On 24 May, Jean Rea, Director in our Actuarial Practice, presented “R for Senior Actuaries” at the Society of Actuaries Annual Convention held in the Convention Centre in Dublin. The presentation slides can be found here. (PDF, 975KB)
This session is aimed at senior actuaries who are interested in learning about R and where it can be leveraged within actuarial work. The session will cover the following areas:
Jean Rea, alongside other members of our insurance team, would be happy to facilitate a demonstration of the use of R more directly, if desired.
How innovation is transforming the insurance industry and implications for IFRS 17 - Webinar
On 14 May, Brian Morrissey (Partner, Head of Insurance), alongside other industry leaders, participated in a webinar on innovation in the insurance industry and implications for IFRS17. The link to the webinar is included here.
Reporting processes still have the same fundamental goals they’ve had for the last twenty years – assess profitability, assess capital requirements, demonstrate solvency and enable management and shareholders to assess how the business is performing. However, the backdrop against which these goals have to be achieved has changed drastically. Against the backdrop of increasing demands and continued evolution, the fundamentals of what a good reporting process is remain unchanged; hence, it is important to bear in mind what good looks like and continually identify scope for even minor improvements in your own reporting process. The following article, written by David O’Shea, a manager within our actuarial team, examines this further.
Of all the organizations that hold personal data, insurers are right up there in terms of volume and richness. From employment and medical details to personal possessions, houses and cars to holidays, they have the information to build a vivid, single picture of their customers. This presents a significant opportunity to target highly personalized offerings and deliver an outstanding customer experience through various touch points and channels. In today's digital world, it also makes insurers vulnerable to cyber-attacks from criminals. The following article explores the opportunities and vulnerabilities that this presents.
Sharon Donnery, Deputy Governor of the CBI, was appointed as Acting Governor of the Central Bank for the 1 June – 31 August period. Gabriel Makhlouf will take up the position of Governor of the Central Bank on 1 September 2019.
The CBI published its 2018 Annual Report and Annual Performance Statement on 29 May 2019. At the launch of the Report and Statement, Governor Philip R. Lane said “much our time and resources over the last year have been focused on Brexit, in terms of contingency planning, risk management and firm authorisations. We will continue to analyse and work to mitigate the risks posed to the economy, consumers, the financial system, and the regulatory environment. We will also continue to work to ensure that financial services firms have robust contingency plans to cope with all Brexit scenarios.”
In the Annual Performance Statement the CBI makes reference to the focus of work throughout the year on cyber risk, culture and recovery and resolution and mentions that it prohibited two individuals from holding any role in the financial services sector indefinitely. In terms of regulatory objectives and priorities for 2019, the CBI reiterated its focus on strengthening resilience, Brexit, and strengthening consumer protection, among others. You may refer to the annual report here (PDF, 4.3MB) and the annual performance statement here. (PDF, 2.2MB)
Speaking at the Department of Finance and Sustainable Nation Ireland Conference, Deputy Governor of the CBI, Sharon Donnery said that that while climate change is a highly unusual source of risk to the financial system, there is a growing consensus over the channels through which climate change can affect the financial sector. She added that “The most direct link from physical risks to the financial system is through the insurance sector. If households and businesses cannot insure themselves against some of the physical risks, they will bear all the costs of climate-related shocks. This reduces resilience”. The CBI has recently joined a new coalition of central banks and supervisors – the Network for Greening the Financial System – to ensure that the financial system is resilient to climate related risks.
Remarks delivered by Seána Cunningham, Director of Enforcement and Anti-Money Laundering at the Professional, Regulatory & Disciplinary Bar Association’s Annual Conference 2019
While speaking at the Professional, Regulatory & Disciplinary Bar Association’s Annual Conference 2019, Seána Cunningham, Director of Enforcement and AML in the CBI shared some recent developments in a number of areas of financial regulation and enforcement such as enforcement actions against individuals and firms; Anti-Money Laundering and Countering the Financing of Terrorism Guidelines; the enforcement investigative process and the importance of cooperation with the regulator; fitness and probity Dear CEO Letter; protected disclosures (‘whistleblowing’); and the proposed individual accountability framework.
Gerry Cross, Director of Financial Regulation Policy and Risk, was speaking at the ICSA Ireland 2019 conference on the theme of governance beyond compliance. On accountability, the Director referred to the CBI’s recommendation to the Minister for Finance that the CBI is given the power under legislation to introduce an enhanced individual accountability framework and said that the Government indicated that it is supportive of this proposal and that work is already underway to introduce the necessary legislation. On Sustainability, Gerry Cross said that firms are expected to take into account environmental, social and governance (ESG) considerations in how firms are run.
EIOPA invites comments on its draft opinion on integrating sustainability in Solvency II. The draft opinion forms part of EIOPA's strategic activities on sustainable finance. In the Consultation paper (PDF, 1.6MB), EIOPA asks whether a change in the time horizon for capital requirements would be required to integrate climate change considerations; whether the assessment of sustainability risks, in particular climate change risks, should be forward looking and incorporated into current or new Solvency II requirements; and whether climate risks may affect life insurer’s technical provision calculations. The due date for sending the comments is Friday, 26 July 2019.
In October 2018 the Joint Committee of the three European Supervisory Authorities (EBA, EIOPA and ESMA - ESAs) launched a public consultation to amend the Implementing Regulations on the mapping of credit assessments of External Credit Assessment Institutions (ECAIs) for credit risk. The amendments were necessary to reflect the outcomes of a monitoring exercise on the adequacy of existing mappings, namely changes to the Credit Quality Steps (CQS) allocation for two ECAIs and the introduction of new credit rating scales for ten ECAIs. The Implementing Regulations are part of the EU Single Rulebook for banking and insurance aimed at creating a safe and sound regulatory framework consistently applicable across the European Union (EU). For the new amendments linked with Solvency II, a re-consultation is required (PDF, 1MB) for the following two reasons:
References to Capital Requirement Regulation (CRR) and elements in the mapping table required an update to take into account the latest assessments.
The following link provides details on the European Commission’s response to ESAs on treatment of bonds under the PRIIPs regulation.
On 21 May 2019 EIOPA published the calculation of the Ultimate Forward Rate (UFR) for 2020 (PDF, 641KB). EIOPA calculated the ultimate forward rate (UFR) for 2020 in accordance with the methodology to derive the UFR which can be obtained via this link (pages 108-111) (PDF, 1.7MB). For the euro, the applicable UFR as of 1 January 2020 will be 3.75%.
14 May 2019: ‘Model use and misuse’ – speech by David Rule
In this speech, David Rule, Executive Director of Insurance Supervision, discusses insurance models and the growing importance of model risk management. He describes some recent findings from the PRA’s work to guard against weakening over time of capital requirements calculated from internal models – so-called ‘model drift’.
14 May 2019: ‘Operational resilience – a progress report’ – speech by Nick Strange
In his speech, Nick Strange, Director, Supervisory Risk Specialists, looks at one of the Bank of England’s strategic priorities – improving the operational resilience of the UK financial sector. Operational resilience is the ability to prevent, respond and recover from operational disruptions.
22 May 2019: A framework for assessing financial impacts of physical climate change: a practitioner’s aide for the general insurance sector
This report has been written by a cross-industry working group to outline a framework for practitioners in the general insurance sector to use to assess the financial impacts of physical climate change. The working group is keen to get comments and views on the framework. Responses are requested by Friday 22 November 2019.
Every month KPMG Ireland's IFRS team is producing an update on the progress of the industry to date on the implementation of the new insurance accounting standard.