Insurance regulatory news, December 2020 # 3 | Hogan Lovells

Latest regulatory developments of curiosity to insurers and their intermediaries. See additionally our Basic regulatory information within the Associated Supplies hyperlinks.

Contents

• 2021 priorities for supervising insurance coverage corporations: PRA Expensive CEO letter
• Solvency II: PRA delays strategy for exterior auditors on matching adjustment
• COVID-19: FCA replace on enterprise interruption insurance coverage take a look at case
• COVID-19: FCA consults on steering on proving presence of COVID-19 in BI insurance coverage claims
• Lloyd’s ESG report
• IDD: EIOPA report on NCA administrative sanctions and different measures
• Solvency II 2020 evaluate: EIOPA opinion
• Local weather-change associated transition dangers: EIOPA sensitivity evaluation
• COVID-19: IAIS 2020 international insurance coverage market report

Following a seasonal break, the subsequent replace will probably be printed on 11 January 2021

2021 priorities for supervising insurance coverage corporations: PRA Expensive CEO letter

The UK Prudential Regulation Authority (PRA) has printed a Dear CEO letter it has despatched to insurance coverage corporations setting out its supervisory priorities for 2021. The priorities set out within the PRA’s letter fall underneath the next headings:

• monetary resilience and credit score danger;
• LIBOR transition;
• operational resilience;
• monetary dangers arising from local weather change; and
• adjustments in PRA duties following finish of EU withdrawal transition interval.

As well as, the PRA continues to see robust governance at corporations as underpinning progress in assembly its expectations.

Solvency II: PRA delays strategy for exterior auditors on matching adjustment

The PRA has up to date its webpage on its session paper on Solvency II and its expectations for the work of exterior auditors on the matching adjustment (CP11/20) to announce a delay to the proposed efficient date set out in paragraph 1.12 of CP11/20. The PRA confirms that any finalised strategy is not going to be efficient for audits of the Solvency and Monetary Situation Studies (SFCRs) with a 31 December 2020 reporting date.

CP11/20 closed on 30 October 2020 and the delay to the proposed efficient date considers suggestions from respondents, together with in relation to the affect of COVID-19. The PRA is notifying corporations of the delay to offer readability and certainty for auditors and corporations in relation to the audits of December year-end SFCRs.

COVID-19: FCA replace on enterprise interruption insurance coverage take a look at case

On 15 December 2020, the Monetary Conduct Authority (FCA) up to date its webpage on the enterprise interruption (BI) insurance coverage take a look at case to advise that the Supreme Courtroom has knowledgeable the FCA that it won’t be able at hand down judgment earlier than January 2021.

COVID-19: FCA consults on steering on proving presence of COVID-19 in BI insurance coverage claims

On 11 December 2020, the FCA printed for session draft guidance on proving the presence of COVID-19 BI insurance coverage claims.

This steering is meant for policyholders, insurers (together with managing brokers at Lloyd’s) and insurance coverage intermediaries. It pertains to proving the presence of COVID-19 in relation to non-damage BI losses arising from UK authorities motion in response to the pandemic for the aim of creating a declare underneath an insurance coverage contract that was in power throughout these occasions and that requires the policyholder to show the presence of COVID-19 inside a selected space round their premises. The steering is predicated on the Excessive Courtroom’s judgment and declarations and within the context of insurers’ obligations underneath the FCA’s guidelines to deal with claims pretty. It units out sorts of proof and methodologies that policyholders might use, along with hyperlinks to additional helpful info for policyholders.

The deadline for responses to the session is 18 January 2021. The FCA intends for the steering to have impact as quickly as it’s issued in remaining type and to stop to have impact on 31 December 2021, because the FCA expects that every one claims to which the steering may very well be related would have been resolved by that date.

The FCA states that if the Supreme Courtroom judgment on the BI insurance coverage take a look at case impacts the contents of the draft steering, it’ll amend the steering accordingly.

Lloyd’s ESG report

Lloyd’s has printed its first environmental, social and governance (ESG) report, which particulars its ambitions to completely combine sustainability into all of Lloyd’s enterprise actions. The report builds on Lloyd’s present ESG work and highlights ongoing work to drive tradition change throughout the Lloyd’s market.

IDD: EIOPA report on NCA administrative sanctions and different measures

The European Insurance coverage and Occupational Pensions Authority (EIOPA) has printed a report which offers an outline of the executive sanctions and different measures imposed by nationwide competent authorities underneath the Insurance coverage Distribution Directive (IDD). EIOPA is required to publish the report yearly underneath Article 36(2) of the IDD, and this primary report covers the interval from the appliance of the IDD on 1 October 2018 till the tip of 2019.

Solvency II 2020 evaluate: EIOPA opinion

EIOPA has printed an opinion it has submitted to the European Fee on the 2020 evaluate of the Solvency II Directive. From a prudential perspective, EIOPA’s view is that general the Solvency II framework is working properly. Nevertheless, it identifies some areas of concern which the evaluate ought to deal with and which EIOPA particulars in its report.

Alongside the opinion, EIOPA has printed a factsheet, background analysis and annex, and impact assessment. As well as, to enhance the proposals set out within the opinion, EIOPA has printed a report and annex masking the person quantitative reporting templates at solo and group degree, to provide stakeholders a full view of the longer term reporting and disclosure necessities.

Local weather-change associated transition dangers: EIOPA sensitivity evaluation

EIOPA has printed a report containing its sensitivity evaluation of climate-change associated transition dangers within the funding portfolio of European insurers. The report outlines present holdings of company bonds and fairness that may be associated to key climate-policy related sectors resembling fossil gas extraction, carbon-intensive industries, car manufacturing and the ability sector. It additionally quantifies potential climate-change associated transition dangers and presents details about attainable impacts on these investments as economies transition away from fossil fuel-dependent vitality manufacturing and carbon-intensive manufacturing.

Whereas the general affect on the steadiness sheets of the insurance coverage sector is counter-balanced each by investments in renewable vitality and the truth that insurers’ portfolios are typically properly diversified, EIOPA is working with nationwide supervisors and expects insurers to observe up on the dangers recognized.

COVID-19: IAIS 2020 international insurance coverage market report

The Worldwide Affiliation of Insurance coverage Supervisors (IAIS) has printed its 2020 global insurance market report, which discusses the affect of the COVID-19 pandemic on the worldwide insurance coverage sector from a supervisory perspective.

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