FEEDBACK STATEMENT - CONSULTATION ON NEW LEVY CALCULATION METHODOLOGY FOR INSURERS
The Central Bank's Consultation Paper on a New Levy Calculation Methodology for Insurers proposed an alternative levy calculation methodology for (re)insurers to the existing PRISM based levy calculation.
Industry approves of the Central Bank's aim to achieve cost stabilisation; the objective of the proposed methodology to rectify 'cliff edge' levy structures which can be a deterrent to growth; and the distinction between unit-linked and other business models within the pricing proposal. However, industry has reservations regarding the timing of the change in view of the Central Bank's ongoing review of PRISM impact frameworks and the potential for this work to lead to further changes to levy methodologies.
Industry proposed retention of the current methodology pending completion of the PRISM impact framework review so that its outcome can be considered in the context of changes to levy methodologies. The Central Bank has concluded that (re)insurers will remain on PRISM impact-derived levies in the next levy cycle and will move to new methodologies as alternatives are developed.
The feedback is available here.
COST OF INSURANCE: JUDICIAL COUNCIL ACT 2019
The Judicial Council Act 2019 was signed into law on 23 July 2019. The Act has yet to be commenced.
The Act provides for the establishment of the Judicial Council, comprised of judges, and a Personal Injuries Guidelines Committee. The Committee's sole function will be to develop and periodically review guidelines for assessing general damages for various types of personal injuries, which will effectively supersede the Book of Quantum.
The measures should address the high levels of damages awarded in Ireland in comparison with other jurisdictions. The changes represent one of the key recommendations of the Cost of Insurance Working Group, which was established to investigate the high cost of insurance in Ireland and propose reforms.
Separately, the Working Group published its ninth progress update on 19 July 2019. The update noted that 31 of the Working Group's 33 recommendations on motor insurance have been implemented or are ongoing and that the reforms have helped to reduce the cost of motor insurance by 24.5% from its peak. 13 of the 14 recommendations on employer/public liability insurance due by Q2 2019 have been completed or are ongoing, although the cost of insurance remains an issue for small businesses and voluntary groups.
CONSUMER CONTRACTS BILL 2017 FEEDBACK STATEMENT
The Department of Finance has published feedback from its consultation on the Consumer Contracts Bill. The insurance industry is critical of the Bill, citing inconsistencies and vague provisions. The Bill would also replace long-standing principles of insurance, which could result in increased costs for insurers and therefore increases in premium. Additionally, the duplication of existing regulations in the Bill would result in increased compliance costs for the consumer. Generally, there is support for the Bill from representative groups as it remedies the imbalance between insurers and the insured. It is also believed that the Bill will improve the insurance industry's relations with customers. Legislative protection for consumers of insurance contracts is overdue. The Bill addresses some of the main areas of concern, including non-disclosure, misrepresentation and warranties. However, they feel that the Bill could be more effective by using the EU definition of small and medium enterprises, increasing the length of time for renewals and introducing an insurance watchdog.
The feedback is available here.
HEALTH INSURANCE (AMENDMENT) ACT 2018 (COMMENCEMENT) ORDER 2019
Section 3 of the Health Insurance (Amendment) Act 2018 came into effect on 27 June 2019. Section 3 of the Act provides for an increase in the Health Insurance Authority's membership from 5 to 7 members, and for an expansion of the quorum from 3 to 4. The aim of this section is to provide the Authority with additional expertise in the carrying out of its functions as an advisory body for the Minister for Health in private health insurance matters.
The Order is available here.
A PROPORTIONALITY TOOLBOX FOR SOLVENCY II
Insurance Ireland and the Dutch Association of Insurers have put a discussion paper,A Proportionality Toolbox for Solvency II, before the European Commission and EIOPA. The paper calls for the application of a range of proportionate measures under Solvency II in respect of small to medium-sized non-life insurers underwriting non-complex products. Under the proposed framework...