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Insurance Ireland response to the Consultation Paper 150 on Guidance for (Re)Insurance Undertakings on Intragroup Transactions & Exposures

This week, the Central Bank of Ireland (CBI) published its feedback statement to the consultation on requirement for insurers to develop pre-emptive recovery planning while the final requirements were also published.

 

Insurance Ireland welcomes the opportunity to share feedback on the Consultation Paper on Guidance for (Re)Insurance undertakings on Intragroup Transactions and Exposures. It is welcome that the prospective Guidance proposes to not introduce any new requirements on (re)insurers in respect of Intragroup Transactions (“IGTs”), and that the Central Bank has 2 considered proportionality in developing the proposed Guidance and will take a proportionate approach in future supervisory engagements with (Re)insurers. It is important that (Re)insurers have the flexibility to implement the Guidance in a manner that is appropriate to the nature, scale, and complexity of their business models and their inherent risks in line with Article 5 of Solvency II. However, there are a number of areas that our members have identified as going further than simply providing guidance on existing regulations and introduces new expectations for (Re)Insurers and we will set these throughout our response.

In section one the Consultation Paper sets out the Central Bank expectations on Governance and Risk Management procedures in place to manage the risks associated with intragroup arrangements in general, and the second section focuses on the most significant exposures observed by the Central Bank (i) Intragroup Assets, (ii) Intragroup Reinsurance and (iii) Cash Pooling/Group Treasury function arrangements. It would be helpful to clarify where the Consultation Paper refers to “intragroup transactions” and “intragroup arrangements” whether the meaning is the same for both or refer to where they are defined by the Central Bank, as both terms are used interchangeably throughout the Guidance.

It is noted in the Consultation Paper that the Central Bank wishes to clarify its expectations on what compliance with the existing Solvency II requirements might look like for a (Re)insurer. One area where more clarity could be provided in the Guidance is relating to the definition and identification of intragroup transactions set out in Article 33 of Solvency II and how it aligns with the Central Bank Recovery Plan Guidelines (Section 5.6)1 and the “interconnectedness” definition, given that the Guidance should be read in conjunction with Recovery Plan Guidelines. For the purpose of ensuring clarity it would be beneficial if the final guidance outlines it relates to the ‘significant’ intragroup transactions as set out in Art. 377 of Solvency II, as the the definition of ‘interconnectedness’ within the Recovery Plan or does the Guidance capture all intragroup arrangements

Full submission from Insurance Ireland available below. 

Insurance Ireland response to the Consultation Paper 150 on Guidance for (Re)Insurance Undertakings on Intragroup Transactions & Exposures

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Insurance Ireland response to the Consultation Paper 150 on Guidance for (Re)Insurance Undertakings on Intragroup Transactions & Exposures

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