Beyond Brexit – Update On Insurance Temporary Run-Off Regime In Ireland
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The Irish insurance business has recently experienced
EU-UK Trade and Cooperation Agreement and the (Re)insurance
The signing of the EU-UK Trade and Cooperation Agreement (TCA)
on 30 December 2020 gives greater clarity on the new relationship
between the UK and the EU27 Member States, including Ireland. The
TCA means that there is now certainty on trading arrangements
across a range of sectors. However, it does not contain much of
significance for (re)insurance or financial services
The statements in the TCA about a framework for regulatory
cooperation to be agreed by March 2021 between the EU and the UK
should assist the (re)insurance sector. This proposed EU-UK
memorandum of understanding should also precipitate progress on
Solvency II equivalence determinations. However, there is a
political dimension to these determinations and a further delay
cannot be ruled out.
Irish Temporary Run-off Regime
To provide a degree of legal certainty, Ireland has enacted a
new legal framework to facilitate the run-off of existing insurance
business of UK (and Gibraltar) insurers and insurance
intermediaries (Firms). In early 2021, the Central Bank of Ireland
(CBI) published details of the registration process for Firms
seeking to avail of the Temporary Run-off Regime (TRR). This is
implemented through the Withdrawal of the United Kingdom from the
European Union (Consequential Provisions) Act 2020.
We summarise the main elements as follows:
- Subject to satisfying the conditions
of the TRR (see below), Firms are permitted to administer their
existing insurance portfolio for up to a maximum period of 15 years
from 31 December 2020 (Relevant Date) in order to terminate their
activities in Ireland.
- The TRR applies in respect of all
life and non-life contracts of insurance written by Firms in
Ireland which were entered into before the Relevant Date. It does
not apply to reinsurance contracts.
- Under the TRR, a Firm is limited to
exclusively administering its existing insurance policies in order
to terminate its activity in Ireland. Mid-term adjustments to
policies are likely to fall foul of the TRR, with the exception of
immaterial / administrative changes which do not, in total,
undermine the TRR’s requirements.
To avail of the TRR, the Firm must:
- Be authorised as an insurer or
registered as an insurance intermediary in the UK or Gibraltar
and have passported into Ireland (either on a
freedom of establishment or freedom of services basis)
immediately before the Relevant Date.
- Have ceased to conduct new insurance
contracts and/or new insurance distribution business, as
appropriate, in Ireland on or before the Relevant
- Exclusively administer its existing
portfolios in order to terminate its activity in Ireland after the
- Comply with the general good
requirements (as applicable).
Other Key Points
In the FAQ section on its website, the CBI provides some limited
insight on its interpretation of how the TRR applies in given
circumstances. Key points include:
- Mid-term policy adjustments
– in response to the question whether such
adjustments are permitted under the TRR, the CBI’s guidance
gives some but not total clarity. It will likely be subject
to some debate. The CBI states that policy adjustments which
“establish, renew, extend, increase or resume insurance cover
on an existing policy, may not be in accordance with the TRR.
Immaterial and / or administrative adjustments to policies may be
permissible, provided these adjustments in total, do not undermine
the requirements of the TRR, which include permanently ceasing to
carry on insurance business.” Notwithstanding the CBI’s
attempts to clarify the point, debate on what constitutes an
“immaterial” and/or “administrative” adjustment
- Life products
– regarding pension policies where there is an
option in the existing contract, the CBI’s guidance limits
itself to saying that it will consider the treatment of annuities
in the context of how a Firm is complying with the TRR’s
conditions in terms of run-off. It advises Firms to seek legal
advice in such instances.
- Occupational pension schemes
– similar to life products, the CBI indicates that
it will consider the addition of new members to such schemes in the
context of how the Firm is complying with the TRR’s conditions
- Withdrawal from TRR
– the CBI notes that it has the power to withdraw
the temporary authorisation / registration of a Firm if (a) it does
not continue to satisfy the conditions of the TRR; or (b) the CBI
is not satisfied with the progress made towards terminating its
business within the maximum 15 year period.
- Regulatory regime
– the CBI confirms that its existing supervisory
approach under the Solvency II and the IDD regimes will continue to
apply to Firms, in addition to the requirements of the TRR
A Firm seeking to avail of the TRR must notify the CBI no later
than 3 months after the Relevant Date.
The CBI has now published the required forms of notification on
its website (see here). Firms must file these forms by the end
of March. The CBI has also given details of the ongoing reporting
requirements which will apply to Firms relating to registrations
under the TRR.
A public register of Firms that notified the CBI that they are
availing of the TRR will be available on the registers.
Contributed by Catherine Williams & Catherine Carrigy
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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