Reinsurance is a business-to-business activity and consequently there are widely different approaches to the degree, if any, to which it is subject to particular regulatory requirements. This disparity in approach is also evident within the European Union.
The European Union is about to agree a reinsurance directive which will oblige all member states to introduce a supervisory regime for reinsurance companies, based on a modified version of the regime that applies to insurance companies. Key features of the proposal will be: minimum capital; "fit and proper" directors-managers; ongoing solvency supervision; and powers for the financial regulator to give directions and so forth. We have supported this approach.
Our approach in Ireland to regulation of reinsurance companies has been influenced by the fact that it is a business-to-business activity, with no consumer protection dimension. Up to 2000, the only regulatory requirements were that reinsurance companies notify the regulator, then the Minister for Enterprise, Trade and Employment, before commencing business and file accounts with the Companies Registration Office.
Since the enactment of the Insurance Act 2000, an enhanced regime provides that each reinsurance company must provide the regulator, now IFSRA, with detailed annual company information. It also gives the regulator the power to order a reinsurance company to cease business in a number of specified circumstances. The Act also provides for the introduction of a full authorisation and supervision regime for reinsurance companies, analogous to that applying to insurance companies, provided that the Minister is satisfied that this is justified and makes an order permitting the relevant section of the Act to take effect. In light of the planned introduction of an EU wide reinsurance supervisory regime, this power has not been used to date.
I am aware of the recent press coverage of concerns about a specific company referred to by the Deputy. In light of this controversy, I have written to the financial regulator seeking advice on the adequacy of the existing legislative and regulatory arrangements for the proper supervision of such bodies.
