Insurance Developments - June 2016 Update | KPMG | QA

Insurance Insights - August 2016

Insurance Insights - August 2016

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


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Monthly Update - Insurance Developments

The Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation

The regulatory framework and detail to support the implementation of the PRIIPs regulation is gathering pace. The PRIIPs regulation is due to become effective on 1 January 2017. On 30 June 2016, the European Commission adopted a regulatory technical standard (RTS) on the PRIIPs key investor document, or KID. This regulatory technical standard (RTS) was drafted by the European Securities and Markets Authority (ESMA), European Banking Authority (EBA) and European Insurance and Occupational Pensions Authority (EIOPA), jointly called the European Supervisory Authorities (ESAs).

On 11 July, there was an open hearing meeting with the European Commission and ESAs. The links to this open hearing and an overview of the RTS are below:

Further information on the PRIIPs Regulation can be found on our website.

Accounting for insurance contracts is changing

It's time to engage

The final insurance contracts standard is expected to be issued within the next few months. Implementing the new requirements will be very complex, so its time to engage.

Our publication 'Accounting for insurance contracts is changing' can help you assess the extent of the impact, so that you can address the wider business implications and meet the expectations of stakeholders and regulators.

Theres a version for life insurers, and one for general insurers. You may also be interested in our SlideShare presentations for life and general insurers, which give a high-level visual summary of the coming changes.

Preparing for the future

Evolving Insurance Risk and Regulation: Regional developments

The Regional regulatory developments chapter has always been a prominent feature of our Evolving Insurance Risk and Regulation report. Regarded by many of our clients as highly informative, this chapter pulls on KPMGs in-depth knowledge and global strength to help insurers understand market and regulatory dynamics in more than 40 countries. In this third chapter, we consider the regulatory trends in each country based on ICP compliance, prudential developments, conduct of business and consumer protection.

Launched in June, the first chapter, International developments dominate regulatory change, is based on discussions with our member firms clients, our professionals assessment of key regulatory developments and through our links with policy bodies in each region.

The second chapter, Conduct risk: Increasing regulatory focus to align product, customer and value, offers insights on industry developments by region with commentary on how regulators are driving change to align products and customers.

Upcoming chapters include updates on IFRS and the forthcoming insurance contracts standard, which will have profound impacts on the industry over the next several years, followed by chapters on emerging risks and tax.

Temporary exemption disclosures

The IASB has agreed to revise the proposed disclosure requirements for the temporary exemption from applying IFRS 9 Financial Instruments. The decision will limit the need to perform a solely payments of principal and interest assessment to those financial assets that are not held for trading or managed on a fair value basis. This will ease the implementation burden on preparers.

Find out more in our web article.

IFRS 9 Financial Instruments

To implement in 2018 or to temporarily defer?

For the last few years, banks have been marching on with their major IFRS 9 implementation programs, whereas many insurers have put plans on hold, waiting for the IASB to complete their deliberations on amendments to the forthcoming insurance contracts standard. Recent decisions by the IASB confirm that many insurers will enjoy a temporary relief from implementing IFRS 9 on the mandatory effective date of 1 January 2018, allowing them to defer the implementation of the standard until the earlier of the mandatory effective date of the new insurance contracts standard or 1 January 2021. However, those insurers that are eligible and elect to defer their implementation of IFRS 9, will still need to meet minimum disclosure requirements starting with their 2018 financial statements.

Our latest Viewpoint article, IFRS 9 Financial Instruments To implement in 2018 or to temporarily defer?, considers the opportunities and risks for each option and how the market is responding to the recent IASB decisions.

Greater transparency in the G-SII assessment process

On 16 June 2016, the International Association of Insurance Supervisors (IAIS) issued its final papers on the G-SII assessment methodology and its paper on systemic risk from insurance product features (in the process dropping the much disliked non-traditional non-insurance (NTNI) title). It notes that the higher loss absorbency (HLA) requirements that are imposed on global systemically important insurers (G-SIIs) will be amended to take account of these papers.

The papers show that the IAIS has taken on board much of the feedback from the two consultations. Insurers will be pleased to see the loss of the NTNI acronym and the continuance of a focus on activities that the original consultation proposed. However, in many respects the biggest win for the industry is the greater transparency that will in future be provided within the G-SII assessment process. Read more.

Next level of detail on the Insurance Distribution Directive (IDD)

The IDD entered into force on 23 February 2016, with transposition of its requirements by 23 February 2018. However, in common with other recent directives, there are a number of articles where further delegated acts are required to support some of the detail. The Commission requested EIOPAs technical advice in these areas, which cover product oversight and governance; conflicts of interest; inducements and assessment of suitability and appropriateness and reporting. In the interests of achieving cross-sectoral consistency, EIOPA was requested to achieve as much consistency as possible with products falling under MiFID II where there is no fundamental differences between the wording used in the two directives. Read more.

Political agreement on anti-tax avoidance directive

On 17 June 2016, the Economic and Financial Affairs Council (ECOFIN) of the EU held discussions with a view to reaching a political agreement on the proposal for an ATAD, which had been a high priority for the Dutch Presidency. In the light of these discussions, the Presidency put forward a final compromise text, to which almost all delegations could agree and announced a silence procedure until Monday, 20 June 2016. As no objections were raised by that deadline, political agreement was reached and the text will be submitted to a later ECOFIN meeting for formal adoption. The Presidency compromise text on the ATAD as well as the Council statements, which form the basis for the political agreement, are available here. Read more.

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