A New Regime For Reinsurance Regulation In Ireland

Author:Mr Tim Pollen
Profession:Dillon Eustace
 
FREE EXCERPT

1. Introduction

The European Communities (Reinsurance) Regulations 2006 (the

"Reinsurance Regulations" or

"Regulations"), which give effect to Directive

2005/68/EC (the "Directive"), came into effect on 15

July 2006. The Reinsurance Regulations, under the supervision

of the Irish Financial Regulator (the "Financial

Regulator") establish a new regulatory framework for the

authorisation and regulation of reinsurers and provide a

separate regime for 'special purpose reinsurance

vehicles' ("SPRVs") whilst imposing particular

requirements for the carrying on of 'finite

reinsurance'. Those familiar with the regulatory regime for

non-life insurers will find similarities in the approach taken

with the Reinsurance Regulations as the latter are largely

based on the non-life insurance regime.

2. The Old Regulatory Regime

Historically, the activities of reinsurers in Ireland were

not supervised by the Irish regulatory authorities. Irish

reinsurers were not required to submit accounts or maintain a

solvency margin, but likely maintained both internally as a

matter of good business practice. This environment changed,

however, with the Insurance Act, 1989 (the "1989

Act"), which introduced the first regulatory measures to

the industry.

Section 22 of the 1989 Act required reinsurers to identify

themselves to the Irish regulatory authorities but did not

require them to provide significant details of their business

operations. However, the measure did allow the authorities to

keep track of the number of companies operating in the Irish

reinsurance market. Section 22 was amended by the Insurance

Act, 2000 which introduced some transparency to the Irish

industry by requiring undertakings that wished to carry on

reinsurance business to give at least 30 days notice of such

intention to the Financial Regulator. Such undertakings were

also required to submit certain information including details

of ownership and share capital, information about directors and

senior management and a statement of the risks proposed to be

covered and related policy and other arrangements. The

Financial Regulator had the power to direct a reinsurer to

cease carrying on business on a number of grounds including

where the undertaking was undercapitalised, had an insufficient

number of suitably qualified members of management or staff or

had engaged in illegal operations outside Ireland.

3. The New Regulatory Regime The Reinsurance

Regulations

The Reinsurance Regulations apply to all persons who

undertake...

To continue reading

REQUEST YOUR TRIAL