The EU General Data Protection Regulation (GDPR) recently introduced a new regime of administrative fines for data protection infringements and provided for a tiered penalty structure based on the nature of the infringement. However, the insurability of GDPR fines remains a grey area and there is a large question mark over whether such fines will be insurable in Ireland where there is an element of moral turpitude in the infringement.
Minister for Finance and Public Expenditure and Reform Paschal Donohoe signed the EU (Insurance Distribution) Regulations 2018 (the IDD Regulations) into national law in June 2018. However, the implementation of the IDD Regulations was postponed until 1 October 2018 to provide the insurance industry with additional time to put in place the necessary organisational and technical changes required to ensure compliance. This article reviews the key changes resulting from the IDD Regulations.
A recently signed ministerial order marks the formal introduction of long-awaited periodic payment orders (PPOs) in Ireland. This should be a welcome development for insurers as it will avoid upfront compensation payments in catastrophic injury cases. It will also align the Irish regime of awards in case of catastrophic injury with the UK system, under which PPOs are already available.
The April 2018 decision of Bin Sun v Jason Price provides a useful summary of the circumstances in which a party can be joined as a co-defendant against the wishes of a plaintiff. It also provides clarity for insurers as to the circumstances in which they can seek to be joined to proceedings at first instance, which could prevent or substantially reduce their exposure in a subsequent application by a claimant to enforce against them.
Large corporates based in Ireland typically have a suite of non-life insurance policies to cover a variety of risks. Given the fact that the UK insurance market is the biggest in the European Union, it is likely that at least some of the policies held by corporates based in Ireland will have been written by UK or Gibraltar-licensed insurers. As such, whatever form Brexit ultimately takes, Irish policyholders with policies written by UK insurers must assess any risk to (among other things) their ability to renew.
Minister for Business, Enterprise and Innovation Heather Humphries recently laid the Competition Act 2002 (Section 27) Order 2018 before the Houses of the Oireachtais. This will have the effect of increasing the financial thresholds for M&A requiring a notification to the Competition and Consumer Protection Commission. This is the first time that a minister has used their powers under Section 27 of the Competition Acts from 2002 to 2017.
The Department of Business, Enterprise and Innovation recently published legislation that substantially increases the financial thresholds at and above which notification of a transaction is required to the Competition and Consumer Protection Commission. From 1 January 2019, only mergers where the acquirer and target each generate €10 million or more and together generate €60 million or more turnover in Ireland will trigger mandatory notification.
The Competition and Consumer Protection Commission's (CCPC's) current scrutiny of the Restaurants Association of Ireland serves as a reminder that trade associations must be careful to stay within the lines and avoid encouraging or inadvertently facilitating anti-competitive agreements between their members. Compliance training is an essential tool to prevent unwanted scrutiny from the CCPC and other authorities.
Non-compete clauses can provide important protection for purchasers who have a legitimate interest in maintaining the value of the business they are acquiring. However, careful consideration must be given to the drafting of non-competes in order to avoid allegations of anti-competitive conduct – which is a criminal offence in Ireland – and scrutiny from competition regulators such as the Competition and Consumer Protection Commission and the European Commission.
A new bill has been proposed in the Oireachtas to grant the Competition and Consumer Protection Commission (CCPC) civil enforcement powers. At present, where the CCPC identifies a suspected breach of competition law, it must petition the court to impose criminal penalties. Under the amendment bill, the CCPC would be empowered to levy administrative fines against firms or individuals for anti-competitive practices. This would bring Ireland into line with most other EU member states.
Ireland has recently shown an increased interest in gun jumping, the prohibited practice of implementing a transaction without having first obtained merger control clearance. In February 2018 the Competition and Consumer Protection Commission confirmed that it had launched an investigation into suspected gun jumping by Armalou Holdings Limited of Lillis O'Donnell Motor Company Limited.
A recent Supreme Court decision confirming that third-party litigation funding in return for a share of the proceeds is unlawful in Ireland has put after-the-event (ATE) insurance back in the spotlight as the only legitimate alternative method of funding litigation. Although a relatively new insurance product, a number of insurers are now providing ATE insurance in Ireland.
The Minimum Competency Code 2017 has been introduced to incorporate the implementation of the EU Insurance Distribution Directive, the EU Markets in Financial Instruments Directive II and associated European Securities and Markets Authority guidelines and the European Regulations 2016. The main changes under the code relate to the qualification and experience requirements of the staff of financial services providers.
The existing legislative and regulatory framework for motor insurance in Ireland is driver-centric and needs to adapt for the era of autonomous vehicles. At present, driving is defined as 'managing and controlling' a vehicle. This is not appropriate for autonomous vehicles, where the technology and not the driver controls the vehicle. The legal landscape must keep pace with this cutting-edge technology and efforts must be made now to consider how best to address the various issues which will arise.
The Consumer Insurance Contracts Bill 2017 recently passed the second stage in the Dáil (the lower house of Parliament) and will now proceed to the committee stage. The bill will apply to consumer insurance contracts only. It will replace the existing duty of disclosure with a statutory duty to answer specific questions carefully and honestly and will allow the insured to claim damages for late payment of claims by insurers. At present, there is no timeline for implementation.
The High Court recently upheld a finding of the Financial Services Ombudsman that an insurer was entitled to avoid a life assurance policy on the grounds of non-disclosure. Significantly, the decision turned on the strength of the proposal form and serves as a useful reminder to insurers of the importance of a well-drafted proposal form.
The EU Solvency II Directive was transposed into domestic Irish law by the European Union (Insurance and Reinsurance) Regulations. The Solvency II regime provides welcome clarity regarding the functions that an insurer may outsource and the requirements which must be complied with before outsourcing. This is particularly welcome news for captive insurers which tend to rely heavily on outsource service providers.
The High Court recently confirmed that third-party rights against insurers in Ireland are restricted, providing comfort for insurers in the context of solicitors' professional indemnity insurance. The decision is consistent with recent confirmation from the authorities that third parties have no direct right of action against insurers. To the extent that a specific statutory provision permits a restricted right of action, the insured defendant's liability must be established in the first instance.
The Court of Appeal recently ruled in a case which considered the 'real rate of return' discount which would be applied to an injured plaintiff's future care costs. When quantifying future losses in personal injury actions, future care costs may now be discounted by only 1% and as a result underwriters will be ordered to pay out higher lump-sum damages awards. There is likely to be a knock-on effect which will see underwriters increasing premiums.
The Central Bank of Ireland's Fitness and Probity Regime has been reviewed to determine its compatibility with the EU Solvency II Directive. A number of amendments are set to be made to the regime for all (re)insurance undertakings, including changes to key function holders, outsourcing key functions, the head of the actuarial function and the removal of the chief actuary and signing actuary.