Insurance Temporary Run-off Regime
The UK withdrew from the EU on 31 January 2020 and entered an 11 month implementation period until 31 December 2020. During that time, EU law continued to apply to and in the UK but not thereafter. This means that UK and Gibraltar (GI) insurers and insurance intermediaries, who previously provided insurance products and services to Irish customers, can no longer, from 31 December 2020, avail of the European passport and must have put in place other arrangements, if they wished to continue to provide these products and services. Recognising the potential impact on policyholders, where firms had not put in place alternative arrangements, the Central Bank and the Department of Finance worked together to establish a Temporary Run-Off Regime (TRR) for insurers and insurance intermediaries (including ancillary insurance intermediaries). The purpose of the TRR is to protect consumers of insurance products by ensuring that existing policies can continue to be serviced after 31 December 2020.
UK / GI insurers and insurance intermediaries who satisfy the conditions of the TRR are permitted to administer their existing portfolio, up to a maximum period of 15 years from 31 December 2020 in order to ensure an orderly termination of their activities in the Republic of Ireland and to ensure minimum disruption for policyholders.
In order to meet the conditions of the TRR, as set out at Part 10 of the Withdrawal of the United Kingdom from the European Union (Consequential Provisions) Act 2020 (the Act), the relevant UK / GI insurer or insurance intermediary must:
- Prior to 31 December 2020 have been authorised as an insurer, or registered as an insurance intermediary in the UK / GI and have started business in the Republic of Ireland either on a freedom of establishment or freedom to provide services basis.
- Have, on or before, 31 December 2020 ceased to conduct new insurance contracts and/or new insurance distribution business, as appropriate, in the Republic of Ireland.
- After 31 December 2020, exclusively administer their existing portfolios in order to terminate their activity in the Republic of Ireland.
- Comply with the general good requirements.
The conditions of the TRR, as set out at Part 10 of the Act, have been amended by Part 5 of the Insurance (Miscellaneous Provisions) Act 2022 (the 2022 Act).
Legislation
Part 10 of the Act amends the European Union (Insurance and Reinsurance) Regulations 2015 and the European Union (Insurance Distribution) Regulations 2018 (IDR) to provide for the TRR.
Part 5 of the 2022 Act amends certain conditions of the TRR, including, with regard to reinsurance activities, the eligibility of firms which had commenced winding-up proceedings or reorganisation measures prior to the relevant date and related Central Bank notification requirements, as set out in the European Union (Insurance and Reinsurance) Regulations 2015 (as amended by the 2022 Act).
Registration
Insurers
Under Part 10 of the Act, UK / GI insurers were required to notify the Central Bank of the application of the TRR to their firm no later than three months after 31 December 2020 by completing the Notification Form below. The completed Notification Form was required to be emailed to i[email protected].
Pursuant to part 5 of the 2022 Act, UK / GI insurers, meeting the amended conditions of the TRR, are required to notify the Central Bank of the application of the TRR to their firm no later than three months after the date on which Regulation 13A (as amended) applies to the firm by completing the Notification Form below. The completed Notification Form is required to be emailed to i[email protected].
Insurers - Temporary Run-Off Regime Notification Form | doc 108 KB
Insurance Intermediaries
UK / GI insurance intermediaries were required to notify the Central Bank of the application of the TRR to their firm no later than three months after 31 December 2020 by completing the following Notification Form. The completed Notification Form was required to be emailed to [email protected].
Insurance Intermediaries -Temporary Run-Off Regime Notification Form | doc 128 KB
Register of Insurers and Insurance Intermediaries subject to the TRR
The registers of insurers and insurance intermediaries that have notified the Central Bank that they satisfy the conditions of the TRR are available on the Registers section of the Central Bank’s website.
Reporting
Insurers
Pursuant to the powers of the Central Bank as provided for at Part 10 of the Act UK / GI insurers, to whom the TRR applies, were required to provide the Central Bank with the information outlined in the Reporting Form below no later than four months from 31 December 2020 and at least annually thereafter via the Central Bank’s Online Reporting System (ONR). Details on how to register on the ONR have been provided.
UK / GI insurers, to whom the TRR applies, following the coming into operation of Part 5 of the 2022 Act, are required to provide the Central Bank with the information outlined in the Reporting Form below no later than four months from the date on which Regulation 13A (as amended) applies to the firm and at least annually thereafter via the Central Bank’s Online Reporting System (ONR). Details on how to register on the ONR have been provided.
Insurers - Temporary Run-Off Regime Reporting Form | xls 28 KB
Insurance Intermediaries
UK / GI insurance intermediaries to whom the TRR applies, were required to provide the Central Bank with the information outlined in Reporting Form below no later than four months from 31 December 2020 and at least annually thereafter.
Insurance Intermediaries - Temporary Run-Off Regime Reporting Form | xls 68 KB
Temporary Run-off Regime FAQ
UK / GI insurers and insurance intermediaries who satisfy the conditions of the TRR will be permitted to avail of the TRR for up to a maximum period of 15 years from 31 December 2020 for the purposes, as regards insurance business in the State, of administering their existing portfolios in order to terminate their activity in the Republic of Ireland.
UK / GI insurers and insurance intermediaries subject to the TRR cannot conduct new insurance contracts and / or distribute new or renew insurance contracts after 31 December 2020.
The legislation does not allow UK / GI insurers and insurance intermediaries to write or distribute new business (including renewals) after 31 December 2020.
The legislation allows UK / GI insurers and insurance intermediaries to manage their existing insurance business for a maximum period of 15 years.
This legislation has been put in place to protect Irish consumers by ensuring that their existing policies can continue to be serviced after 31 December 2020, for 15 years. The Central Bank expects all insurers and insurance intermediaries to take the necessary steps over this period to regularise their position if they wish to continue to provide services to Irish policyholders after that period ends.
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.
Yes, the TRR will allow claims against insurers that are subject to the TRR to be processed.
As regards insurance, the TRR applies in respect of all life and non-life contracts of insurance written by UK / GI insurers in the Republic of Ireland on a passporting (i.e. freedom to provide services / freedom of establishment) basis entered into before 31 December 2020.
The legislation applies only to insurance business carried on in the Republic of Ireland in the exercise of passporting rights from the UK / GI. It only applies to policies that were in place prior to 31 December 2020.
For some pension policies, there may be an option for the policyholder to take the fund as a lump sum or convert to annuity. This option may form part of the existing contract. The Central Bank will consider the treatment of annuities in the context of how the particular firm is meeting the conditions of the TRR in terms of run-off.
The European Insurance and Occupational Pensions Authority (EIOPA) issued a Recommendation for the insurance sector in light of the United Kingdom withdrawing from the European Union, which sets out where a run-off regime is in place, while this should not allow for new insurance contracts to be concluded, this is without prejudice to policyholder rights to exercise options or rights within an existing contract to realise pension benefits.
In light of the various factors that must be taken into consideration with this query, the Central Bank advises firms to seek legal advice on the requirements of the TRR.
The Central Bank will consider the addition of new members in the context of how the particular firm is meeting the TRR conditions in terms of run-off and contractual obligations to accept new members.
In light of the various factors that must be taken into consideration with this query, the Central Bank advises firms to seek legal advice on the requirements of the TRR.
Regulation 13(B)(3) of the European Union (Insurance and Reinsurance) Regulations 2015, as amended by the Insurance (Miscellaneous Provisions) Act 2022, provides that: “Where a person to whom Regulation 13A applies carries on reinsurance business in the State, these Regulations shall not apply in respect of that reinsurance business".
No. However, the Central Bank may withdraw the temporary authorisation or registration if, amongst other things:
- the insurer or insurance intermediary does not continue to satisfy the conditions for the TRR, or
- the Central Bank is not satisfied with the progress made by the relevant person towards terminating its business within the maximum of 15 years from 31 December 2020.
The existing supervisory approach will continue to apply, pursuant to Solvency II or the Insurance Distribution Directive, except as modified by the TRR as the case may be, and will include adherence to the general good requirements.