"Shaping the Future of Insurance: a Regulator’s perspective” - Director Seána Cunningham remarks at European Insurance Forum

Introduction

My thanks to Insurance Ireland for the invitation to attend the European Insurance Forum 2025.  I am delighted to have the opportunity to speak here today, at an event which brings together so many insurance leaders and experts.

The theme of the Forum, "Resilience and Revitalisation: Shaping the Future of Insurance”, is timely as it speaks to the insurance industry’s focus on the future. For regulators too this is important as we look to better understand, anticipate and adapt in the context of the far reaching changes taking place within the economy, society and financial system globally.

This is also timely in the context of the Government’s recently published Action Plan for Insurance Reform 2025-2029, which we welcome and support.

In my remarks today, I would like to touch on how the Central Bank of Ireland’s approach to the regulation and supervision of the insurance sector is evolving and to reflect on some key areas of focus as we look to the future, namely:

• Resilience in uncertain times;
• Accountability, Trust and Consumer Focus; and
• Responsible and Ethical Innovation. 

But before doing so, I think it is worth reflecting on the importance of a well-functioning and resilient insurance sector. 

Supporting people, businesses and the wider economy

Insurance plays a critical role in supporting businesses and individuals in navigating and mitigating risks in an uncertain and rapidly changing world.

Non-life insurance provides motor, property and liability protection to communities, increasing resilience and recovery in the wake of adverse events, whilst various speciality lines of business are a key enabler of international trade and investment.

Life assurance provides financial protection and stability for families and dependents, as well as providing a key mechanism for savings and investment. 

Our mandate in the Central Bank of Ireland, as you will know, is that we work to ensure that the financial system operates in the best interests of consumers and the wider economy. The insurance sector is no different, and so key to us, as a regulator, is ensuring that it functions in such a way as to provide this support. 

Ultimately, people and businesses should be able to access products which are suitable for their needs: be clear on what is covered, what is not, and to what extent; and be able to rely on that cover being in place, and importantly paying out, should certain risks crystallise or life events happen.    

Looking to the future

Ireland is home to the fourth largest insurance industry in the EU, with a significant international component.   In 2024, premiums written by Irish firms equated to €109bn, of which more than 70% related to risks outside of Ireland, with exposures spread across more than 70 countries. This is not to forget the 2,400-plus retail intermediaries operating in Ireland, despite ongoing consolidation in this market.

There are new opportunities and challenges emerging for the insurance sector with which both regulators and the insurance industry must contend.

The financial system today operates against a backdrop of ongoing geopolitical tensions and uncertainty, which threaten economic growth and market stability.

Digitalisation of the economy, including the growth of AI, presents both opportunities and challenges, bringing continued cyber resilience into sharp focus.

Growing climate risks and ageing populations are presenting many challenges in the long and short term – and have the potential to significantly widen insurance "protection gaps".

Future focused - our role and supervisory framework

In the context of these fundamental shifts in the environment, the Central Bank’s strategy is focused on four key safeguarding outcomes:

• Consumer and investor protection;
• Safety and soundness;
• Financial stability; and
• Integrity of the financial system.

We are implementing a new supervisory approach, building on the strong foundations of our long standing risk-based and outcomes-focused approach to supervision.  

In designing our new approach, we reflected on EU and global best practice while recognising also the particular strategic advantage the Central Bank has from having all elements of the central banking and financial regulation mandates in one organisation.

Our new approach does not change the safeguarding outcomes we are pursuing.  However, it recognises the changing nature of the financial system, which increasingly transcends traditional regulatory distinctions such as “prudential”, “conduct”, and “anti-money laundering”, and delivers a more integrated approach to supervision, with multi-disciplinary teams working together to deliver our supervisory priorities in a more effective and efficient way. 

The insurance sector will be supervised in an integrated, holistic way, in accordance with a multi-year supervisory strategy.  In addition, insurance firms that could most significantly impact on the achievement of our safeguarding outcomes will be supervised at an individual firm level.

Under this new approach firms should hear one voice from the Central Bank, with more coordinated, consistent messaging and more streamlined demands across the full span of our regulatory and supervisory mandate.

Importantly, under the new approach, we will:

• Continue to deliver an open and transparent engagement approach, to communicate clearly our priorities and areas of focus, and to listen to questions and concerns that may arise; 
• Remain risk-based and outcomes-focused and continue to take a targeted and proportionate approach to our supervision and to the use of our supervisory powers; and    
• Continue our engagement with key stakeholders, including through our participation at the European Insurance and Occupational Pensions Authority (EIOPA) and the International Association of Insurance Supervisors (IAIS), to work towards consistent application of regulatory standards and coordinated supervisory efforts. 

Simplification

Europe is rightly looking to ensure its economy is productive and competitive into the future. Productive and resilient business sectors are central to that objective. To help deliver that, there is an increasing focus on the simplification of regulation, including financial regulation.

It is important to remember that regulation plays a key role in the economy and financial system – enabling innovation, competition and cross border activity, while ensuring the financial system operates in the best interest of consumers and the wider economy, both in good times and bad.

Given its importance, regulation should always be forward-looking, proportionate, predictable, and, to the greatest extent possible, harmonised. Supervision, in turn, should be risk based and outcomes-focused.  

And in our view, regulators and supervisors should always be open to reviewing and considering existing frameworks, to see if we can deliver the same outcomes in different, and indeed “simpler”, ways that reduce the administrative burden on firms.

Simplification done well is in line with these principles, which is why we are proactively engaging with the simplification agenda, at home and in Europe.

Domestically, we have already identified and indeed implemented areas where we could simplify and reduce the burden and we will continue to do so.  By way of example, we have streamlined authorisation and change of business requirements and removed the requirement for an external audit of captive insurer's regulatory returns and public disclosures.

At European level, the Solvency II review will carve out a proportionality regime for small and non-complex undertakings. In parallel, EIOPA is working to achieve simplification and burden reduction through a focus on harmonisation and a rationalisation of reporting requirements and guidance to firms and supervisory authorities.

There is of course a careful and critical balance to be struck, and this requires industry to play its part too. Simpler standards cannot mean lower standards, and simpler standards will still need to deliver their intended outcomes.  We will all have a role in making sure that we get simplification right and it is so important that we do.  The outcomes of financial stability and consumer protection are now more important than ever as we will have no growth and no adoption of innovation, if the financial sector is not stable and consumers don’t have trust in it.

Resilience in uncertain times

Returning to the three areas of shared focus I set out at the beginning of my remarks, let me take each in turn.

In recent years the insurance sector has shown itself to be resilient in weathering significant inflation and interest rate shocks as well as volatile financial markets.  This has been welcome but I think we will all agree that there is no room for complacency. 

Rising geopolitical tensions and economic divisions pose significant challenges for insurers, which serve to underscore the continued importance of prudent risk management and resilience across the financial system, and at an individual firm level, the maintenance of sufficient financial resources to withstand plausible but severe stresses.

Close monitoring of the impact of changes in financial markets, the macro environment, the changing needs of your consumers, and over the longer term, climate, will need to remain at the forefront for industry and regulators both now and into the future. 

Accountability, trust and consumer focus

Turning to trust, this forms the foundation of the relationship between insurers and their customers, and so is something that it is critical to maintain. Consumers need to trust that insurers are providing value for money, ongoing service and support, and that they will honour the commitments they have made where insured risks crystallise.

We believe that the development of consumer focused cultures, robust governance and well defined accountabilities are the fundamental building blocks of organisations that are trustworthy. These were key design principles underpinning the Central Bank’s Individual Accountability Framework.    

We see the importance of consumer trust clearly resonating and reflected in Insurance Ireland’s strategy to “support building consumer trust in insurance” and this is very welcome.  

This will involve the insurance sector playing an active role in relation to the measures needed to address emerging protection gaps. It will also require insurance firms to take steps to build trust with consumers through transparency, value for money, suitability of products, and high quality customer support and service. 

Through our supervision, we will continue to examine how firms are delivering on their responsibilities to their customers and the continued commitment to building consumer trust in the insurance sector. 

Responsible and ethical innovation

Lastly let me speak of innovation, something that is happening at pace in the financial sector, presenting both opportunities and risks.

In recent years, innovation has brought new entrants, new products and new ways of serving customers and the economy.

This has clear benefits for consumers, businesses and society and is an essential component of a competitive economy and a well-functioning financial system.  The digital transition, done right, has immense potential for delivering better outcomes for consumers, investors, and the wider economy.  It is important that you are ready to capitalise on that potential, and are proactively adapting your business models, strategies and systems to do so.

But it is also important that regulators and industry account for both the opportunities and risks that innovation brings.  If the insurance sector is to continue to be resilient and to maintain trust, then innovation needs to be done in a way that is both responsible and ethical.

The insurance industry has pioneered the use of data and statistics to make informed decisions on risk. The management of new data and technologies, particularly involving use of generative Artificial Intelligence, will require firms to consider carefully their ethical and responsible use, including the governance and controls required to oversee these technologies effectively.

And we, as regulators, will be focused on developing a deeper understanding of use of Artificial Intelligence systems in the insurance sector and assessing whether firms have the necessary governance and risk management measures in place to harness innovation responsibly and well.   

Closing remarks

It is important to acknowledge as we look forward that insurance firms and regulators have a shared goal in securing a well-functioning and resilient insurance sector into the future.

Given the rapid change underway and ahead, in the nature, shape and digitalisation of the global economy and financial system, it is important we remain vigilant, maintain resilience, and ensure we are agile and adapting to the changing nature of financial services, the opportunities it provides and the changing nature of resilience it implies.

I am reminded of a quote attributed to the French writer Albert Camus, who observed that “real generosity towards the future lies in giving all to the present”.

This is a sentiment which I expect will resonate with us all and highlights the importance of our collective efforts and work today in securing a future where the insurance sector continues to support the needs of people, businesses and the wider economy. 

My thanks to Brian Balmforth, Maura Killoran, Cian O’Laoide and James O’Sullivan for their help in preparing these remarks.