Central Bank Deputy Governor concerned some insurance companies not Brexit-Ready: 'There is no excuse'

• Financial system is sufficiently resilient to withstand a hard Brexit, but some issues are inevitable
• Firms need to continue to prepare for a hard Brexit to ensure they can continue to serve their customers
• Insurance firms need to do more now on climate change and technology risks

This Friday morning PwC and Insurance Ireland are co-hosting a breakfast briefing to launch a CEO Survey Report. The Central Bank of Ireland Deputy Governor for Prudential Regulation, Ed Sibley, raised some of the key future challenges that insurance firms need to better prepare for.

During his wide-ranging address, Deputy Governor Sibley urged CEOs to prepare for the plausible scenario of the UK leaving the EU without a deal. Deputy Governor Sibley said “Based on the work we have undertaken in the Central Bank, the work of the Oireachtas, the actions taken by the European Commission and the work in individual firms, I am satisfied that the Irish financial system is, overall, resilient enough to withstand a hard Brexit.” 

“However, not all regulated firms are adequately prepared. There is no excuse for this, even accepting that there remains considerable uncertainty. You owe all your stakeholders, including and most importantly your customers, a duty of care to ensure that you are prepared.”

As the insurance industry is arguably the most exposed financial services sector to the risks, challenges and opportunities of innovation and climate change, the industry must take action now to meet these challenges successfully. 

Deputy Governor Sibley said “Too many of your firms are not getting the fundamentals right, with ineffective IT risk management practices, weaknesses in IT security, a lack of effective oversight of IT, and weaknesses in the management of outsourcing.”

He also noted that climate change presents a major challenge for insurance firms. “It is clear that the worst possible year is getting worse every year.” He expects “the insurance industry to play a positive and proactive role in shaping the wider response to climate change risks.”

Referring to the Central Bank’s focus on increasing diversity at senior levels across the financial services industry, Deputy Governor Sibley challenged the sector on its lack of diversity at senior levels, highlighting the importance of making progress to reduce risk and enhance culture. He noted that the Central Bank had prioritised diversity assessments across the insurance industry due to the lack of improvements and that these assessments were also considering the extent of gender pay gaps.

Read Deputy Governor Sibley’s full address.