“Strengthened supervision is a necessary condition if a new cycle of excessive risk taking is to be prevented”, Director of Insurance Supervision Sylvia Cronin

16 March 2016 Press Release
  • Investment strategy affects bottom line profitability and overall success of the business model
  • An appropriate recovery and resolution regime ultimately facilitates greater certainty and stronger policyholder protection
  • Next major financial shock could potentially be from a succession of successful cyber-attacks on financial services firms

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Speaking at the European Insurance Forum today, Director of Insurance Supervision, Sylvia Cronin, highlighted that implementation of the Solvency II regime requires more intrusive supervisory initiatives.  “Supervision all across Europe has to be more adaptable and have greater flexibility in the suite of supervisory activities and tools used”, she said. 

Ms Cronin also stressed the importance of an appropriate investment strategy for insurance firms.  “The impact investment strategy has on the performance of a business affects not just bottom line profitability but the overall success of the business model”, she said.  “In a Solvency II world there has to be consideration given to the prudent person principle in the search for yield.  Boards must monitor the effect investment performance is having on their business and ensure that adequate ongoing evaluation is performed that aligns to their stated risk tolerances.”

In relation to recovery and resolution, Ms Cronin noted that “The Central Bank recognises the potential advantages of a recovery and resolution framework for the insurance industry.  These advantages largely relate to the challenges that can be posed by the cross-border nature of insurance undertakings and groups”.  She added that “Differences between home and host supervisor requirements in the availability and application of these tools are currently a barrier to effective cross-border recovery and resolution which would be addressed by a harmonised framework.  An appropriate regime would ultimately facilitate greater certainty in these situations and stronger policyholder protection.”

In order to protect against the possibility of cyber-attacks, companies are investing more now in security budgets, employee awareness programmes and formal standards and strategies than ever before.  Ms Cronin said: “Robust strategies including IT policies, procedures and technical controls should be in place.  Given the complex, rapidly changing and borderless nature of cybercrime, no single firm or regulator can successfully tackle the risk alone.  Cybercrime’s international nature will require a collaborative response from governments, regulators and industry.”