Stress and scenario testing is a powerful tool that enables business leaders to identify what their key risks are and how potential future evolution could impact on their business. This article, written by David O’Shea, an actuarial manager with KPMG, explores how the lessons learnt from stress and scenario testing as part of the Own Risk and Solvency Assessment under Solvency II, can serve as a useful reference point for wider industries outside of Financial Services.
KPMG’s Global CEO Outlook 2019 highlights how today’s insurance CEOs are well-attuned to the future they face. With customer needs changing and expectations rising, and the competitive landscape evolving, insurers understand that their legacy operating models will no longer be fit for purpose. The future of insurance lies in achieving a deeper understanding of the customer, operational excellence, intelligent automation and adapting to the industry’s shifting talent needs.
As they search for new ways to solve businesses challenges, inspire innovation and create and seize new opportunities, insurers worldwide are increasingly teaming up with insurtechs and other technology startups. Yet combining the steady caution of traditional insurance with the fast-moving, fast-changing ethos of startup culture is rarely straightforward. Insurers need to be well-prepared to make sure these partnerships work for all involved --and deliver meaningful value in the end. This article addresses organisational considerations on how insurers can get the most out of insurtech partnerships and how to prepare their organisation for success.
Digital transformation and technology innovation is driving huge change across the insurance industry. From customer experience, biometrics, AI, chatbots, machine learning, through to leveraging cloud computing. This combined with the need to deliver IFRS17 means the impact on finance and actuarial is significant. Actuaries will need to support and understand the transaction-based finance world and finance teams will need to interact with actuarial modelling output to validate results.
Join Legerity and a panel of experts, including Jean Rea, an Actuarial Director with KPMG, for a discussion on how regulation and digital transformation are changing the finance and actuarial functions within insurance firms.
Planning in the context of continued Brexit uncertainty is a major challenge for Irish based business, North and South. Notwithstanding recent developments, it remains impossible to predict with any certainty what outcome will emerge. A Deal, No Deal, an extended Article 50, and indeed No Brexit, all remain possibilities. To help you prepare for these challenges, we have updated some recommended actions that businesses of all sizes can take to prepare for Brexit in whatever form it may take.
The CBI has launched Guidelines to assist firms to meet their anti-money laundering (AML) and countering the financing of terrorism (CFT) obligations. The Guidelines set out the expectations of the CBI regarding the factors that Firms should take into account when identifying, assessing and managing ML/TF risks.
Speaking at the launch of the Guidelines, Director General, Financial Conduct, Derville Rowland said firms must adopt a risk-based approach to fulfilling their obligations and ensure that their controls, policies and procedures are fit for purpose, up-to-date, tested and kept under constant review and scrutiny. The Director General noted the role of the CBI as a risk-based supervisor and its key supervisory priority being transaction monitoring when it comes to preventing ML and TF. The Director General stated that the CBI welcomes steps to increased co-ordination at the EU level, including the recent decision to enhance/ strengthen the powers of the European Banking Authority (EBA).
Please click here to read the complete speech.
Please click here for the link to the AML / TF Guidelines (PDF, 1,310KB).
The CBI has published the “General Good Requirements for Insurance Undertakings”. The document (PDF, 665KB) sets out in summary form some of the main requirements that insurers and reinsurers operating in Ireland must adhere to.
The CBI announced the appointment of Louise Dennehy as the new Chief Information Officer with effect from 1 September 2019 and Domhnall Cullinan as the new Director of Insurance Supervision. Domhnall was previously Head of Insurance Supervision in the CBI and took up his new role on 1 September.
The CBI has published a paper on “The Future of Global Financial Centres after Brexit: an EU Perspective”. The paper (PDF, 1MB) notes London is likely to remain a very large global financial centre (GFC) even in adverse Brexit scenarios. The impact of Brexit on London’s GFC could be very small due to the ‘premium’ London enjoys and a less open, productive, and rich UK might influence London’s GFC and other financial centres in the EU, including Dublin.
Vasileios Madouros, Director of Financial Stability at the CBI, while speaking at a Diversity and Inclusion conference, discussed why Diversity and Inclusion is an important matter for the CBI to achieve its mission and contribute to a safer financial system. During the speech, the Director explained the potential benefits of Diversity and how to realise them. He also gave insights on the ways to foster an inclusive culture at the organisation.
Commission Implementing Regulation (EU) 2019/1285 (PDF, 1MB) has been published in the Official Journal of the EU (OJ). The Implementing Regulation lays down technical information for the calculation of technical provisions and basic own funds for reporting with reference dates from 30 June 2019 until 29 September 2019 under the Solvency II Directive (2009/138/EC) on the taking-up and pursuit of the business of Insurance and Reinsurance. The Implementing Regulation, which was made under Article 77e(2) of the Solvency II Directive, sets out the technical information to be used by reinsurers and insurers when calculating technical provisions and basic own funds for reporting.
The European Parliament has published a briefing on AML (PDF, 347KB), which presents current initiatives and actions aiming at reinforcing the AML supervisory and regulatory framework in the EU.
The briefing outlines the key points as below:
a) The EU supervisory architecture and the respective roles of European and national authorities in applying AML legislation that have been further specified in the 5th AML Directive;
b) Ways that have been proposed to further improve the AML supervisory and regulatory frameworks; and
c) Some possible additional reforms to bring about a more integrated AML supervisory architecture in the EU.
Insurance Europe has responded to IAIS’s systemic risk consultation (PDF, 131KB). In its response to the IAIS consultation on its new holistic framework for assessing systemic risk in insurance, Insurance Europe highlighted the need for every jurisdiction to achieve comparable outcomes when applying the framework, to ensure a global level playing field.
Insurance Europe has responded to an EIOPA opinion paper on sustainability in Solvency II (PDF, 258KB), where it said the current framework is not a barrier to the integration of sustainability. It also noted that sustainability risks are already incorporated into the framework. Insurance Europe warned that the direct incorporation of a uniform quantitative approach into the own risk assessment (ORSA), based on a standardised set of climate change scenarios, would contrast with the very nature of the ORSA, which is company-specific and with a unique time horizon.
The IAIS is seeking feedback, through public consultation, on the draft Issues Paper on the Use of Big Data Analytics in Insurance. Feedback on this consultative document is invited by 16 October 2019. The paper builds on the IAIS Issues Paper on Increasing Digitalisation in Insurance and its Potential Impact on Consumer Outcomes (November 2018) by focusing more specifically on issues relating to the use of personal and other data by insurers as a result of digitalisation.