Dáil Éireann Debate, Tuesday - 24 June 2014
136. Deputy John Browne asked the Minister for Finance if his attention has been drawn to the fact of the Maltese regulator in the Setanta Insurance case being unable to have a meaningful engagement with the Central Bank of Ireland for over a year in regard to Setanta; and if he will make a statement on the matter. [26661/14]
View answerThe current legal and regulatory framework for the provision of insurance in the European Economic Area (EEA), and the supervision of that activity, is prescribed by European Union Law in the Life and Non-Life Insurance Directives. The Insurance Directives specify particular roles for both the home Member State supervisory authority (i.e. the supervisory authority that grants an authorisation) and the host Member State supervisory authority (i.e. the supervisory authority of a Member State where an insurance undertaking conducts business of a freedom of services or freedom of establishment basis) of an insurance undertaking.
Insurance undertakings authorised under the Insurance Directives are subject to solvency and financial reserving requirements, the supervision of these requirements is the sole responsibility of the home Member State supervisory authority. In the case of Setanta Insurance Company Limited (Setanta), this was the Malta Financial Services Authority (MFSA). The primary objective of these requirements is to ensure that claims made in respect of policies issued will be adequately provided for by an insurance undertaking.
Under Article 20 of the Third Non-Life Directive the Home Regulator is required to notify the Host Regulator (in this case the Central Bank of Ireland) if the solvency margin of an undertaking falls below the statutory requirement. In such instances the Home Regulator, i.e. the MFSA should inform the Host Regulator, i.e. the Central Bank of Ireland, of the measures it has taken to address the solvency deficit. EEA insurance regulators are also members of EIOPA (European Insurance & Occupational Pensions Authority) and are required to comply with the General Protocol relating to the collaboration of the insurance supervisory authorities of the Member States of the European Union. This general protocol statement was issued in 2008 and is currently under review by EIOPA.
In my role as the Minister for Finance I have responsibility for the development of the legal framework governing financial regulation. The day to day responsibility for the supervision of financial institutions is a matter for the Central Bank of Ireland, which is statutorily independent in the exercise of its regulatory functions. I have consulted with the the Central Bank on this matter and they have informed me that the Central Bank co-operates on an ongoing basis with peer regulators on matters of mutual interest. This includes the MFSA.
In response to the Deputy's specific question, neither I nor my officals have at any time been advised that the MFSA was unable to have a meaningful engagement with the Central Bank of Ireland in regard to Setanta. The Central Bank had Regulator to Regulator contact with the MFSA in September 2013 and in October 2013 the Central Bank undertook a consumer protection inspection of Setanta. The Central Bank became aware of prudential issues in the course of this investigation and subsequently shared these with the MFSA in November 2013. At this point the Central Bank entered into a phase of heightened contact with the MFSA in relation to these issues. Regular contact was maintained in the following months, and in January 2014 an announcement was made that the firm would cease writing new business and issuing further renewals.
