The Central Bank of Ireland (the ’Central Bank’) has recently published Consultation Paper 115 on the ’Authorisation and Supervision of Branches of Third Country Insurance Undertakings’ (the ’Consultation Paper’). The Solvency II regime facilitates a non-EEA insurer establishing a branch operation in an EEA Member State subject to meeting specific regulatory requirements (a ’Third Country Branch’). Post-Brexit, on the understanding that the UK will be regarded as a ’third country’, a UK insurer may avail of the provisions of Solvency II which enable third country insurers to establish a Third Country Branch in an EEA Member State. A Third Country Branch does not have the right to passport into other jurisdictions similar to an EEA-subsidiary and accordingly, it would only be permitted to write business in the jurisdiction in which it is established.
The consultation will remain open for interested parties to make submissions until 5 February 2018. Entities that are considering the establishment of a branch in Ireland, should review the Consultation Paper carefully and, if necessary, make submissions to the Central Bank in accordance with the terms of the Consultation Paper.
The substance of the Consultation Paper is contained in 4 appendices:
The publication of the Consultation Paper represents an important development particularly for UK insurers considering the option of establishing a branch in Ireland. In particular it provides a good sense of the Central Bank's proposed approach to authorising and supervising existing branches of UK Insurers.
Interestingly, the Central Bank indicates that the establishment of the Third Country Branch may not be appropriate for all business models owing to the nature, scale and complexity of the proposed business model and/or the proposed customer base. The point is also made that in developing its policy on the authorisation of Third Country Branches, the Central Bank considers the primary purpose of establishing such branches should be the provision of insurance to policyholders within the Irish market (a point of view that is likely to be strongly challenged by existing branches of UK insurers that write global risks).
Significantly, the Central Bank states that its supervision of a Third Country Branch will have a particular focus on ensuring that there are senior individuals in the Irish market who are clearly responsible for the management of both the branch operations and business pursued in the Irish market. The Policy Notice also indicates that the Central Bank's attention will be concentrated on ensuring that the bankruptcy regime in the relevant ’third country’ jurisdiction provides at least the same level of protection to policyholders of the Third Country Branch in winding-up proceedings as is currently provided under the Solvency II requirements.
Finally, the Consultation Paper deals only with insurance branches and not with reinsurance branches.
To view a copy of the Consultation Paper, please click here.