Home Knowledge Update on Cross-Border Guidelines for Life Assurance Undertakings

Update on Cross-Border Guidelines for Life Assurance Undertakings

On 29 March 2012, the Central Bank of Ireland (the “CBI”) published ‘Guidelines for Insurance Undertakings – Distributing Products on a Cross-Border Basis’ (the “Guidelines”).  These Guidelines sought to set out the Central Bank’s view as to what constitutes “best practice” for distributing Irish life assurance products on a cross-border basis in the EEA and further afield.

The Guidelines contained general principles and specific requirements in areas such as product design, distribution and complaints handling.  Although the Guidelines adopted a ‘one size fits all’ approach, the CBI has acknowledged that some provisions would be inappropriate for insurers in specific circumstances and that the desired results could be achieved by different means. The Guidelines were intended to be a dynamic document that would be updated periodically reflecting industry submissions.

Shortly after the release of the Guidelines, various industry bodies raised various issues with the provisions in the Guidelines. It was, for example, not clear what status the Guidelines were expected to have, nor was it clear they were to commence.  It was also queried why the Guidelines had been introduced without consultation. As a result of the various queries that were raised, it became apparent that the CBI had intended that the Guidelines would have a much more limited scope than industry had initially perceived. The CBI clarified that the Guidelines were neither binding nor legally enforceable and that insurers were not obliged to take any specific actions on foot of them.

The Guidelines have since been withdrawn and removed from the CBI’s website. It is intended that a new text, developed in consultation with industry, will replace them. This consultation process for that replacement text is currently underway. It is expected that the replacement guidelines will be non-binding and could, for example, be issued as a “Dear CEO” letter.

For further information, please contact John Larkin or Gill Young of our Insurance and Reinsurance unit.

Contributed by Gill Young