RSA Insurance Ireland Dac

BACKGROUND RSAII is an insurance undertaking authorised in Ireland to transact non-life insurance business. RSAII was authorised on 1 January 2009, incorporating the existing Europa General Insurance Company Ltd and the Irish branch of Royal and Sun Alliance Insurance plc, the UK subsidiary of the RSA Insurance Group plc. 3 As part of a scheduled supervisory engagement with RSAII, the Central Bank identified delays in increasing recommended claim reserve estimates on a sample of large loss claims. The Central Bank informed RSAII of this finding on 1 October 2013 and, subsequently, in the course of RSAII’s Claims Reserving Processes and Controls Audit, RSAII identified an undocumented process involving the systematic underserving of large loss claims which had been in operation since 2009 and continued until its discovery in mid October 2013 (the “Relevant Period”). In response to this finding, the Central Bank commenced an investigation into suspected underreserving practices at RSAII in 2014. PRESCRIBED CONTRAVENTIONS The Central Bank’s investigation identified the following contraventions: 1. Failure to maintain Technical Reserves RSAII breached Article 13(1)(a) of the European Communities (Non-Life Insurance) Framework Regulations 1994, S.I. No. 359 of 1994 (the “1994 Regulations”), which requires an insurance undertaking to maintain sufficient levels of Technical Reserves. Technical Reserves are the amount set aside by an insurance company to cover its liability for claims. Technical Reserves comprise an aggregate of Outstanding Claims Reserve, Unearned Premium Reserve and Unexpired Risk Reserve. RSAII was required to submit regulatory returns to the Central Bank on a quarterly basis.