The Central Bank of Ireland (CBI) recently published its insurance newsletter for December 2024, setting out its supervisory priorities for the sector in 2025 and highlighting the revised outsourcing notification guidance for (re)insurers (amongst other items).

On the supervisory priorities for 2025, the CBI stated that, as part of the overall revisions to its supervisory framework, the (re)insurance sector will be supervised on an integrated basis from within a single insurance directorate from 2025. The aim is to ensure that firms will hear one consistent voice from the CBI, with coordinated messages and streamlined demands, in relation to all supervisory matters (i.e.  prudential, conduct or financial crime related). As part of these changes, Seána Cunningham has been appointed as the new Director of Insurance. Her previous role in the CBI was Director of Enforcement and Anti-Money Laundering.

The CBI also highlighted the following five main headings and issues for its 2025 supervisory priorities:

1. Financial Resilience: Firms can expect supervisory focus on core elements of pricing and underwriting discipline, reserving and capital adequacy. Capital adequacy considerations will focus on capital optimisation strategies, reasonableness of future management actions and group recovery options.
2. Culture, Governance and Risk Management: The CBI will assess firms’ adherence to the Individual Accountability Framework, particularly how key elements have been embedded into governance frameworks. Consumer protection considerations may include questions of how ‘value for money’ considerations are being measured and addressed, as well as disclosure of key information to consumers in this regard.
3. Growth and Complexity: The CBI states that it will pay close attention to aspects of business models that exhibit significant growth or complexity, such as speciality lines of business which depend heavily on specific underwriting expertise, which may be provided from group entities in other jurisdictions. The CBI will focus on business models that give rise to a higher risk that day to day control is taking place in another jurisdiction. The use of artificial intelligence in pricing and underwriting is another key focus.
4. Cyber and Operational Resilience: CBI supervision in 2025 will focus on how firms are safeguarding continuity of critical business services and effective implementation of DORA requirements.
5. Sustainability: Firms will be encouraged to build on their understanding of climate change risks and the implications for their long-term strategy and business model. Particular emphasis will be placed on how climate change risks are being integrated into governance and risk management frameworks in line with the CBI Guidance for (Re)Insurance Undertakings on Climate Change Risk.

The insurance newsletter also highlights the publication by the CBI in December 2024 of its revised outsourcing notification guidance for (re)insurers in relation to the outsourcing of critical or important functions, as well as related notification templates which accompany the guidance. The CBI points out that this sector-specific guidance should be followed by (re)insurers from now on, rather than the more general Cross-Industry Guidance on Outsourcing.