With the publication of the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Recovery Plan Requirements for Insurers) Regulations 2021 in 19 April 2021 requirements have been placed on (re)insurers in relation to recovery planning in order to ensure that if an insurance undertaking fails, it is in an orderly manner without significant financial stability impact or consumer protection detriment.
Since the publication the Central Bank has outlined its expectations for these recover plans noting that “the recovery plan should:
Each recovery plan will be different and will depend on the circumstances of the (re)insurer in question. The Central Bank expects the recovery options to be credible, that is realistic and considered; firms are expected to understand the potential impact of the recovery plan on own funds, liquidity and SCR across a range of adverse scenarios.
The recovery plan should not be prepared in a vacuum; for example, the outputs from the ORSA process should be considered as part of recovery planning and vice versa. This should be a strategic document, owned by the Board and embedded in the business; it should not be treated as a tick box exercise to appease the Central Bank.
While this is a tool for the undertaking to prepare for and mitigate risk, this must nevertheless be submitted to the Central Bank by High and Medium High Impact firms within 14 days of the Board’s approval, and no later than 31 March 2022. Medium Low and Low impact firms will be required to submit their plan to the Central Bank if requested to do so.
Receive the latest insights, news and more direct to your inbox.
