Insurance Regulation Omnibus Consultation – Feedback Paper (2018-08-03)

Summary

This feedback paper responds to the April 2018 Consultation Paper on the Insurance Regulation Omnibus review and confirms final positions on revisions to several insurance rules and guidance in Guernsey. It summarises industry comments and sets out the Commission's final decisions and effective dates across seven areas: public disclosure, conduct of business, ORSA, Category 6 special purpose entities, reinsurance/risk transfer guidance, frequency of solvency reporting, and new majority shareholder controller notification.

• Public Disclosure: Revised Public Disclosure Rules narrow the scope of exemptions (Category 5 and 6 insurers, Protected Cell Companies and non-Bailiwick entities remain outside additional disclosure); most insurers must continue making audited financial statements available and, unless exempt on premium/asset size, reinsurance or policyholder-base grounds, must also make additional website disclosure and file it with the Commission.
• Conduct of Business Rules: Scope clarified to apply to Category 1 and Category 3 insurers only in respect of retail customer business; drafting changes made to interest triggers, cooling-off period flexibility, and definitions of intermediary and customer.
• ORSA: The Commission will proceed with the proposed criteria for full ORSA scope; relevant insurers must transition from OSCA to full ORSA for assessment periods beginning after 2 August 2018.
• Category 6 Special Purpose Entities: Revised guidance allows the Commission to require paid-up share capital of up to £100,000 where there is no robust contingency funding plan for orderly wind-down, and scrutiny of individuals as direct cell owners.
• Reinsurance and Risk Transfer Guidance: Wording changed from 'requires' to 'should' to confirm the document's status as guidance rather than binding rules, with no substantive policy change.
• Solvency Reporting Frequency: Increased frequency of solvency reporting will proceed for insurers within scope; half-year returns are due, and this establishes a new recurring filing obligation.
• Majority Shareholder Controller: The Commission will proceed with the proposed guidance on new majority shareholder controller notification as originally consulted upon, without substantive change.

Firms should note the specific effective and transition dates below, as different reforms take effect on different timelines.

Key obligations

• Licensed insurers (other than Category 5, Category 6, Protected Cell Companies and non-Bailiwick incorporated entities) must make annual audited financial statements available to persons with a valid interest, equivalent to the 2010 Public Disclosure Rules.
• Licensed insurers must make additional public website disclosure of specified information unless they meet one of the listed exemption criteria (premium/asset thresholds, reinsurance with group insurer, single fronting arrangement, or small number of commercial policyholders).
• Insurers withholding, redacting or summarising required disclosure must notify the Commission of the reasons for non-disclosure or redaction.
• Insurers with websites must publish applicable disclosure on their website, and relevant licensed insurers must file their public disclosure information with the Commission for publication on its website.
• Category 1 and Category 3 licensed insurers must comply with the Conduct of Business Rules in respect of business with retail customers, achieving full compliance by 3 February 2019.
• Relevant insurers must transition from OSCA to a full ORSA for individual assessment periods beginning after 2 August 2018.
• Category 6 Special Purpose Entities may be required to hold paid-up share capital of up to £100,000 where there is no robust contingency funding plan for orderly wind-down.
• Licensed insurers within scope of the increased reporting frequency must submit half-year Regulatory Solvency Assessment returns within 60 calendar days following the 6 month reporting period end, commencing with financial years beginning after the publication date of the response paper.

Applies to

licensed insurers, Category 1 licensed insurers, Category 3 licensed insurers, Category 5 licensed insurers, Category 6 licensed insurers (Special Purpose Entities), Protected Cell Companies, non-Bailiwick incorporated insurance entities

Deadlines

• financial year ends falling after 31 August 2018: New Public Disclosure Rules apply from this point onward.
• 3 August 2018: New Licensed Insurer's (Conduct of Business) Rules 2018 take effect.
• 3 February 2019: End of the 6 month transitional period; insurers expected to be in full compliance with the Conduct of Business Rules.
• assessment periods beginning after 2 August 2018: Revised ORSA rules apply from this point; relevant insurers transition to full ORSA for the subsequent assessment period.
• 60 calendar days following the 6 month reporting period end: Deadline for submission of the half-year Regulatory Solvency Assessment return.
• financial years commencing after the publication date of this response paper (3 August 2018): First half-year Regulatory Solvency Assessment required for insurers within scope of increased reporting frequency.