Insurance Insights - August 2017

Insurance Insights - August 2017

A collection of KPMG's latest publications and articles which focus on developments in, and issues facing the insurance industry.

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Solvency II Reporting Reviews

Shortly after the first sets of annual qualitative and quantitative reports were submitted to the Central Bank of Ireland (“CBI”), the CBI recommended that firms undertake appropriate post-implementation reviews of Solvency II reporting, to see what went well and what could have been done better.  Firms may need to review and document their processes and/or strengthen the internal controls around their production and submission to the CBI of supervisory returns, including the SFCR and RSR, to ensure the accuracy of the information and to meet regulatory expectations. 

Read KPMG’s Pillar III Brochure which highlights the reporting areas that may need particular attention.

The Consumer Protection Code and the Digitalisation of Financial Services

Regulators welcome FinTech innovations, but recognise that the digitalisation of financial services introduces both consumer benefits and risks for consumers as it continues to shape general consumer behaviour and preferences that in turn influence consumer expectations.  As a result, digital innovation is causing regulators to question whether existing rules and supervisory approaches are fit for purpose.

The Central Bank explores these issues in its Discussion Paper on the Consumer Protection Code and the Digitalisation of Financial Services; this paper will be open for comments until 27 October 2017.

Draft Delegated Act on Product Oversight and Governance

The European Commission has published a draft Commission Delegated Regulation supplementing the Insurance Distribution Directive (IDD) laying down product oversight and governance requirements applicable to manufacturers and distributors of insurance products, including the requirement to operate a product approval process. The draft is open for feedback until 17 August 2017.

Read recent feedback submitted to the European Commission.

No exemptions from Solvency II quarterly reporting

The Central Bank of Ireland published ‘Policy Notice May 2017’ on discretions and options on submission of information.

In its May Policy Notice on submission of information, the CBI clarified that the reporting exemptions relating to quarterly templates S.06.03 (look-through) and S.08.02 (derivatives) that applied to certain Low and Medium-Low Impact undertakings in 2016 will no longer apply. It’s worth noting that even though the notice was published after the end of Q1 2017, the original derogation which was published in 2015 was limited to 2016 reporting periods. Accordingly, all (re)insurance are required to submit all of the relevant quarterly templates set out in Article 6 of Implementing Regulation (EU) 2015/2450 in relation to any quarter ending on or after 1 January 2017.

Read the Policy Notice – Solvency II Implementation Note - May 2017.

Regulation and Guidelines on PRIIPs

The regulatory framework and detail to support the implementation of the PRIIPs regulation is gathering pace.

On 30 June 2017, the European Commission adopted the Regulation on key information documents for packaged retail and insurance-based investment products (KIDs for PRIIPs) and shortly after, on 4 July, it published Guidelines on the Regulation’s application.  On 11 July, there was an open hearing meeting with the European Commission and ESAs and on 28 July the ESA’s Joint Committee published and submitted their Technical Advice to the European Commission which sets out the minimum requirements that manufacturers of PRIIPs with environmental or social objectives (EOS PRIIPs) should comply with to ensure that they offer products that meet the retail investors' needs.

Read KPMG’s overview of the RTSs on Key Information Document and of the Open hearing meeting with the European Commission and ESAs.

Read the EC Guidelines on the Regulation on KIDs for PRIIPs.

Read the Technical Advice on EOS PRIIPs.

Insurance regulators’ approach to Brexit relocations

EIOPA publishes principles on the supervisory approach to relocations from the UK.

On 11 July, EIOPA issued an opinion setting out its expectations on the EU-27 insurance supervisors’ approach to the authorisation and supervision of insurance firms seeking to obtain access to the EU internal market post Brexit.  EIOPA’s Opinion touches on the requirement to re-apply for an insurance authorisation or an internal model, and on the need for firms to demonstrate appropriate corporate substance, in terms of senior management presence, outsourcing, and risk retention. 

Read EIOPA’s Opinion on supervisory convergence in light of the United Kingdom withdrawing from the European Union.

IFRS 15 Revenue | Are you ready to go?

Getting to the finish line

In a matter of months, the new revenue recognition standard – IFRS 15 – may change the way some insurers account for their contracts.

Our SlideShare IFRS 15 Revenue – Are you good to go? summarises the key considerations that you need to focus on, and will help you drive your IFRS 15 implementation project to the finish line.

Also available...

  • Our IFRS 15 transition toolkit will help you understand the new requirements and decide which transition option to use – it also provides illustrative disclosures.
  • Our IFRS blog provides topical insight and discussion, and practical guidance to help you implement the new accounting standards.
  • Our Accounting for revenue is changing series will help you assess the impact for your company. You may be particularly interested in the sector-specific guidance for the insurance sector.
  • Please visit KPMG’s Global IFRS Institute for practical guidance to help you navigate and make a smooth transition to the new standards.

IFRS 17 Insurance Contracts | The watching and waiting is over

It's time to get started

After some 20 years of discussion and debate, the comprehensive new accounting model in IFRS 17 will give users of financial information a whole new perspective on insurers’ financial statements.

Preparing for and applying the new standard will require substantial effort and present particular challenges – not least in implementing new or upgraded systems, processes and controls.

Our First Impressions guide contains insights and examples that will help you assess the potential impact, and make informed decisions when choosing your approach to IFRS 17 implementation.The time to watch and wait is over – the need for planning starts now.

For a high-level overview, read our web article and SlideShare presentation.

Closing the gap | Insuring your business against evolving cyber threats

In light of recent global cyber-attacks, KPMG in the UK joins insurance market Lloyd’s of London and international law firm DAC Beachcroft to provide a cross-sector assessment of the cyber threats facing companies today. The new report also outlines the financial impact of data breaches, and analyses both the immediate and ‘slow-burn’ costs that could dramatically increase the final bill for businesses.

While it is not possible to be 100 percent secure from a cyber-attack, there are a number of measures companies can take to mitigate the risks, minimise the consequences and recover more quickly should a breach occur.

Cyber Insurance is a part of the solution
Demand for cyber risk coverage continues to be driven by privacy breach laws in certain countries, yet the absence of similar measures in other continents may contribute to the relative lack of awareness around cyber insurance. As rapid technological advancements expose new threats and liabilities to companies, the onus is on both businesses and insurers to stay on top of ever-changing cyber risks.

This Report outlines four ways in which businesses could work with insurers to better prepare for and mitigate cyber threats.

Brexit Navigator

Now that Article 50 has been triggered, how do you successfully navigate the next 24 months and beyond to manage the uncertainty caused by Brexit?

KPMG's Brexit Navigator is designed to help businesses with cross-border or cross-channel interests or customers to plot out the key decision milestones.

Our KPMG Tax App and KPMG Brexit Website expand on these and other Brexit related topics.

We will continue to share with you important matters as they happen.

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