The Central Bank of Ireland has, at end June, published its industry consultation paper on “Regulations for pre-emptive recovery planning for (re)insurers”. The requirement to prepare a recovery plan will apply to all (re)insurers with some acknowledgement to proportionality and some carve outs for Captives and Branches.
The draft Regulations, and associated draft Guidelines included in the consultation paper set out what is required and point to a significant exercise to be carried out by (re)insurers. This will include:
(a) development of Indicators which point to a potential failure of the business;
(b) development of a range of Optionswhich could reasonably be expected to aid in restoring the financial viability of the company;
(c) articulation of a range of Scenarios, external and internal, which could trigger financial stresses with the potential to cause failure.
The above will need to be book-ended with details of the Governance around the process, the Strategic Analysisof the business (products, markets, significant counterparties etc), and the Communication plans for the various scenarios. With this significant additional chapter proposed to be added to the Risk Management Framework for (re)insurers, it will be important that it is positioned appropriately along side the ORSA and the Risk Appetite chapters and is not just another report of the CRO.
Seamus@GovernanceMatters.ieTo discuss any of your Governance needs call Governance Matters on +353 (0)87 6408750 or email your query to firstname.lastname@example.org