Insurance Policy and Legislation
Insurance Policy and Legislation
The legal and regulatory framework for the provision of life insurance, non-life insurance and reinsurance in the European Economic Area, and the supervision of that activity, is prescribed by EU Directives. The provision of insurance throughout the EEA is on a freedom of services basis and the mutual recognition of the authorisation of insurance undertakings by Member States.
The Department’s Insurance Policy Unit advises and prepares proposals for senior management of the Department, the Minister and the Government, for an effective policy and legislative framework for insurance regulation and development of the insurance sector. This work is carried out in a manner consistent with EU financial services initiatives which in turn adequately encompass Irish national interests.
EU Solvency II Directive
Solvency II represents a substantial overhaul of European insurance regulation. It sets out new, more comprehensive EU-wide requirements on capital adequacy and risk management for insurers with the key aim of increasing policyholder protection. The directive entered into force in Irish law on 1 January 2016 and it is expected that this new regime will reduce the possibility of consumer loss or market disruption.
Insurance Distribution Directive
The Insurance Distribution Directive was published in the Official Journal of the European Union in February 2016 and must be transposed into Irish law by February 2018. It will replace the Insurance Mediation Directive which was adopted in 2002 to regulate point of sale insurance products and create a single market for the sale of insurance products. The Insurance Distribution Directive aims to further enhance consumer protection and ensure a level playing field by extending the scope of the directive to include all sales of insurance products. It will also seek to identify and mitigate conflicts of interest in particular in the area of commissions, and strengthen administrative sanctions.
The Insurance Compensation Fund (ICF)
The ICF is a consumer protection mechanism which provides a minimum level of protection for policyholders where an insurance company goes into liquidation. Under the scheme, certain policyholders are entitled to a payment of 65% of their claim or €825,000, whichever is the less.
The Insurance Unit has responsibility for the development of the legislation and framework which governs the Insurance Compensation Fund (ICF). The fund itself is maintained and administered under the control of the President of the High Court acting through the Accountant of the Courts of Justice.
The Central Bank of Ireland is responsible for carrying out an annual assessment of the financial position of the ICF and determining an appropriate annual contribution to be paid to the ICF by non-life insurance companies.
A report of the recent Review of the Framework for Motor Insurance Compensation in Ireland, carried out by the Department of Finance and the Department of Transport, Tourism and Sport is available here
This report is agreed by both Ministers and was brought to Government in July 2016.
Other Government Department / Agency roles in the area of insurance
The Central Bank of Ireland is responsible for the supervision and regulation of insurance undertakings that are authorised by the Central Bank and for the supervision in relation to the conduct of business rules of all insurance firms selling insurance in Ireland. The Central Bank is statutorily independent in the exercise of these regulatory and supervisory functions. Consumer issues in relation to insurance are covered by the Central Bank of Ireland’s Consumer Protection Code.
Financial Services Ombudsman – If a policyholder has a complaint about an insurance company not honouring a claim on a policy, they may refer the matter to the Financial Services Ombudsman for adjudication.
The Department of Transport, Tourism and Sport is responsible for policy and legislation specifically in relation to motor insurance.
The Department of Health is responsible for policy and legislation specifically in relation to health insurance.