On 11 December 2025, the Central Bank of Ireland (Central Bank) published its final Insurance Quarterly newsletter of the year, outlining several important supervisory updates for Irish (re)insurers.

Thematic Reviews – Main Findings

Operational Resilience

The Central Bank’s review of life insurers focused on Pillar 1 of its Cross-Industry Guidance on Operational Resilience (as amended). While positive practices were noted, areas for improvement include:

• Ensuring a clear distinction between operational risk and operational resilience;
• Board minutes should evidence robust discussion and challenge on resilience risks and resource needs, including ‘probing questions’;
• Identification of Critical or Important Business Services (CIBS) should adopt a “service lens,” defining the service, its end-user, and ensuring standalone functionality;
• Impact tolerances should include metrics beyond time-based measures; and
• Mapping of interconnections and dependencies should be sufficiently granular to identify vulnerabilities and support resilience testing.

AML, CFT and Financial Sanctions

The Central Bank assessed AML, CFT, and financial sanctions (FS) governance in cross-border life firms for compliance with the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 (as amended). While overall compliance was satisfactory, improvements are expected by the Central Bank in:

• Clear governance structures outlining AML/CFT and FS roles and responsibilities;
• Inclusion of AML/CFT and FS matters on board and committee agendas, with documented discussion and challenge;
• Firm-level AML/CFT and FS policies tailored to local obligations and updated legislative references; and
• Adherence to internal AML/CFT and FS policies.

Climate Change Materiality Assessments

The Central Bank conducted a thematic review of climate change risk materiality assessments across a new cohort of (re)insurers. Key points include:

• Firms should apply the Guidance for (Re)Insurance Undertakings on Climate Change Risk holistically, reflecting its status as a strategic priority;
• Materiality assessments should follow an iterative approach, with methods refined over time;
• While external consultants may assist initially, the process should be internalised in the long term;
• Firms must set a clear climate risk appetite supported by quantitative and qualitative metrics;
• Assessments should explicitly state conclusions on the materiality of climate risk across short-, medium-, and long-term horizons, covering both physical and transition risks;
• Analysis of second-order and indirect impacts remains weak; firms are encouraged to adopt a more holistic view; and
• The Central Bank intends to integrate climate risk guidance into governance frameworks, with further details expected in the next Insurance Quarterly Newsletter.

The Newsletter confirms that Q1 and H1 2026 will feature several thematic reviews and surveys, including EIOPA’s review on the fair treatment of consumers with chronic illnesses, a Solvency II industry review, and assessments on investment risk, pricing, underwriting, and product governance across various specified sectors.

US Social Inflation Survey

The Central Bank recently surveyed specialty and reinsurance firms on their exposure to US social inflation. Social inflation is defined as rising claims costs driven by factors such as litigation trends, larger jury awards, and legal changes. Summarily, the Central Bank’s key expectations include:

• Firms must understand and monitor their exposure, using cedants, brokers, or MGAs where oversight is limited;
• Adopt proactive reserving and supplement claims data with market data to capture social inflation trends; and
• Consider group-level implications and reflect them in the ORSA.

Social inflation remains a supervisory focus for the Central Bank, with ongoing monitoring and follow-up reviews planned for 2026.

Solvency II Review and IRRD

The Newsletter reminds firms of upcoming Solvency II revisions and IRRD implementation, both effective from January 2027. The key points include:

• The Central Bank will engage with firms throughout 2026 and issue a survey to assess the impact of Solvency II reforms and interest in proportionality measures (an area where firms have shown limited consideration to date).
• A voluntary pre-application process for proportionality measures may be offered ahead of formal applications once the revised framework takes effect.
• For IRRD, firms already complying with national recovery planning requirements are considered well-positioned to meet the new obligations.

Other Insights

The Newsletter also contains updates on the changes to the Insurance Compensation Fund levy (see our article here), the updates to the Fitness and Probity regime (see our article here), a reminder to firms on DORA registers of information, and other EIOPA and EU updates.

If you have a query on any topic addressed in the Newsletter, please contact a member of our Insurance team.

Contributed by James O’Brien and Martha Ní Dhochartaigh