Central Bank Of Ireland Publishes Latest Insurance Newsletter

In September 2025, the Central Bank of Ireland (Central Bank) published its third insurance newsletter of 2025 (Newsletter).

The Newsletter features several supervisory and insurance updates that will be of interest to Irish (re)insurers, including:

• Intra-Group Outsourcing: Key findings from the Central Bank's review of outsourcing practices within specialty firms, with a focus on governance and operational resilience.
• Asset Intensive Reinsurance: Insights from the Central Bank's recent data request, highlighting its focus on risk management and transparency in reinsurance arrangements.
• Health Insurance Practices: Expectations from the Central Bank's thematic review on how consumers are treated when purchasing or renewing health insurance.

Intra-Group Outsourcing and Specialty Firms

Earlier this year, the Central Bank conducted a thematic risk assessment of several specialty insurance firms (Assessment). The Assessment focused on intra-group outsourcing within these firms and the governance and oversight of such arrangements.

In summary terms, the Central Bank expects firms to have in place (i) adequate and effective outsourcing risk management frameworks which reflect the significance of the reliance on such arrangements and (ii) adequate management information and governance structures to enable sufficient oversight and reporting of the outsourcing risk. In the Newsletter, the Central Bank details the key findings from its Assessment under the following headings:

• Substantive Presence and Decision-Making – the Central Bank highlights the significant reliance on shared services structures and third country branches among specialty firms, emphasising the need for adequate substance and decision-making in Ireland. In line with the 2023 EIOPA Supervisory Statement (and affirmed in prior Newsletters), the Central Bank emphasised that any "disproportionate dependence" should be addressed. In particular, the Central Bank expects that firms underwriting EEA business establish a meaningful presence within the EEA, not in third countries, and develop an action plan in line with the Central Bank and EIOPA's expectations to this end. The Central Bank also found that Boards should ensure PCF reporting lines are appropriate, with CEOs exercising appropriate oversight over all functions and underwriting activities and monitoring the executive team accordingly.
• Outsourcing Framework – the Central Bank found that some firms lacked a tailored outsourcing policy and strategy specific to their Irish operations, with insufficient Board oversight. It reiterated expectations set out in its 2021 Cross-Industry Guidance on Outsourcing, highlighting the need for frameworks that reflect the scale of outsourcing risk. Key findings include incorporating outsourcing as a distinct risk category in the risk appetite statement, ensuring robust management information to monitor risks, and considering a complete failure scenario of key outsourced providers (including mitigation plans) in the ORSA where outsourcing is a material risk.
• Use of Service Companies and Hybrid Arrangements – the Central Bank has noted a growing trend in firms relying on group-affiliated service companies for staffing. While common, the Central Bank notes that these arrangements can pose risks to operational resilience if not correctly managed. Hybrid models, in particular, introduce added complexity and demand robust oversight. It expects that Boards of firms using hybrid arrangements should assess compliance with its 2022 Guidance on the Use of Service Companies for Staffing Purposes in the Insurance Sector and its 2021 Outsourcing Guidance. The Central Bank also expects Boards to ensure that governance, organisational, and risk structures are fit for purpose, and to take action to revise or remove any that fall short of regulatory expectations.

Notably, the Newsletter reminds specialty firms of the Central Bank's Dear CEO Letter, highlighting that its key messages will guide future engagements with the Central Bank.

Asset Intensive Reinsurance

The Central Bank has reiterated its focus on Asset-Intensive Reinsurance (AIR), noting that it remains under active monitoring. In May 2025, it issued a data request to 11 life (re)insurers with material reinsurance or retrocession arrangements.

The findings showed AIR exposure is broadly aligned with expectations, projected to grow by approximately 5% in 2025, and generally backed by high-quality collateral. However, the Central Bank observed that a default by a key reinsurance counterparty could cause some firms to fall below the 100% SCR coverage ratio before collateral recovery, particularly those with concentrated exposure to a single group entity.

Firms are reminded to consult their supervisor before entering material AIR transactions. Additionally, any significant changes to reinsurance or retrocession arrangements that materially affect the business must be notified under the Change of Business process. The Central Bank may also review or request further information where AIR contracts significantly impact reinsurance recoverables. The Newsletter outlines key areas of focus in assessing reinsurance proposals, including:

• Impact on the regulatory balance sheet;
• Risk transfer versus capital relief;
• Counterparty risk management;
• Collateral quality and recoverability;
• Stress testing (e.g., recapture risk, SCR impact); and
• Governance and oversight, including senior executive involvement.

Thematic Review on Consumer Treatment when Purchasing or Renewing Health Insurance.

The Newsletter outlines findings from the Central Bank's recent thematic review on how health insurers treat consumers during policy purchase and renewal.

The review, primarily a call listening exercise, assessed how effectively insurers encourage consumer engagement and provide support and advice. While positive practices were noted, the Central Bank identified areas needing improvement to ensure customers receive appropriate assistance and advice, in addition to effective information and supportive customer service throughout their journey.

Firms were reminded of the Dear Compliance Officer Letter issued in July 2025, which sets out the Central Bank's expectations. Key priorities include:

• Offering full suitability assessments to consumers who engage at renewal;
• Using appropriate systems and tools during customer interactions;
• Encouraging consumer contact through proactive communications;
• Providing online fact-find and plan comparison tools for self-assessment; and
• Ensuring robust oversight of customer support, including individual agents.

Firms are also referred to the Guidance on Securing Customers' Interests and reminded to avoid exploiting consumer inertia, habits, biases, or informational asymmetries.

Other Topics

The Newsletter notes that the Central Bank is actively assessing the impact of upcoming Solvency II amendments. It will engage with firms to assess their readiness for the January 2027 implementation, including applications for small and non-complex undertaking status, proportionality measures, and implications for regulatory balance sheets. Supervisory reviews and a potential data request in 2026 will support this process. Firms are encouraged to evaluate how these changes may affect them.

Additional updates in the Newsletter include regulatory return formats and submission deadlines, EIOPA developments in sustainability and digitalisation, and the Central Bank's Authorisations and Gatekeeping Report, which outlines average processing times.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.