Edition Highlights:

  • The Association of British Insurers (ABI) has published the Key note speech by James Dalton, ABI’s Director of General Insurance Policy, on cyber risk: How insurance can help businesses prepare for and manage cyber risk.
  • The Monetary Authority of Singapore (MAS) has published the Key note speech by David Hardoon, Chief Data Officer of MAS, on the topic of Data Science and Machine Learning.
  • The International Accounting Standards Board has finalized the overhaul of insurance accounting as it will help investors and other stakeholders better understand insurers’ risk exposure, profitability and financial position.

 

Current coverage period: Through May 31, 2017

Note: Anticipated business impact for covered regulations is shown using the following rating legend:       (*Low) (** Medium) (*** High)

 

CURRENT REGULATIONS:

International Financial Reporting Standards (IFRS) (**):
IASB finalises fundamental overhaul of insurance accounting
Publication Date: May 18th 2017

Regulation Type: Final Rule

Category: Accounting

The IASB has finalized the fundamental overhaul of insurance accounting via issuance of IFRS 17 Insurance Contracts standard. IFRS 17, which goes into application in 2021, replaces IFRS 4, which was brought in in 2004. IFRS 17 solves the comparison problems created by IFRS 4 by requiring all insurance contracts to be accounted for in a consistent manner using current values – instead of historical cost.1

 

International Association of Insurance Supervisors (IAIS)(***):
Revised Insurance Core Principles 13 – Reinsurance and Other Forms of Risk Transfer
Publication Date: June 2nd 2017

Regulation Type: Consultation

Category: Compliance
The IAIS has issued a consultation on revisions to the current (2011) version of ICP 13: Reinsurance and Other Forms of Risk Transfer. The review of ICP 13 follows a Peer Review Assessment of the Principle which was undertaken in 2016.2

 

Financial Stability Board (FSB)(*):
FSB sets out next steps on work to strengthen governance frameworks to mitigate misconduct risks
Publication Date: May 23th 2017

Regulation Type: News

Category: Compliance
The agency has published a Stocktake of efforts to strengthen the governance frameworks to mitigate misconduct risks. The report describes the findings of a stocktake of efforts underway by international bodies, national authorities, industry associations and firms on the use of governance frameworks to address misconduct risk, and includes a literature review on the root causes of misconduct.3

 

Insurance Europe (IE) (***):
IASB releases a new global basis for insurance contracts accounting
Publication Date: May 18th 2017

Regulation Type: News

Category: Accounting
Olav Jones, deputy director general of Insurance Europe, has expressed concern that despite high implementation costs, little testing has taken place to confirm whether IFRS 17 is suitable for European insurers. This is in response to the International Accounting Standards Board’s publication of the International Financial Reporting Standard for insurance contracts (IFRS 17).4

 

European Insurance and Occupational Pensions Authority (EIOPA) (*):
EIOPA launches its second EU-wide Occupational Pensions Stress Test
Publication Date: May 18th 2017
Regulation Type: Report

Category: Accounting
The regulator has launched an EU-wide stress test for the Institutions for Occupational Retirement Provision (IORPs). EIOPA’s stress test provides insight into the risks and vulnerabilities of the European occupational pensions sector. This is the second exercise conducted by EIOPA in this sector.5

 

Prudential Regulation Authority (PRA) (**):
Solvency II: Supervisory disclosures, the PRA’s supervisory approach and insurance regulations applicable in the United Kingdom
Publication Date: May 1st 2017

Regulation Type: Report

Category: Prudential
The PRA has announced the publication of supervisory disclosures in line with its obligations under Article 31(2) of the Solvency II Directive, including: aggregate statistical data on key aspects of the application of the prudential framework.6

 

Insurance Europe (IE) (***):

Comments on European Commission proposal for directive on harmonising of insolvency and enforcement laws
Publication Date: May 15th 2017
Regulation Type: Response To Consultation

Category: Compliance
Insurance Europe supports the European Commission’s proposal for a directive on harmonizing insolvency and enforcement laws. However, their position paper outlines a number of concerns regarding the definition of “early warning tools,” stay periods, hold-out investors, and voting to accept restructuring plans.7

 

Prudential Regulation Authority (PRA) (***):
Strengthening individual accountability in banking and insurance: Amendments and optimisations
Publication Date: May 12th 2017
Regulation Type: Final Rule

Category: Compliance
The just published policy statement also issues the final rules amending the Senior Managers and Certification Regime (SM&CR) and the Senior Insurance Managers Regime (SIMR), and updates the Supervisory Statement (SS) 28/15 “Strengthening individual accountability in banking,” SS35/15 “Strengthening individual accountability in insurance,” and the PRA Statement of Policy “Conditions, time limits and variations of approval.”8

 

Insurance Europe (IE) (**):
Comments on amendments to the Fourth Anti-Money Laundering (AML) Directive
Publication Date: May 23rd 2017
Regulation Type: Responses To Consultation

Category: Compliance
Insurance Europe has expressed its support of the “Action Plan to strengthen the fight against terrorist financing” as set out in the European Commission’s proposed amendments to the Fourth Anti-Money Laundering Directive. However, it is concerned about the creation of automated and centralized mechanisms at the national level, the requirement to contact customers to review any information related to beneficial owners, and the definition of life insurance.9

 

European Insurance and Occupational Pensions Authority (EIOPA)(**):

Interview with Gabriel Bernardino, Chairman of the European Insurance and Occupational Pensions Authority conducted by Adam Cadle, Insurance Asset Management Europe and published on 30 May 2017
Publication Date: May 30th 2017
Regulation Type: Speeches
Category: Compliance
The regulator has published an interview with Gabriel Bernardino, Chairman of EIOPA. Mr. Bernardino explained that the transitional measures, which form an integral part of Solvency II, are intended to facilitate the entry into the new regime by giving insurance companies the time needed to adapt to the new solvency requirements. He also outlined the benefits of a macro-prudential framework for the European Insurance sector and the potential impacts of Brexit on the insurance industry.10

 

Financial Conduct Authority (FCA) (**):
Disclosure rules following application of PRIIPs Regulation
Publication Date: May 2nd 2017
Regulation Type: Final Rule

Category: Compliance
The agency has issued a policy statement setting out how its disclosure requirements will change to reflect the application of the Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation. This paper will be relevant to most firms that provide, advise on, or sell investments or investment services to the UK retail market as these firms will need to comply with the regulation and any revised disclosure rules in the FCA Handbook of January 1, 2018.11

 

Insurance Europe (IE) (**):
EU insurance rules must be digital-friendly to reflect consumers’ needs
Publication Date: June 1st 2017
Regulation Type: News

Category: Others
European Insurance and Reinsurance Federation’s president Sergio Balbinot, delivered a speech at Insurance Europe’s 9th International Conference. He commented that rules for insurers should allow them to provide innovative products that meet the ever-changing demands of consumers.12

 

European Commission (EC) (**):
Questions and Answers – Data protection reform package
Publication Date: May 24th 2017
Regulation Type: News

Category: Others
The agency has announced that the data protection reform package that came into force in May 2016 and will be applicable as of May 2018, and includes the General Data Protection Regulation (GDPR) and the Data Protection Directive for the police and criminal justice sector. This release sets out some questions and answers regarding the reforms.13

 

European Commission (EC) (***):
Statement by Vice-President Andrus Ansip and Commissioner Vera Jourova one year ahead of the entry into application of the General Data Protection Regulation
Publication Date: May 24th 2017
Regulation Type: Speeches

Category: Others
European Commission Vice-President Andrus Ansip and Commissioner Vera Jourova have stated that the new rules will protect European Union (EU) citizens’ fundamental right to personal data protection. Citizens will have the right to know as soon as possible if their data has been hacked or disclosed, and it will be easier to complain and obtain compensation if they believe their rights have not been respected.14

 

Association of British Insurers (ABI) (**):
‘WannaCry’ highlights urgent need for cyber risk data
Publication Date: May 18th 2017
Regulation Type: News

Category: Others
The ABI has announced that its Director of General Insurance Policy, James Dalton, will discuss the need for a national anonymized database detailing cyber incidents. This would help the UK become a world leader in cyber insurance. Mr Dalton also outlined how the insurance sector is stepping up to help businesses prepare for, and respond to cyber threats in the aftermath of the “WannaCry” cyber-attack that hit over 300,000 computer systems across 150 countries.15

 

Association of British Insurers (ABI) ():
Address by James Dalton to the Westminster eForum Keynote Seminar: Cyber security in the UK: policy and technology priorities
Publication Date: May 18th 2017
Regulation Type: Speeches

Category: Others
James Dalton, Director of General Insurance Policy at the ABI, delivered a speech at the Westminster eForum. Mr Dalton’s speech touched on the importance of cyber insurance and provided an overview of how insurers are responding to one of the key threats associated with increased digitalization in terms of the development and roll out of cyber insurance products.16

 

Australian Prudential Regulation Authority (APRA) (*):
Aggregate Risk Exposures
Publication Date: May 10th 2017
Regulation Type: Guidance

Category: Prudential
The APRA has published Prudential Standard 3PS 221 (Aggregate Risk Exposures – 3PS 221), which sets out APRA’s requirements in relation to the aggregation of risks across a Level 3 group. This Guide was created to assist Level 3 Heads comply with those requirements and to outline prudent practices in relation to certain aggregation matters.17

 

Monetary Authority of Singapore (MAS) (**):
IFC and Monetary Authority of Singapore Collaborate to Advance FinTech Innovation in Asia
Publication Date: May 23th 2017
Regulation Type: News

Category: Others
The MAS signed a memorandum of cooperation with the International Finance Corporation (IFC) to establish and develop the ASEAN Financial Innovation Network (AFIN). The network aims to facilitate broader adoption of financial technology (FinTech) innovation and development, as well as enhancing economic integration within the ASEAN region.18

 

Monetary Authority of Singapore (MAS) (***):
Data Science and Machine Learning in Practice
Publication Date: May 26th 2017
Regulation Type: Speeches

Category: Others
Dr David Hardoon, Chief Data Officer of the MAS delivered a speech on Advances in Data Science and their implications for business. In his comments, he pointed out that there are four vital components to “data science,” including data, tools, infrastructure and skillsets. Among implementation methods, he identified establishing hub-and-spoke partnership and supervisory technology, facilitating data flows, sharpening MAS’ in-house capabilities, as well as enhancing the role of people.19

Visit www.accenture.com/RegulatoryCompliance for latest insights on regulatory remediation and compliance transformation.

References:

1.  “IASB finalises fundamental overhaul of insurance accounting,” International Financial Reporting Standards, May 18, 2017. Access at: IASB finalises fundamental overhaul of insurance accounting

2.  “Revised Insurance Core Principles 13 Reinsurance and Other Forms of Risk Transfer,” International Association of Insurance Supervisors, June 2, 2017. Access at: Revised Insurance Core Principles 13 – Reinsurance and Other Forms of Risk Transfer

3.  “FSB sets out next steps on work to strengthen governance frameworks to mitigate misconduct risks,” Financial Stability Board, May 23, 2017. Access at: FSB sets out next steps on work to strengthen governance frameworks to mitigate misconduct risks

4.  “IASB releases a new global basis for insurance contracts accounting,” Insurance Europe, May 18, 2017. Access at: IASB releases a new global basis for insurance contracts accounting

5.  “EIOPA launches its Second EU-wide Occupational Pensions Stress Test, European Insurance and Occupational Pensions Authority, May 18, 2017. Access at: EIOPA launches its second EU-wide Occupational Pensions Stress Test

6.  “Solvency II: Supervisory disclosures, the PRA’s supervisory approach and insurance regulations applicable in the United Kingdom,” Prudential Regulation Authority, May 1, 2017. Access at: Solvency II: Supervisory disclosures, the PRA’s supervisory approach and insurance regulations applicable in the United Kingdom

7.  “Comments on European Commission proposal for directive on harmonising of insolvency and enforcement laws,” Insurance Europe, May 15, 2017. Access at: Comments on European Commission proposal for directive on harmonising of insolvency and enforcement laws

8.  “Strengthening individual accountability in banking and insurance: amendments and optimisations – PS12/17,” Prudential Regulation Authority, May 12, 2017. Access at: Strengthening individual accountability in banking and insurance: Amendments and optimisations

9.  “Comments on amendments to the Fourth Anti-Money Laundering (AML) Directive,” Insurance Europe, May 23, 2017. Access at: Comments on amendments to the Fourth Anti-Money Laundering (AML) Directive

10. “Interview with Gabriel Bernardino, Chairman of the European Insurance and Occupational Pensions Authority conducted by Adam Cadle, Insurance Asset Management Europe and published on 30 May 2017,” European Insurance and Occupational Pensions Authority, May 30, 2017. Access at:Interview with Gabriel Bernardino, Chairman of the European Insurance and Occupational Pensions Authority conducted by Adam Cadle, Insurance Asset Management Europe and published on 30 May 2017

11. “PS17/6: Disclosure rules following application of PRIIPs Regulation,” Financial Conduct Authority, May 2, 2017. Access at: Disclosure rules following application of PRIIPs Regulation

12. “EU insurance rules must be digital-friendly to reflect consumers’ needs,” Speech by Sergio Balbinot, European Insurance and Reinsurance Federation president,” Insurance Europe, June 1, 2017. Access at: EU insurance rules must be digital-friendly to reflect consumers’ needs

13. “Questions and Answers – Data protection reform package,” Fact Sheet, European Commission, May 24, 2017. Access at: Questions and Answers – Data protection reform package

14. “Statement by Vice-President Andrus Ansip and Commissioner Věra Jourová one year ahead of the entry into application of the General Data Protection Regulation,” European Commission, May 24, 2017. Access at: Statement by Vice-President Andrus Ansip and Commissioner Vera Jourova one year ahead of the entry into application of the General Data Protection Regulation

15. “‘WannaCry’ highlights urgent need for cyber risk data,” Association of British Insurers, May 18, 2017. Access at: ‘WannaCry’ highlights urgent need for cyber risk data

16. “Address by James Dalton to the Westminster eForum Keynote Seminar: Cyber security in the UK: policy and technology priorities,” Association of British Insurers, May 18, 2017. Access at: Address by James Dalton to the Westminster eForum Keynote Seminar: Cyber security in the UK: policy and technology priorities

17. “Prudential Standard 3PS 221 – Aggregate Risk Exposures,” Australian Prudential Regulation Authority, May 10, 2017. Access at: Aggregate Risk Exposures

18. “IFC and Monetary Authority of Singapore Collaborate to Advance FinTech Innovation in Asia,” Monetary Authority of Singapore, May 23, 2017. Access at: IFC and Monetary Authority of Singapore Collaborate to Advance FinTech Innovation in Asia

19. “Data Science and Machine Learning in Practice” – Keynote Speech by Dr David Hardoon, Chief Data Officer, Monetary Authority of Singapore, at the 7th Annual Sim Kee Boon Institute Conference on Advances in Data Science and Implications for Business on 26 May 2017,” Monetary Authority of Singapore, May 26, 2017. Access at: Data Science and Machine Learning in Practice

 

About the Insurance Monthly Regulatory Tracker

The “Insurance Regulatory Insights” newsletter is the monthly initiative aimed at updating the Finance and Risk community with the most recent regulatory changes impacting insurance firms. We update our comprehensive regulatory database every month by tracking more than 40 regulatory and industry bodies covering North America, Europe and Asia Pacific. Every month, we will highlight approximately 10 regulations shortlisted on the basis of geography of coverage and anticipated business impacts. Our summaries highlight the Regulation Type and business processes affected by the regulatory reforms. This newsletter is planned to supplement the existing newsletter “Regulatory Insights” which provides a deeper analysis of business implications and Accenture’s point of view on a single or much smaller set of regulatory changes.

Disclaimer

This blog is intended for general informational purposes only, does not take into account the reader’s specific circumstances, may not reflect the most current developments, and is not intended to provide advice on specific circumstances. Accenture disclaims, to the fullest extent permitted by applicable law, all liability for the accuracy and completeness of the information in this blog and for any acts or omissions made based on such information. Accenture does not provide legal, regulatory, audit or tax advice. Readers are responsible for obtaining such advice from their own legal counsel or other licensed professional.

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