On 21 December 2016, the Central Bank of Ireland published guidelines to assist (re)insurance undertakings and directors in preparing the Compliance Statement required by Section 26 of the Corporate Governance Requirements for Insurance Undertakings 2015 (the “Requirements”).
The Compliance Statement should report on any material deviations from the Requirements together with background information and the remedial action taken (or to be taken). In that regard, the Central Bank notes that it has not prescribed the form of such a report (as it will depend upon the facts of the case).
The Compliance Statement must be filed annually with the Central Bank. The Central Bank may however request more frequent reports.
Use of information by the Central Bank
Where a (re)insurer reports a material (materiality of a deviation is determined in the first instance by the board) breach of the Requirements, the Central Bank may use that information for any of its regulatory functions. This may expose the (re)insurance undertaking and/or the persons concerned to sanctions. However, the Compliance Statement is otherwise confidential when submitted to the Central Bank.
Combining Compliance Statements with existing reporting requirements
For Solvency II undertakings, the Compliance Statement forms part of the overall Compliance Statement to be provided by undertakings as set out in the Central Bank’s Guideline for Solvency II (Re)Insurance undertakings on Directors’ Certifications 2016.
Retention of supporting documentation
Compliance documents should be retained by an undertaking for a period of 6 years. The Central Bank provides guidance on supporting documentation which may be used to demonstrate compliance with obligations under the Requirements.
Availability to the Central Bank
The majority of directors must be reasonably available to the Central Bank at short notice. The meaning of “short notice” will depend on the facts of the particular case.
(Re)insurance undertakings should not combine committees. Where the board carries out the functions of sub-committees it should do so separately for each committee. It should be clear from the minutes of the meeting the capacity in which the board was sitting.
Contributed by: Niall Campbell