Council of the European Union
Solvency II - Council of the EU publishes general approach on amendments - 17 June 2022
The Council of the EU (the Council) has agreed its general approach on the proposed Directive amending the Solvency II Directive (2009/138/EC). The proposal aims to review the prudential framework that applies to the insurance sector in a comprehensive fashion, covering a broad range of topics including the quality of supervision, reporting, long-term guarantee measures and macro-prudential tools.
Among other things, the Council notes that it took the specificities of national insurance industries into account when it updated the capital requirements regime for the overall EU industry, and that it considered it useful to assign new tasks to the European Insurance and Occupational Pensions Authority (EIOPA). These include preparing a report on the assessment of risks related to biodiversity loss by insurers, along with natural disasters and climate-related risks, consistent with the European Green Deal.
The Council may now begin negotiations with the European Parliament in order to agree on a final version of the proposed Directive.
Press release
European Insurance and Occupational Pensions Authority
Non-affirmative cyber underwriting exposures - EIOPA publishes consultation paper - 17 June 2022
The European Insurance and Occupational Pensions Authority (EIOPA) has published a consultation paper on a supervisory statement on the management of non-affirmative cyber underwriting exposures.
EIOPA explains that cyber risk exposures could originate from both affirmative cyber insurance policies and cyber endorsements, for which some exclusions may not be clear, and in relation to insurance policies designed without explicitly taking cyber risk into consideration. EIOPA recommends that national competent authorities dedicate higher attention to insurance undertakings’ assessment of the terms and conditions of their existing insurance products. The consultation paper focuses on supervisory expectations and emphasises:
- the need for a top-down strategy and risk appetite definition for (re)insurance undertakings to underwrite cyber risk;
- the need to identify and measure risk exposures with the purpose of implementing sound cyber underwriting practices, with particular regard to the management of non-affirmative cyber exposures; and
- the importance of cyber underwriting risk management and risk mitigation, including reinsurance strategy.
The deadline for responses is 18 July 2022.
EIOPA Consultation Paper on Supervisory Statement on management of non-affirmative cyber underwriting exposures (EIOPA-22/290)
Press release
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Exclusions in insurance products arising from systemic events - EIOPA publishes consultation paper - 17 June 2022
The European Insurance and Occupational Pensions Authority (EIOPA) has published a consultation paper on a supervisory statement on exclusions in insurance products related to risks arising from systemic events.
EIOPA explains that there is an increasing risk that insurance products may become unaffordable or unavailable for systemic events such as pandemics, climate change or large cyber-attacks. Simultaneously, products which may have originally covered these events, or which may have been silent in relation to the coverage for these events, may explicitly exclude them in the future. These systemic events also underline increasing consumer detriment caused by ambiguous contractual terms and lack of clarity on the coverage of losses arising from such events. EIOPA observes that this has led to disputes between policyholders and insurance undertakings, reputational risks for the sector as well as significant losses for all parties involved.
The supervisory statement aims to promote supervisory convergence in how national competent authorities (NCAs) assess the treatment of exclusions in insurance contracts that arise from risks following systemic events. EIOPA notes that this should ultimately support insurers in following a customer-oriented approach in such events.
EIOPA therefore recommends NCAs to take into consideration the following factors:
- insurance product manufacturers should assess whether applicable exclusions from coverage are clear and whether there is contract clarity for policyholders;
- if the risk arising from a systemic event becomes uninsurable or there is a lack of clarity about whether the risk is covered or not, insurance manufacturers are expected to make an assessment of the terms and conditions and of the scope of coverage by considering the needs, objectives and characteristics of the identified target market; and
- when new products are developed, the target market’s needs, objectives and characteristics need to be taken into account regarding exclusions as part of the product oversight and governance process.
The deadline for responses is 18 July 2022.
EIOPA Consultation Paper on Supervisory Statement on Exclusions in Insurance Products Related to Risks Arising from Systemic Events (EIOPA-22-288)
Press release
Financial Conduct Authority
Funeral plan providers - FCA publishes update on authorisation status - 17 June 2022
The FCA has published a list of funeral plan providers it intends to authorise when the pre-paid funeral plans industry comes under its regulation from 29 July 2022. The list contains 24 firms, including the largest funeral plan providers. The FCA notes that, together, these firms hold approximately 87% of existing customer plans.
The FCA explains that, from 29 July 2022, all funeral plan providers will need to follow its rules, which include a ban on cold calling and commission paid to intermediaries, and maintain high standards on governance and financial resilience. Funeral plan holders will be able to refer complaints about a firm to the Financial Ombudsman Service and will be covered by the Financial Services Compensation Scheme if their provider goes out of business.
The FCA is still assessing a small number of providers’ applications and will give an update on these as soon as possible.
Funeral plan provider application status
Press release
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Signposting to travel insurance customers with medical conditions - FCA updates webpage on policy statement PS20/3 - 17 June 2022
The FCA has updated the webpage on its February 2020 policy statement (PS20/3) on signposting to travel insurance for consumers with pre-existing medical conditions, announcing that it is delaying its post-implementation review of the rules by a year. The FCA explains that the impact of the COVID-19 pandemic on the travel insurance market has undermined the FCA’s ability to draw firm conclusions from a review conducted in 2022, and the FCA now intends to conduct the review between April and October 2023.
Updated webpage
