Central Bank of Ireland: Product Oversight and Governance (“POG”) Thematic Review
August 2023A thematic inspection of product oversight and governance was undertaken by the Central Bank of Ireland in the latter half of 2022. The inspection included a selection of six non-life insurance undertakings to assess the current level of controls, processes and systems in place relating to POG arrangements. The inspection focused on five key control areas:
- POG policies & procedures
- Underwriting controls
- Post implementation reviews
- Risk management oversight; and
- Board oversight
Key themes identified: - Board Oversight
The inspection found that there wasn’t always strong Board oversight of all new products and material changes to existing products. The CBI notes that Boards should have sign-off role for new products and material product changes.
- Risk Management
The CBI found that the risk function’s role in POG arrangements to be lacking in some instances. The CBI stated that the POG process should be meaningful and a control that is integrated with both the emerging risk and Own Risk Solvency (“ORSA”) process.
- Policy Wording
The CBI outlined its expectation that firms ensure sufficient resources and attention are provided to ensure any potential detriment to the firm and the customer is identified and mitigated without delay and also have in place a plan of ongoing policy wording reviews.
- Protection Gaps
The CBI found that while undertakings in general are aware of the EIOPA recent Supervisory Statement and the requirements within, these requirements need to be reinforced to ensure that the POG process considers both prudential and consumer considerations.
The CBI also outlined various good practices which firms should consider embedding into their own POG arrangements such as the CRO having a ‘gatekeeper’ role with responsibility for considering materiality of product changes, having at least one member of the Board with general insurance background and a detailed understanding of products, establishing a customer forum and dedicated wordings committees, implementing a schedule of product reviews and manual wordings, to name a few.
The CBI concluded that:
- To ensure they have a complete awareness of their exposures in connection to the products they offer, many undertakings need to take additional steps to guarantee they have reliable procedures and controls, as well as technical expertise to advise on and challenge.