Innovation and insurance in Ireland: A supervisory perspective – Deputy Governor, Prudential Regulation, Ed Sibley

• Greater convergence of European supervision is essential to protect financial stability, policyholders and beneficiaries and to the long-term benefit of insurance firms operating in Ireland
• Insurance firms need to improve Brexit planning
• Innovation in the insurance industry provides many opportunities and risks; insurance firms need to invest in their existing IT infrastructure to meet the challenges of technology and business model changes

Full speech

At Insurance Ireland’s Annual President’s Conference today, Deputy Governor of Prudential Regulation, Ed Sibley gave his first speech focussed on the insurance industry. He spoke about the Central Bank’s role within the European Supervisory Framework, regulatory priorities for 2018 and innovation in the insurance industry.
On the Central Bank’s approach to regulation and supervision, Deputy Governor Sibley said: “As insurance is such an important activity, effective prudential and conduct regulation and supervision is of fundamental importance. Insurance policyholders need to understand the products they purchase and know that an insurance firm will provide cover throughout the term of the insurance contract and have the financial strength to pay valid claims in the future.”

Irish based Insurance firms play an important role in the European insurance sector and the Central Bank prioritises working with European stakeholders to ensure we understand, operate to and influence the development and evolution of the European insurance regulatory framework.

Mr Sibley highlighted the risks associated with the absence of a consistent European approach to resolving insurance firms, saying “An appropriate framework is necessary to ensure failure is managed in a manner that minimises the impacts on policyholders, beneficiaries and financial stability.”

Mr Sibley noted that innovation in the insurance industry should result in significant benefits to wider society. Innovations in motor insurance provide an ability to track driver behaviour, better price for risk and actively incentivise the reduction in risky behaviours – so delivering positive impacts for road safety. This may reduce the number and the severity of claims, which would be of obvious benefit to all, and ultimately should result in lower premiums. He did caution that insurance firms should ensure that the use of the associated data “needed to be in both the interests of the firm and its shareholders, and its customers.”