Central Bank of Ireland issues guidance on use of service companies by insurers
The CBI is also keen to ensure that conflicts of interest are managed appropriately. Insurance industry personnel subject to these types of staffing arrangements generally provide their services to more than one group entity. This can potentially lead to a conflict of interest. The CBI expects this to be addressed in the written agreement.
For insurers receiving the services, a particular point to consider in this context is whether their existing service agreements contain means to remove a member of staff if there is any doubt as to their ability to properly discharge of his responsibilities. Service providers will also need to understand what obligations are imposed on them to replace employees when needed. If the same staff member is to be provided to multiple insurers within the same group, particularly in relation to PCF roles, each insurer will need to be satisfied that the person can commit the level of time required to perform the role.
What should insurers do now?
The CBI expects insurers to read the guidance in conjunction with relevant Solvency II regulations and guidance.
By January 31, 2023, insurers must review their existing staffing arrangements and ensure that they are updated and augmented, if necessary, to align with CBI expectations. When an insurer is considering entering into a new staffing arrangement, then they will need to consider the guidelines.
If, after conducting the review, an insurer determines that an existing or proposed staffing arrangement does not comply with the guidelines, the CBI expects the insurer not to use that staffing arrangement. in staff. This insurer may need to consider other staffing structures.
There are a number of types of staffing structures that can be used. In our experience, the most common are usually secondments or dual work contracts. However, we recommend that insurers consider their tax and regulatory requirements and the employment implications of the structure before determining the most appropriate alternative structure.