Ireland: Central Bank To Supervise Insurance Intermediaries

by Robert Lee, Tax-news.com, London

03 May 2001

Ireland's Central Bank announced last month that it had taken over responsibility for the regulation and supervision of insurance intermediaries. This results in about 5,500 new firms coming under the regulatory framework of the Central Bank.

This new addition to the Central Bank’s responsibilities, under the Insurance Act 2000, extends the scope of the Bank’s supervisory remit to cover the protection of clients of insurance intermediaries, both life and non-life. The Bank has corresponded with about 6,000 individual firms, whose names were provided to the Bank by the insurance companies, requesting them to seek registration or authorisation under the Act.

Under the new regulatory framework there will be three categories of insurance intermediary. The Restricted Activity Investment Product Intermediary (RAIPI) is the first level of authorisation. It covers the receiving and transmitting of orders in investment and insurance products to product producers from whom the intermediary holds letters of appointment and providing advice only on instruments available from those product producers. The Bank estimates about 4,000 insurance intermediaries will come under this category. Authorised Advisors, on the other hand, provide similar services to restricted intermediaries but are authorised to advise on a more expansive range of products without the necessity to hold a letter of appointment from the relevant product producer. This will essentially allow an intermediary to provide advice on the entire investment and insurance market. The Bank estimates about 1,400 intermediaries will seek this second level of authorisation. Finallly, Authorised Cash Handlers provide the full range of insurance and investment services, as in the first two categories, including cash handling and own account trading. About 100 intermediaries are expected to apply for this third category.

The legislation allows all existing insurance intermediaries three months in which to respond with the appropriate application for authorisation under one of the above categories. The Bank expects to receive 5,500 application or registration forms and up to 10,000 associated individual questionnaires in this three-month period. Any firm that does not respond by 1 July must cease providing insurance services.

A preliminary code of conduct has been forwarded by the Central Bank to all firms. While the next three months will be largely taken up with the registration process – the largest ever of its kind in Ireland – it is also planned to finalise the conduct of business rules, incorporating a more detailed code of conduct, during this period. This is intended to ensure that firms will operate at all times in a proper professional manner and act in the best interests of consumers.

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