of charge to all existing and prospective With-Profits fund members. The document will include details of the investment strategy and business risk, including information on who bears the costs from guarantees and smoothing. The Head of Actuarial Function will be required to report to the Board of the insurer in relation to compliance with the Principles. An additional annual report on compliance with the document must be made available to With-Profits fund members within six months of the end of each financial year.
The updated guidance also makes changes to the format of the actuarial opinion on technical provisions. The new opinion includes sections for the actuary to set out the key reliances that influenced their opinion, the key limitations on their opinion, their recommendations for improvements and to note relevant post-balance sheet events.
CONSULTATION PAPER 129 FOR NEW LEVY CALCULATION METHODOLOGY FOR INSURERS
The Central Bank has proposed a revised methodology for calculating the industry funding levy for Irish (re)insurers. The current banded approach to calculating the industry levy is determined by a (re)insurer's PRISM rating. According to the Central Bank, this approach gives rise to a significant threshold effect if a (re)insurer moves through the bands. To eliminate this effect, the proposed methodology will consist of a minimum fixed fee component plus a variable fee component:
the minimum fee component will equate to 45% of the total amount of the Central Bank's aggregate annual levy requirement from the insurance sector and will be apportioned by PRISM rating; and
the remaining 55% of the Central Bank's annual levy requirement will be a variable fee component: subject to certain adjustments for captives, reinsurers and lower impact firms, (re)insurers will pay the variable fee in proportion to the aggregate sum of their Gross Written Premium (GWP) and gross Technical Provisions (TPs) (this aggregate sum will be expressed inmillions) and will be multiplied by a specified rate per million that will be published annually by the...