4 January 2016
- 2016 marks a significant milestone for the Irish insurance industry with the arrival of the Solvency II regime.
From 1 January 2016, insurers in Ireland operate under a new regulatory regime – Solvency II. Solvency II is an EU Directive which introduces a new, harmonised insurance regulatory regime aimed at promoting policyholder protection and creating a safer, more resilient sector.
Sylvia Cronin, Director of Insurance Supervision said: “1 January 2016 marked a major milestone for the insurance industry with the implementation of Solvency II in Ireland. Solvency II is the first significant overhaul of insurance regulation in a number of years.
"It will mean for the first time that there will be a harmonised, consistent, risk-based regulatory model across the EU. The risk-based dimension of Solvency II is important as it requires firms to have the required level of capital resources to execute their business strategy. This means that where an insurer adopts a riskier business model or product strategy, the solvency capital requirement for that firm will be higher and should more automatically reflect the risk profile of that firm than has been the case to date.
"The implementation of Solvency II is a significant challenge for firms as they will need to increase the sophistication of their risk management systems. Overall, it represents a very positive and welcome development for the industry requiring firms to place risk at the heart of decision making and embed a more risk aware culture within their businesses.”
Further information on Solvency II is available on the Central Bank's website here and on the website of the European Insurance and Occupational Pensions Authority (EIOPA) here.