The Central Bank expressed concerns to the Europe’s insurance and pensions authority about how Gibraltar continues to approve motor insurers that can passport services into Ireland, after the collapse of one insurer based in the British overseas territory and effective withdrawal of another from the Irish market last year, reports Irish Times.
It is understood the Central Bank expressed its dissatisfaction to the Gibraltar Financial Services Commission (GFSC) on its approval process for insurers and to the European Insurance and Occupational Pensions Authority (EIOPA). Although the Gibraltar regulator is not a member of EIOPA, and may be cut off from the European Union under Brexit, it took up an offer to explain its processes before the authority. The Central Bank is believed to remain concerned. A spokeswoman for GFSC could not be reached by phone after office hours on Tuesday and did not immediately respond to a request for comment by email.
A spokeswoman for the the Central Bank said that in general the banks strongly recommends that consumers “should satisfy themselves on the insurer who is underwriting their policy, particularly where the policy is bought from a broker.” All insurance companies are required to disclose on policy documentation their name and the country where they are from.
Gibraltar is the leading location for overseas companies selling motor cover in the State, with the territory the regulatory base for 11 out of 24 foreign companies registered with the Motor Insurers’ Bureau of Ireland (MIBI) as of July 2016. Some 14,000 Irish motorists were affected when Gibraltar-based Enterprise Insurance collapsed that month with 255 claims on its books with an estimated cost of €6.2 million.
Gibraltar has no compensation scheme. The Supreme Court reserved judgment late last year in a case that will likely decide what body carries the cost of claims against failed insurers. This was the result of an appeal by MIBI against an earlier court decision that it foot the €90 million bill for Malta-registered Setanta Insurance’s 2014 implosion.
In August, Zenith Insurance, then the largest Gibraltar-based motor insurer in Ireland, decided would stop offering Irish car coverage from this month amid soaring claims costs in a loss. Both companies had offered insurance products intermediaries, known as underwriting agents.
Regulators subsequently approved two further insurers to passport motor coverage in Ireland through the same underwriting agents network. There is no suggestion that there are any issues with these particular firms.
The question over regulatory and supervisory standards in Europe has become all the more pressing as UK-based financial services firms seek to move activities from Britain to preserve access to the EU market following Brexit. While European banking supervision is presided over by the European Central Bank, leaving little room for regulatory arbitrage, the same is not the case for the insurance industry.
Separately, it is believed the Central Bank is preparing for at least one enforcement action to be taken against an Irish mortgage lender this year in relation to an ongoing investigation into overcharging on tracker mortgages.
The regulator, which fined Permanent TSB’s former subprime unit Springboard Mortgages €4.5 million in November for overcharging tracker-mortgage customers, is known to be in the middle of enforcement proceedings against PTSB itself and Ulster Bank.
Further actions are likely, as 15 lenders have been subjected to the industry-wide probe.