Ireland’s Central Bank streamlines authorization for re/insurers

The Central Bank of Ireland has consolidated its five separate checklists for the authorization of new re/insurers into a single document, aiming to streamline the authorization process.

The updated checklist covers life insurance, non-life insurance, reinsurance, captive non-life insurance, and captive non-life reinsurance undertakings, creating a more efficient system for new authorizations.

Additionally, the Central Bank has issued new guidance for completing and submitting authorization applications. The updated checklist includes a provision to consider the timing needs of applicants, indicating a shift towards accommodating companies’ launch schedules.

The Central Bank noted that this change reflects its responsiveness to industry feedback, aligning its processes with applicant needs.

These updates coincide with the implementation of the EU Mobility Directive in Ireland, which facilitates cross-border conversions and mergers. The directive enables European companies to relocate their corporate seats within the EU/EEA without changing their corporate identity. For a re/insurer moving to Ireland under the directive, obtaining a new authorization is required.

The revised checklist maintains the clarity of the previous versions but includes expanded sections to reflect recent developments in the insurance sector and regulatory changes. New areas of focus include governance, risk management, and outsourcing.

In the governance section, applicants seeking a new insurance license must submit a management responsibilities map (MRM) that complies with the Central Bank’s new Senior Executive Accountability Regime (SEAR).

The MRM outlines governance structures, reporting lines, and oversight arrangements, requiring firms to consider their resourcing at the board and executive management level early in the application process.

The checklist also addresses the use of service companies for staffing, includes additional questions on outsourcing, and expands the requirements for applicants intending to conduct business outside the EEA.

The risk management section now incorporates specific queries on managing climate risk, anti-money laundering procedures, and compliance with operational resilience guidelines set by the Central Bank.

A new focus for re/insurance applicants

Climate risk management is now a key focus for applicants, and the level of detail required will depend on the applicant’s business type and model. The Central Bank’s guidance on climate change risk for re/insurance undertakings will assist applicants in determining what information should be included in their submissions.

The MRM must also outline the allocation of prescribed responsibilities to pre-approval controlled functions. This necessitates a thorough understanding of the skills and experience of key individuals to ensure responsibilities are appropriately assigned.

Consideration must also be given to potential conflicts of interest and how they affect reporting lines.

No new specific requirements regarding customer protection have been included in the checklist. However, the Central Bank’s recent introduction of conduct standards focused on customer interests, along with its “Dear CEO” letter on consumer protection risk management, suggests these themes may arise during the authorization review process.

The Central Bank may address these issues through additional queries as part of the application process.

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