S.I. No. 485/2015 - European Union (Insurance and Reinsurance) Regulations 2015

CONTENTS

Part 1 PRELIMINARY

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

Part 2 AUTHORISATION

12.

13.

14.

15.

16.

17.

18.

19.

20.

21.

22.

23.

24.

25.

26.

Part 3 SUPERVISION

27.

28.

29.

30.

31.

32.

33.

34.

35.

36.

37.

38.

39.

40.

41.

42.

Part 4 CONDITIONS GOVERNING BUSINESS

Chapter 1 Responsibilities of board of directors

43.

Chapter 2 System of governance

44.

45.

46.

47.

48.

49.

50.

51.

Chapter 3 Public disclosure

52.

53.

54.

55.

56.

57.

58.

Chapter 4 Qualifying holdings

59.

60.

61.

62.

63.

64.

65.

66.

67.

68.

69.

70.

71.

72.

73.

74.

75.

Part 5 EXCHANGE OF INFORMATION AND PROMOTION OF SUPERVISORY CONVERGENCE

76.

77.

Part 6 DUTIES OF AUDITORS

78.

Part 7 PURSUIT OF LIFE AND NON-LIFE ACTIVITY

79.

80.

81.

Part 8 VALUATION OF ASSETS AND LIABILITIES, TECHNICAL PROVISIONS, OWN FUNDS, SOLVENCY CAPITAL REQUIREMENT, MINIMUM CAPITAL REQUIREMENT AND INVESTMENT RULES

Chapter 1 Valuation of assets and liabilities

82.

Chapter 2 Technical provisions

83.

84.

85.

86.

87.

88.

89.

90.

91.

92.

93.

94.

95.

96.

97.

98.

99.

100.

101.

Chapter 3 Own funds

Determination of own funds

102.

103.

104.

105.

106.

Classification of own funds

107.

108.

109.

110.

111.

Eligibility of own funds

112.

Chapter 4 Solvency Capital Requirement

General provisions

113.

114.

115.

Standard formula

116.

117.

118.

119.

120.

121.

122.

123.

124.

Internal model

125.

126.

127.

128.

129.

130.

131.

132.

133.

134.

135.

136.

137.

138.

Chapter 5 Minimum Capital Requirement

139.

140.

Part 9 INVESTMENTS

141.

142.

143.

Part 10 UNDERTAKINGS IN DIFFICULTY OR IN IRREGULAR SITUATION

144.

145.

146.

147.

148.

149.

150.

151.

152.

153.

Part 11 RIGHT OF ESTABLISHMENT AND FREEDOM TO PROVIDE SERVICES

Chapter 1 Establishment by insurance undertakings

154.

155.

156.

157.

158.

159.

Chapter 2 Freedom of insurance undertakings to provide services

General

160.

161.

162.

163.

Third party motor vehicle liability

164.

Chapter 3 Competencies of supervisory authorities of host Member State

Insurance

165.

166.

167.

168.

169.

170.

Reinsurance

171.

172.

Chapter 4 Statistical information

173.

Chapter 5 Winding-up proceedings

174.

175.

Part 12 BRANCHES OF UNDERTAKINGS ESTABLISHED OUTSIDE EUROPEAN UNION

Chapter 1 Taking up of business

176.

177.

178.

179.

180.

181.

182.

183.

184.

Chapter 2 Reinsurance

185.

186.

Chapter 3 Subsidiaries

187.

188.

Part 13 APPLICABLE LAW AND CONDITIONS OF DIRECT INSURANCE CONTRACTS

Chapter 1 Compulsory insurance

189.

Chapter 2 Conditions of insurance contracts and scales of premiums

190.

191.

Chapter 3 Information for policy holders

Non-life insurance

192.

193.

Life insurance

194.

Part 14 PROVISIONS SPECIFIC TO NON-LIFE INSURANCE

Chapter 1 General provision

195.

Chapter 2 Community co-insurance

196.

197.

198.

199.

200.

201.

202.

203.

Chapter 3 Legal expenses insurance

204.

205.

206.

207.

208.

209.

210.

Chapter 4 Health insurance

211.

Part 15 PROVISIONS SPECIFIC TO LIFE INSURANCE

212.

Part 16 PROVISIONS SPECIFIC TO REINSURANCE

213.

214.

Part 17 SUPERVISION OF INSURANCE AND REINSURANCE UNDERTAKINGS IN A GROUP

Chapter 1 Definitions and scope

215.

216.

217.

218.

219.

220.

Chapter 2 Financial position

Group solvency

221.

222.

223.

224.

225.

226.

227.

228.

229.

230.

231.

232.

233.

234.

235.

236.

237.

238.

239.

240.

241.

242.

243.

244.

Risk concentration and intra-group transactions

245.

246.

Risk management and internal control

247.

Chapter 3 Measures to facilitate group supervision

248.

249.

250.

251.

252.

253.

254.

255.

256.

257.

258.

259.

260.

261.

262.

263.

Chapter 4 Third countries

264.

265.

266.

267.

Chapter 5 Mixed-activity insurance holding companies

268.

Part 18 REORGANISATION AND WINDING-UP OF INSURANCE UNDERTAKINGS

Chapter 1 Scope and definitions

269.

270.

Chapter 2 Reorganisation measures

271.

272.

273.

274.

Chapter 3 Winding-up proceedings

275.

276.

277.

278.

279.

280.

281.

282.

283.

284.

Chapter 4 Common provisions

285.

286.

287.

288.

289.

290.

291.

292.

293.

294.

295.

296.

297.

298.

299.

Part 19 OTHER PROVISIONS

Chapter 1 Offences

300.

301.

302.

303.

304.

305.

306.

Chapter 2 Co-operation, fees and notices

307.

308.

309.

Chapter 3 Amendments

310.

311.

312.

313.

314.

315.

316.

317.

318.

SCHEDULE 1 Classes of non-life insurance

Part 1 Classes

Part 2 Authorisations for more than one class of insurance

SCHEDULE 2 Classes of non-life insurance

SCHEDULE 3 Solvency Capital Requirement (SCR) Standard Formula

Part 1 Calculation of Basic Solvency Capital Requirement

Part 2 Calculation of non-life underwriting risk module

Part 3 Calculation of life underwriting risk module

Part 4 Calculation of market risk module

S.I. No. 485 of 2015

EUROPEAN UNION (INSURANCE AND REINSURANCE) REGULATIONS 2015

Notice of the making of this Statutory Instrument was published in

“Iris Oifigiúil” of 10th November, 2015.

I, MICHAEL NOONAN, Minister for Finance, in exercise of the powers conferred on me by section 3 of the European Communities Act 1972 (No. 27 of 1972) and for the purpose of giving effect to Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009¹ as amended by Directive 2011/89/EU of the European Parliament and of the Council of 16 November 2011² , Directive 2012/23/EU of the European Parliament and of the Council of 12 September 2012³ , Council Directive 2013/23/EU of 13 May 2013⁴ , Directive 2013/58/EU of the European Parliament and of the Council of 11 December 2013⁵ and Directive 2014/51/EU of the European Parliament and of the Council of 16 April 2014⁶ , hereby make the following Regulations:

Part 1 PRELIMINARY

Citation and commencement

• (2) Subject to paragraph (3), these Regulations come into operation on 1 January 2016.

• (3) So far as is necessary to secure compliance by the State with the obligations imposed by Article 308a of the Directive, and for the purposes of Regulation 4(7), these Regulations come into operation on the day after they are made.

Object of Regulations

Interpretation

“Act of 1942” means the Central Bank Act 1942 (No. 22 of 1942);

“Act of 2010” means the Central Bank Reform Act 2010 (No. 23 of 2010);

“Act of 2013” means the Central Bank (Supervision and Enforcement) Act 2013 (No. 26 of 2013);

“Act of 2014” means the Companies Act 2014 (No. 38 of 2014);

“annual quantitative templates” mean the annual templates referred to in Article 304(1)(d) of Commission Delegated Regulation (EU) 2015/35;

“annual summary of the regular supervisory report” means the summary report referred to in Article 312(3) of Commission Delegated Regulation (EU) 2015/35;

“authorisation” means an authorisation granted (or deemed to be granted) by the Bank under these Regulations or (but only where the context requires) an authorisation granted (or deemed to be granted) by a supervisory authority of a Member State other than the State in accordance with Article 14 of the Directive, and “authorised” shall be construed accordingly;

“Bank” means Central Bank of Ireland;

“board of directors” includes a committee of management or other directing body of a society registered under the Industrial and Provident Societies Acts 1893 to 2014 or the Friendly Societies Acts 1896 to 2014;

“branch” means an agency or a branch of an insurance undertaking or reinsurance undertaking which is located in the territory of a Member State other than its home Member State, and any permanent presence of an undertaking in a Member State other than its home Member State shall be treated in the same way as a branch, even where that presence does not take the form of a branch but consists merely of an office managed by the staff of the undertaking or by a person who is independent but has permanent authority to act for the undertaking as an agency would;

“captive insurance undertaking” means an insurance undertaking owned either by—

• (a) a financial undertaking other than an insurance undertaking or reinsurance undertaking or a group of insurance undertakings or reinsurance undertakings, or

• (b) an undertaking which is not a financial undertaking,

the purpose of which is to provide insurance cover exclusively for the risks of the undertaking or undertakings to which it belongs or of an undertaking or undertakings of the group of which it is a member;

“captive reinsurance undertaking” means a reinsurance undertaking owned either by—

• (a) a financial undertaking other than an insurance undertaking or reinsurance undertaking or a group of insurance undertakings or reinsurance undertakings, or

• (b) an undertaking which is not a financial undertaking,

the purpose of which is to provide reinsurance cover exclusively for the risks of the undertaking or undertakings to which it belongs or of an undertaking or undertakings of the group of which it is a member;

“close links” means a situation in which 2 or more natural or legal persons are linked by control or participation, or a situation in which 2 or more natural or legal persons are permanently linked to one and the same person by a control relationship;

“Commission” means European Commission;

“Commission Delegated Regulation (EU) 2015/35” means Commission Delegated Regulation (EU) 2015/35 of 10 October 2014 supplementing Directive 2009/138/EC of the European Parliament and of the Council on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II)⁷ ;

“concentration risk” means all risk exposures with a loss potential which is large enough to threaten the solvency or the financial position of insurance undertakings and reinsurance undertakings;

“control” means the relationship between a parent undertaking and a subsidiary undertaking, as set out in Article 1 of Directive 83/349/EEC, or a similar relationship between any natural or legal person and an undertaking;

“Court” means High Court;

“credit institution” has the meaning given by Article 4(1) of Directive 2006/48/EC;

“credit risk” means the risk of loss or of adverse change in the financial situation, resulting from fluctuations in the credit standing of issuers of securities, counterparties and any debtors to which insurance undertakings or reinsurance undertakings are exposed, in the form of counterparty default risk, or spread risk, or market risk concentrations;

“the Directive” means Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking up and pursuit of the business of Insurance and Reinsurance (Solvency II) as amended by Directive 2011/89/EU of the European Parliament and of the Council of 16 November 20111, Directive 2012/23/EU of the European Parliament and of the Council of 12 September 20122, Council Directive 2013/23/EU of 13 May 20133, Directive 2013/58/EU of the European Parliament and of the Council of 11 December 20134 and Directive 2014/51/EU of the European Parliament and of the Council of 16 April 20145;

“Directive 73/239/EEC” means the First Council Directive 73/239/EEC of 24 July 1973 on the coordination of laws, regulations and administrative provisions relating to the taking-up and pursuit of the business of direct insurance other than life assurance⁸ ;

“Directive 78/660/EEC” means the Fourth Council Directive of 25 July 1978 based on Article 54(3)(g) of the Treaty on the annual accounts of certain types of companies⁹ ;

“Directive 83/349/EEC” means the Seventh Council Directive 83/349/EEC of 13 June 1983 based on Article 54(3)(g) of the Treaty on consolidated accounts¹⁰ ;

“Directive 84/5/EEC” means the Second Council Directive 84/5/EEC of 30 December 1983 on the approximation of the laws of the Member States relating to insurance against civil liability in respect of the use of motor vehicles¹¹ ;

“Directive 85/611/EEC” means Council Directive 85/611/EEC of 20 December 1985 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS)¹² ;

“Directive 98/78/EC” means Directive 98/78/EC of the European Parliament and of the Council of 27 October 1998 on the supplementary supervision of insurance undertakings in an insurance group¹³ ;

“Directive 2000/26/EC” means Directive 2000/26/EC of the European Parliament and of the Council of 16 May 2000 on the approximation of the laws of the Member States relating to insurance against civil liability in respect of the use of motor vehicles and amending Council Directives 73/239/EEC and 88/357/EEC (Fourth motor insurance Directive)¹⁴ ;

“Directive 2002/13/EC” means Directive 2002/13/EC of the European Parliament and of the Council of 5 March 2002 amending Council Directive 73/239/EEC as regards the solvency margin requirements for non-life insurance undertakings¹⁵ ;

“Directive 2002/83/EC” means Directive 2002/83/EC of the European Parliament and of the Council of 5 November 2002 concerning life assurance¹⁶ ;

“Directive 2002/87/EC” means Directive 2002/87/EC of the European Parliament and of the Council of 16 December 2002 on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate and amending Council Directives 73/239/EEC, 79/267/EEC, 92/49/EEC, 92/96/EEC, 93/6/EEC and 93/22/EEC, and Directives 98/78/EC and 2000/12/EC of the European Parliament and of the Council¹⁷ ;

“Directive 2004/39/EC” means Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments, amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC¹⁸ ;

“Directive 2004/109/EC” means Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC¹⁹ ;

“Directive 2005/68/EC” means Directive 2005/68/EC of the European Parliament and of the Council of 16 November 2005 on reinsurance and amending Council Directives 73/239/EEC, 92/49/EEC as well as Directives 98/78/EC and 2002/83/EC²⁰ ;

“Directive 2006/48/EC” means Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking-up and pursuit of the business of credit institutions²¹ ;

“diversification effects” means the reduction in the risk exposure of insurance undertakings and reinsurance undertakings and groups related to the diversification of their business, resulting from the fact that the adverse outcome from one risk can be off-set by a more favourable outcome from another risk, where those risks are not fully correlated;

“EBA” means the European Supervisory Authority (European Banking Authority) established by Regulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Banking Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/78/EC²² ;

“EIOPA” means the European Supervisory Authority (European Insurance and Occupational Pensions Authority) established by Regulation (EU) No 1094/2010;

“ESRB” means the European Systemic Risk Board established by Regulation (EU) No 1092/2010 of the European Parliament and of the Council of 24 November 2010 on European Union macro-prudential oversight of the financial system and establishing a European Systemic Risk Board²³ ;

“establishment”, in relation to an insurance undertaking or a reinsurance undertaking, means its head office or any of its branches;

“external credit assessment institution” means a credit rating agency that is registered or certified in accordance with Regulation (EC) No 1060/2009 of the European Parliament and of the Council or a central bank issuing credit ratings which are exempt from that Regulation²⁴ ;

“financial services legislation” has the meaning assigned to it by section 3(1) of the Act of 2013;

“financial undertaking” means any of the following entities:

• (a) a credit institution, or a financial institution or an ancillary services undertaking within the meaning of Article 4(5) and (21) of Directive 2006/48/EC respectively;

• (b) an insurance undertaking or a reinsurance undertaking, or an insurance holding company within the meaning of Regulation 215(1);

• (c) an investment firm;

• (d) a mixed financial holding company within the meaning of Article 2(15) of Directive 2002/87/EC;

“financial year”, in relation to an undertaking, means the period in respect of which the accounts of the undertaking are made up, whether the period is a year or not;

“function”, within a system of governance, means an internal capacity to undertake practical tasks and includes the risk management function, the compliance function, the internal audit function and the actuarial function;

“group” has the meaning given by Regulation 215(1);

“home Member State” means—

• (a) for non-life insurance, the Member State in which the head office of the insurance undertaking covering the risk is situated;

• (b) for life insurance, the Member State in which the head office of the insurance undertaking covering the commitment is situated;

• (c) for reinsurance, the Member State in which the head office of the reinsurance undertaking is situated;

“host Member State” means the Member State, other than the home Member State, in which an insurance undertaking or reinsurance undertaking has a branch or provides services; and for this purpose, in relation to life and non-life insurance, the Member State in which an insurance undertaking “provides services” means, respectively, the Member State of the commitment or the Member State in which the risk is situated, where that commitment or risk is covered by the insurance undertaking, or a branch, situated in another Member State;

“industrial assurance business” has the meaning assigned to it by section 3 of the Insurance Act 1936 (No. 45 of 1936);

“the Insurance Acts” means the Insurance Acts 1909 to 2009, regulations made under those Acts and regulations relating to insurance made under the European Communities Act 1972 (No. 27 of 1972);

“insurance undertaking” means a person who has received authorisation to carry on non-life insurance or life insurance and references to “non-life insurance undertaking” and “life insurance undertaking” shall be construed accordingly;

“intra-group transaction” means any transaction by which an insurance undertaking or reinsurance undertaking relies either directly or indirectly on other undertakings within the same group or on any natural or legal person linked to the undertakings within that group by close links, for the fulfilment of an obligation, whether or not contractual, and whether or not for payment;

“investment firm” has the meaning given by Article 4(1)(1) of Directive 2004/39/EC;

“large risks” means—

• (a) risks classified under classes 4, 5, 6, 7, 11 and 12 in Part 1 of Schedule 1;

• (b) risks classified under classes 14 and 15 in Part 1 of Schedule 1, where the policy holder is engaged professionally in an industrial or commercial activity or in one of the liberal professions, and the risks relate to such activity;

• (c) risks classified under classes 3, 8, 9, 10, 13 and 16 in Part 1 of Schedule 1 and risks insured for professional associations, joint ventures or temporary groupings in so far as the policy holder exceeds the limits of at least 2 of the following criteria:

• (i) a balance-sheet total of €6.2 million in assets;

• (ii) a net turnover, within the meaning of Fourth Council Directive 78/660/EEC of 25 July 1978 based on Article 54(3)(g) of the Treaty on the annual accounts of certain types of companies²⁵ , of €12.8 million;

• (iii) an average number of 250 employees during the financial year;

and if the policy holder belongs to a group of undertakings for which consolidated accounts within the meaning of Directive 83/349/EEC are drawn up, the criteria set out in paragraph (c) shall be applied on the basis of the consolidated accounts;

“legal expenses insurance undertaking” shall be construed in accordance with Regulation 204;

“life insurance” means activities of the classes in Schedule 2;

“liquidity risk” means the risk that an insurance undertaking or reinsurance undertaking is unable to realise investments and other assets in order to settle its financial obligations when they fall due;

“market risk” means the risk of loss or of adverse change in the financial situation, resulting, directly or indirectly, from fluctuations in the level and in the volatility of market prices of assets, liabilities and financial instruments;

“Member State” means a Member State of the European Union and, where relevant, includes a contracting party to the Agreement on the European Economic Area signed at Oporto on 2 May 1992 (as adjusted by the Protocol signed at Brussels on 17 March 1993), as amended;

“Member State in which the risk is situated” means any of the following:

• (a) the Member State in which the property is situated, where the insurance relates either to buildings or to buildings and their contents, in so far as the contents are covered by the same insurance policy;

• (b) the Member State of registration, where the insurance relates to vehicles of any type;

• (c) the Member State where the policy holder took out the policy in the case of policies of a duration of 4 months or less covering travel or holiday risks, whatever the class concerned;

• (d) in all cases not explicitly covered by paragraph (a), (b) or (c), the Member State in which either of the following is situated:

• (i) the habitual residence of the policy holder;

• (ii) if the policy holder is a legal person, that policy holder’s establishment to which the contract relates;

“Member State of the commitment” means the Member State in which either of the following is situated:

• (a) the habitual residence of the policy holder;

• (b) if the policy holder is a legal person, that policy holder’s establishment, to which the contract relates;

“Minister” means Minister for Finance;

“national bureau” means a national insurers’ bureau as defined in Article 1(3) of Council Directive 72/166/EEC of 24 April 1972 on the approximation of the laws of Member States relating to insurance against civil liability in respect of the use of motor vehicles, and to the enforcement of the obligation to insure against such liability²⁶ ;

“national guarantee fund” means the body referred to in Article 1(4) of Second Council Directive 84/5/EEC of 30 December 1983 on the approximation of the laws of the Member States relating to insurance against civil liability in respect of the use of motor vehicles²⁷ ;

“non-life insurance” means activities of the classes in Part 1 of Schedule 1;

“operational risk” means the risk of loss arising from inadequate or failed internal processes, or from personnel and systems, or from external events;

“outsourcing” means an arrangement of any form between an insurance undertaking or reinsurance undertaking and a service provider, whether a supervised entity or not, by which that service provider performs a process, a service or an activity, whether directly or by sub outsourcing, which would otherwise be performed by the insurance undertaking or reinsurance undertaking itself;

“own risk and solvency assessment report” means the report submitted in accordance with Regulation 47(9);

“parent undertaking” means a parent undertaking within the meaning of Article 1 of Directive 83/349/EEC;

“participation”, in relation to an undertaking, means the ownership, direct or by way of control, of 20% or more of the voting rights or capital of the undertaking;

“probability distribution forecast” means a mathematical function that assigns to an exhaustive set of mutually exclusive future events a probability of realisation;

“qualifying holding”, in relation to an undertaking, means a direct or indirect holding in the undertaking which represents 10% or more of the capital or of the voting rights or which makes it possible to exercise a significant influence over the management of the undertaking;

“quarterly quantitative templates” mean the quarterly templates referred to in Article 304(1)(d) of Commission Delegated Regulation (EU) 2015/35;

“regular supervisory report” means the report referred to in Article 304(1)(b) of Commission Delegated Regulation (EU) 2015/35;

“regulated market” means either of the following:

• (a) in the case of a market situated in a Member State, a regulated market /as defined in Article 4(1)(14) of Directive 2004/39/EC; or

• (b) in the case of a market situated in a third country, a financial market which fulfils the following conditions:

• (i) it is recognised by the home Member State of the insurance undertaking and meets requirements comparable to those under Directive 2004/39/EC;

• (ii) the financial instruments dealt in on that market are of a quality comparable to that of the instruments dealt in on the regulated market or markets of the home Member State;

“Regulation (EC) No 593/2008” means Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I)²⁸ ;

“Regulation (EU) No 1094/2010” means Regulation (EU) No 1094/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/79/EC²⁹ ;

“reinsurance” means—

• (a) the activity consisting in accepting risks ceded by an insurance undertaking or third-country insurance undertaking, or by another reinsurance undertaking or third-country reinsurance undertaking, or

• (b) in the case of the association of underwriters known as Lloyd’s, the activity consisting in accepting risks, ceded by any member of Lloyd’s, by an insurance undertaking or reinsurance undertaking other than the association of underwriters known as Lloyd’s;

“reinsurance undertaking” means a person who has received authorisation to carry on reinsurance only;

“risk measure” means a mathematical function which assigns a monetary amount to a given probability distribution forecast and increases monotonically with the level of risk exposure underlying that probability distribution forecast;

“risk-mitigation techniques” means all techniques which enable insurance undertakings and reinsurance undertakings to transfer part or all of their risks to another party;

“special purpose vehicle” means any undertaking, whether incorporated or not, other than an existing insurance undertaking or reinsurance undertaking, which assumes risks from insurance undertakings or reinsurance undertakings and which fully funds its exposure to such risks through the proceeds of a debt issuance or any other financing mechanism where the repayment rights of the providers of such debt or financing mechanism are subordinated to the reinsurance obligations of such an undertaking;

“subsidiary undertaking” means any subsidiary undertaking within the meaning of Article 1 of Directive 83/349/EEC, including subsidiaries of such an undertaking;

“supervisory authority” means a national authority empowered by law to supervise insurance undertakings or reinsurance undertakings;

“supervisory review process” shall be construed in accordance with Regulation 38(7);

“third country” means a country that is not a Member State;

“third-country insurance undertaking” means an undertaking which has its head office in a third country but would require authorisation as an insurance undertaking in accordance with Article 14 of the Directive if it had its head office in a Member State;

“third-country reinsurance undertaking” means an undertaking which has its head office in a third country but would require authorisation as a reinsurance undertaking in accordance with Article 14 of the Directive if it had its head office in a Member State;

“underwriting risk” means the risk of loss or of adverse change in the value of insurance liabilities, due to inadequate pricing and provisioning assumptions.

Exclusion of small undertakings

• (a) the annual gross written premium income of the undertaking does not exceed €5 million;

• (b) the total of the undertaking’s technical provisions, gross of the amounts recoverable from reinsurance contracts and special purpose vehicles, as referred to in Regulation 83 does not exceed €25 million;

• (c) where the undertaking belongs to a group, the total of the technical provisions of the group, gross of the amounts recoverable from reinsurance contracts and special purpose vehicles, does not exceed €25 million;

• (d) the business of the undertaking does not include insurance or reinsurance activities covering liability, credit and suretyship insurance risks, other than any that constitute ancillary risks within the meaning of Regulation 16;

• (e) the business of the undertaking does not include reinsurance operations exceeding €0.5 million of its gross written premium income or €2.5 million of its technical provisions gross of the amounts recoverable from reinsurance contracts and special purpose vehicles, or more than 10% of its gross written premium income or more than 10% of its technical provisions gross of the amounts recoverable from reinsurance contracts and special purpose vehicles.

• (2) In the case of an undertaking to which, by virtue of paragraph (1), these Regulations do not apply—

• (a) if any of the amounts set out in paragraph (1) is exceeded for 3 consecutive years these Regulations apply to the undertaking from the beginning of the next year, and

• (b) if the condition set out in paragraph (1)(d) ceases to be met and for as long as it is not met, these Regulations apply.

• (3) By way of derogation from paragraph (1), these Regulations apply to an undertaking seeking authorisation to pursue insurance or reinsurance activities in respect of which the annual gross written premium income or technical provisions gross of the amounts recoverable from reinsurance contracts and special purpose vehicles are expected to exceed the amounts in paragraph (1) within the next 5 years.

• (4) These Regulations cease to apply to an undertaking if the Bank verifies that—

• (a) the conditions set out in paragraph (1) have been met for the previous 3 consecutive years, and

• (b) those conditions are expected to be met for the next 5 years.

• (5) Paragraph (1) does not apply to an undertaking which conducts business outside the State through a branch or pursuant to the freedom to provide services under Regulations 154 to 163.

• (6) Paragraphs (1) to (5) do not prevent any undertaking from applying for authorisation or continuing to be authorised under these Regulations.

• (7) The Bank may require an undertaking which expects to meet the conditions in this Regulation to notify the Bank accordingly in such manner, and at such time, as may be determined by the Bank and published on its website.

Exclusion of mutual undertakings

• (2) These Regulations do apply to the accepting undertaking.

Exclusions: insurance forming part of social security system

Exclusions: non-life operations

• (a) capital redemption operations;

• (b) operations of provident and mutual benefit institutions whose benefits vary according to the resources available and in which the contributions of the members are determined on a flat rate basis;

• (c) operations carried out by organisations not having a legal personality with the purpose of providing mutual cover for their members without there being any payment of premiums or constitution of technical reserves;

• (d) export credit insurance operations for the account of or guaranteed by the State, or where the State is the insurer.

Exclusions: assistance activity

Exclusions: life operations and organisations

• (a) operations of provident and mutual-benefit institutions whose benefits vary according to the resources available and which require each of their members to contribute at the appropriate flat rate;

• (b) operations carried out by organisations, other than insurance undertakings or reinsurance undertakings, whose object is to provide benefits for employed or self-employed persons belonging to an undertaking or group of undertakings, or a trade or group of trades, in the event of death or survival or of discontinuance or curtailment of activity, whether or not the commitments arising from such operations are fully covered at all times by mathematical provisions;

• (c) organisations which undertake to provide benefits solely in the event of death, where the amount of such benefits does not exceed the average funeral costs for a single death or where the benefits are provided in kind.

Exclusions: reinsurance

• (2) These Regulations do not apply to reinsurance undertakings which by 10 December 2007 ceased to conduct new reinsurance contracts and exclusively administer their existing portfolio in order to terminate their activity.

Insurance and reinsurance undertakings closing their activity

• (a) the undertaking has satisfied the Bank that it will terminate its activity before 1 January 2019, or

• (b) the undertaking is subject to reorganisation measures set out in Regulations 271 to 274 and an administrator has been appointed before 1 January 2016.

• (2) An insurance undertaking or reinsurance undertaking which falls within paragraph (1)(a) shall be subject to Regulations 12 and 14 to 268 from 1 January 2019 or from an earlier date notified by the Bank if the Bank is not satisfied with the progress that has been made towards terminating the undertaking’s activity.

• (3) An insurance undertaking or reinsurance undertaking which falls within paragraph (1)(b) shall be subject to Regulations 12 and 14 to 268 from 1 January 2021 or from an earlier date notified by the Bank if the Bank is not satisfied with the progress that has been made towards terminating the undertaking’s activity.

• (4) Paragraph (1) applies to an insurance undertaking or reinsurance undertaking if—

• (a) it is not part of a group, or if it is, all undertakings that are part of the group cease to conduct new insurance or reinsurance contracts before 1 January 2016,

• (b) the undertaking provides the Bank with an annual report setting out what progress has been made in terminating its activity, and

• (c) the undertaking has notified the Bank that paragraph (1) applies to it.

• (5) The Bank shall draw up a list of the insurance undertakings and reinsurance undertakings to which paragraph (1) applies and communicate that list to all the other Member States.

• (6) This Regulation does not preclude any insurance undertaking or reinsurance undertaking from operating in accordance with Regulations 12 and 14 to 268.

Part 2 AUTHORISATION

Prohibition against carrying on insurance etc. without authorisation

• (a) carry on the business of insurance of any class, or any reinsurance activity, in the State unless the person holds an authorisation covering the class of insurance or the reinsurance activity, or

• (b) claim to be, or represent itself as, an insurance undertaking or reinsurance undertaking in the State unless the person holds an authorisation covering insurance or reinsurance.

• (2) Paragraph (1) does not apply to persons, activities or operations excluded from the application of these Regulations.

• (3) A person who contravenes paragraph (1) commits an offence.

Deemed authorisation for existing undertakings

• (2) Paragraph (1) does not include a person excluded from the application of these Regulations.

Authorisation

• (a) any undertaking which has established or is establishing its head office in the State, or

• (b) any insurance undertaking which is the holder of an authorisation relating to the whole or any part of a particular class or classes of insurance and which proposes to extend its business to the whole of the class or to other classes of insurance.

• (2) An application for authorisation shall be in such form, and contain such particulars, as the Bank may from time to time determine.

Scope of authorisation

• (2) An authorisation of an insurance undertaking shall be granted for a particular class of insurance in Part 1 of Schedule 1 or in Schedule 2 and shall cover the entire class, unless the applicant wishes to cover only some of the risks pertaining to that class.

• (3) The risks included in a class shall not be included in any other class except in the cases referred to in Regulation 16.

• (4) Where appropriate the Bank may grant authorisation for 2 or more of the classes of insurance.

• (5) An authorisation may be restricted to industrial assurance business and an insurance undertaking may not carry on industrial assurance business by virtue of an authorisation unless the authorisation expressly extends to such business.

• (6) As far as non-life insurance is concerned, the Bank may grant authorisation for the groups of classes in Part 2 of Schedule 1; and the Bank may limit authorisation requested for one of the classes to the operations set out in the scheme of operations referred to in Regulation 21.

• (7) Without prejudice to Regulation 16(1), an insurance undertaking may engage in the assistance activity referred to in Regulation 8 only if it has been granted authorisation for class 18 in Part 1 of Schedule 1 and, if it does so these Regulations shall apply to that activity.

• (8) As far as reinsurance is concerned, authorisation may be granted for non-life reinsurance activity, life reinsurance activity or both and an application for authorisation as a reinsurance undertaking shall be considered in the light of the scheme of operations to be submitted pursuant to Regulation 17(4)(c).

Ancillary risks

• (a) they are connected with the principal risk;

• (b) they concern the object which is covered against the principal risk;

• (c) they are covered by the contract insuring the principal risk.

• (2) The risks included in classes 14, 15 and 17 in Part 1 of Schedule 1 shall not be regarded as risks ancillary to other classes but legal expenses insurance as set out in class 17 may be regarded as a risk ancillary to class 18 in that Part of that Schedule, where all of the conditions in paragraph (1) and either of the following conditions is met:

• (a) the main risk relates solely to the assistance provided for persons who fall into difficulties while travelling, while away from their home or habitual residence;

• (b) the insurance concerns disputes or risks arising out of, or in connection with, the use of sea going vessels.

Conditions for authorisation

• (a) it shall be a designated activity company, a public limited company, a company limited by guarantee, an unlimited company or a European Company (SE);

• (b) its head office and registered office shall be in the State.

• (2) Despite paragraph (1)(a), an undertaking applying for authorisation in relation to life insurance may be a society registered under the Industrial and Provident Societies Acts 1893 to 2014 or the Friendly Societies Acts 1896 to 2014.

• (3) An undertaking set up in any public law form may apply for an authorisation provided that it has as its object insurance or reinsurance operations, under conditions equivalent to those under which undertakings governed by private law operate.

• (4) An undertaking applying for authorisation shall also comply with the following provisions:

• (a) where the application is for authorisation as an insurance undertaking, its objects shall be limited to the business of insurance and operations arising directly from insurance to the exclusion of all other commercial business;

• (b) where the application is for authorisation as a reinsurance undertaking, its objects shall be limited to the business of reinsurance and related operations (which may include a holding company function or activities with respect to financial sector activities within the meaning of Article 2(8) of Directive 2002/87/EC);

• (c) it shall submit to the Bank a scheme of operations in accordance with Regulation 21;

• (d) it shall hold the eligible basic own funds to cover the absolute floor of the Minimum Capital Requirement provided for in Regulation 140(2);

• (e) it shall submit to the Bank evidence that it will be, and will continue to be, in a position to hold eligible own funds to cover the Solvency Capital Requirement, as provided for in Regulation 113;

• (f) it shall submit to the Bank evidence that it will be, and will continue to be, in a position to hold eligible basic own funds to cover the Minimum Capital Requirement, as provided for in Regulation 139;

• (g) it shall submit to the Bank evidence that it will be in a position to comply with the system of governance referred to in Regulations 44 to 51;

• (h) it shall submit to the Bank a copy of the undertaking’s memorandum and articles of association;

• (i) where the application is for authorisation as a non-life insurance undertaking and the risks to be covered are those included in class 10 in Part 1 of Schedule 1, other than carrier’s liability, it shall communicate to the Bank the name and address of the claims representative appointed or to be appointed pursuant to Article 4 of Directive 2000/26/EC in each Member State other than the State.

• (5) An insurance undertaking seeking authorisation to extend its business to other classes or to extend an authorisation covering only some of the risks pertaining to one class shall submit to the Bank—

• (a) a scheme of operations in accordance with Regulation 21; and

• (b) evidence that it possesses the eligible own funds to cover the Solvency Capital Requirement and Minimum Capital Requirement provided for in Regulations 113 and 139.

• (6) An insurance undertaking shall not be authorised to pursue life and non-life insurance activities simultaneously except in the circumstances specified in Regulation 79.

• (7) A life insurance undertaking seeking authorisation to extend its business to the risks included in class 1 or 2 in Part 1 of Schedule 1 as referred to in Regulation 79 shall demonstrate to the Bank that it—

• (a) possesses the eligible own funds to cover the absolute floor of the Minimum Capital Requirement for life insurance undertakings and the absolute floor of the Minimum Capital Requirement for non-life insurance undertakings provided for in Regulation 140(2), and

• (b) undertakes to cover, and continue to cover, the minimum financial obligations referred to in Regulation 80(3).

Close links

• (2) The Bank shall refuse authorisation if the laws, regulations or administrative provisions of a third country governing one or more natural or legal persons with which the insurance undertaking or reinsurance undertaking has close links, or difficulties involved in their enforcement, would prevent the effective exercise of its supervisory functions.

• (3) The Bank shall, in the exercise of its powers under financial services legislation, require an insurance undertaking or reinsurance undertaking to provide it with the information the Bank requires to monitor compliance with the condition referred to in paragraph (1) on a continuous basis.

Policy conditions and scales of premiums

• (2) Despite paragraph (1), in relation to life insurance the Bank may, for the sole purpose of verifying compliance with rules concerning actuarial principles, require systematic notification of the technical bases used for calculating scales of premiums and technical provisions but such a requirement does not constitute a prior condition for authorisation.

• (3) The Bank shall not retain or introduce prior notification or approval of proposed increases in premium rates except as part of general price control systems.

• (4) The Bank, in the exercise of its powers under financial services legislation, may subject undertakings seeking or having obtained authorisation for class 18 in Part 1 of Schedule 1 to checks on their direct or indirect resources in staff and equipment, including the qualification of their medical teams and the quality of the equipment available to such undertakings to meet their commitments arising out of that class.

Economic requirements of the market

Scheme of operations

• (a) the nature of the risks or commitments which the insurance undertaking or reinsurance undertaking proposes to cover;

• (b) the kind of reinsurance arrangements which the reinsurance undertaking proposes to make with ceding undertakings;

• (c) the guiding principles as to reinsurance and to retrocession;

• (d) the basic own fund items constituting the absolute floor of the Minimum Capital Requirement;

• (e) estimates of the costs of setting up the administrative services and the organisation for securing business; the financial resources intended to meet those costs and, if the risks to be covered are classified in class 18 in Part 1 of Schedule 1, the resources at the disposal of the insurance undertaking for the provision of the assistance promised.

• (2) In addition to the requirements set out in paragraph (1), for the first 3 financial years the scheme shall include the following:

• (a) a forecast balance sheet;

• (b) estimates of the future Solvency Capital Requirement, as provided for in Regulations 113 to 115, on the basis of the forecast balance sheet, as well as the calculation method used to derive those estimates;

• (c) estimates of the future Minimum Capital Requirement, as provided for in Regulations 139 and 140, on the basis of the forecast balance sheet, as well as the calculation method used to derive those estimates;

• (d) estimates of the financial resources intended to cover technical provisions, the Minimum Capital Requirement and the Solvency Capital Requirement;

• (e) in regard to non-life insurance and reinsurance—

• (i) estimates of management expenses other than installation costs, in particular current general expenses and commissions;

• (ii) estimates of premiums or contributions and claims;

• (f) in regard to life insurance, a plan setting out detailed estimates of income and expenditure in respect of direct business, reinsurance acceptances and reinsurance cessions.

Shareholders and members with qualifying holdings

• (2) The Bank shall not grant an authorisation to an undertaking if, taking into account the need to ensure the sound and prudent management of the undertaking, it is not satisfied as to the qualifications of the shareholders or members.

• (3) For the purposes of paragraph (1) the voting rights referred to in Articles 9 and 10 of Directive 2004/109/EC, as well as the conditions regarding aggregation laid down in Article 12(4) and (5) of that Directive, shall be taken into account.

• (4) The Bank shall not take into account voting rights or shares which investment firms or credit institutions may hold as a result of providing the underwriting of financial instruments or placing of financial instruments on a firm commitment basis included under point 6 of Section A of Annex I to Directive 2004/39/EC, provided that those rights are not exercised or otherwise used to intervene in the management of the issuer and are disposed of within one year of the acquisition.

Prior consultation with authorities of other Member States

• (a) a subsidiary undertaking of an insurance undertaking or reinsurance undertaking authorised in the other Member State,

• (b) a subsidiary undertaking of the parent undertaking of an insurance undertaking or reinsurance undertaking authorised in the other Member State, or