(Re)Insurance Intermediaries – Update on Changes to Central Bank Authorisation Form and Other Regulatory Requirements
This article highlights the recent changes to the Central Bank of Ireland's application process for authorisation and other regulatory requirements impacting (re)insurance intermediaries.

The Central Bank of Ireland (Central Bank) has recently published a number of updates in relation to the authorisation and regulation of (re)insurance intermediaries in Ireland. In this article, we highlight the key changes arising from the following publications by the Central Bank:

  • Updated application forms and related guidance for authorisation as a retail intermediary, including as a (re)insurance intermediary under the European Union (Insurance Distribution) Regulations 2018 (IDR).  
  • New guidance for retail intermediaries on the requirement to hold Professional Indemnity Insurance (PII) Cover; and 
  • An updated guidance manual for retail intermediaries on the completion of the Retail Intermediary Annual Return.

Authorisation Process

On 1 July 2020, the Central Bank published two new application forms, A Form and B Form, to be used by applicants seeking authorisation or registration as a retail intermediary, including as an insurance intermediary. The nature, scale and complexity of the retail intermediary's proposed activities dictates which form should be used. 

An applicant is required to review the specified criteria set out in Part 1 of each form to determine whether A Form or B Form applies to them. The A Form will be relevant for more simplified business models whereas the B Form is most likely to be relevant to the majority of insurance intermediaries currently being established in Ireland.  This is because it is to be used where the applicant proposes to: 

  • operate an organisational structure that includes branches, tied insurance intermediaries, or other types of agents; or 
  • operate as a "Managing General Agent" (MGA), as defined in the form; or 
  • passport its services into other Member States; or 
  • provide services to 2,500 or more consumers based on (i) a projected average number of consumers in years 1-3 post-authorisation; and (ii) includes direct and indirect consumers of the applicant (i.e. consumers of branches, other tied agents, etc). 

By creating two separate application forms, we understand that the Central Bank is trying to identify the more complex applications at the outset with a view to streamlining the assessment process. Any application submitted after 3 August 2020 must be made using the A Form or B Form.  However, recognising that some applicants may have already started to complete the earlier version of the application form (dated September 2018), the Central Bank will accept submissions using that form, or the new forms, up to 3 August 2020. 

For more information or to view the relevant forms, please see Central Bank website here

PII Cover Requirements

In June 2020, the Central Bank issued guidance for all retail intermediaries, including insurance intermediaries, on the requirements in relation to PII cover (PII Guidance), which it regards as a "key prudential and consumer protection safeguard".

The European Insurance and Occupational Pensions Authority (EIOPA) regularly reviews the base amounts for PII of (re)insurance intermediaries to take into account the changes to the European index of consumer price. Accordingly, as an outcome of the latest review by EIOPA, the base amounts for PII cover were increased in Commission Delegated Regulation 2019/1935, amending the Insurance Distribution Directive and IDR.

The PII Guidance was published shortly after Commission Delegated Regulation 2019/1935 took effect on 12 June 2020. The PII Guidance confirms that the new minimum PII levels that (re)insurance intermediaries must hold are €1,300,380 per claim and €1,924,560 aggregate cover per annum. 

The PII Guidance also sets out the requirements on ring-fencing of cover and explains the Central Bank's expectations where a PII policy contains an excess or deductible payable by the (re)insurance intermediary. In such cases, the Central Bank's view is that the firm concerned must be able to demonstrate that it has sufficient financial resources to pay such an excess or deductible.

To view the PII Guidance in full, please see here.

Annual Return Guidance

Finally, the Central Bank has updated its guidance manual for completion of the online annual return for retail intermediaries, as well as its related FAQ document. The manual guides retail intermediaries through the annual return process conducted via the Central Bank's Online Reporting System (ONR). All firms are required to submit their annual return electronically six months after the relevant reporting date of the firm.

To view the Annual Return guidance, please see here

Please get in touch with your usual contact or any member of the William Fry Insurance team if you would like to discuss any of these regulatory developments and how they impact your business.

 

Contributed by Claire O'Connor

Key Contacts

John Larkin Partner

Eoin Caulfield Partner

Ian Murray Partner

Related Practice Areas

Related Industry