Regulation

Question 1

Types of Regulatory philosophy

Answer 1

Market-led or social welfare

Question 2

What are the 5 types of insurance markets

Answer 2

Socialised, Nationalistic, Protected, Traditional, Liberal

Question 3

Socialised market

Answer 3

No private insurers completely run by the state

Question 4

Give an example of a Socialised market in the Irish context

Answer 4

VHI

Question 5

Natonalisitc market

Answer 5

No foreign insurers

Question 6

Where are nationalistic markets found and what is the effect on these places

Answer 6

Emerging markets, it prevents them from fully emerging as they must internalise all the risk

Question 7

Protected market

Answer 7

Market access is restricted and different treatment to different insurers. This creates a lack of transparency in the market.

Question 8

Traditional

Answer 8

Efforts made by regulators to render the market more competitive but problems still continue so the government intervenes to try and fix this

Question 9

Liberal

Answer 9

There is no discrimination in the market with a capitalist approach

Question 10

What market type is Ireland?

Answer 10

Traditional

Question 11

How is more competition and innovation sought to be achieved?

Answer 11

Through the capitalist model and less regulation

Question 12

Why is re-regulation happening?

Answer 12

Consumers are scared and don’t trust insurers

Question 13

Ex post regulation

Answer 13

The government regulates after an offence occurred

Question 14

What are the goal of ex-post regulation?

Answer 14

To prevent it from happening again

Question 15

What are the benefits of ex-post regulation

Answer 15

Allows innovation and risk-taking

Question 16

Ex-ante regulation

Answer 16

Prevents an offence from occurring the in the first place

Question 17

What are the drawbacks of ex-ante regulation

Answer 17

Prevents innovation

Question 18

When is ex ante regulation imposed?

Answer 18

When there is a lack of regulation or in a nationalistic, protected or socialised market

Question 19

What is principal based regulation?

Answer 19

Where parameters are given and you must work within them

Question 20

Rules-based regulation

Answer 20

This is what you can and can’t do

Question 21

What is the effect of rules-based regulation?

Answer 21

Regulatory Arborgage

Question 22

Regulatory Arborgage

Answer 22

Where you move from a distraction of high regulation to one of low regulation

Question 23

Para fiscal taxation

Answer 23

Take money from tax and put it aside as an insurance fund for catastrophic losses

Question 24

ORSA

Answer 24

Own risk and solvency assessment - how insurers intend to meet their solvency requirements.

Question 25

What actions can insurers take against insurers in difficulty

Answer 25

• Mergers
• Cease unprofitable practices
• Buy out insurers
• DB wind up (pensions act)

Question 26

What lines do we see insolvency guarantees?

Answer 26

Non-life

Question 27

Explain how insolvency guarantees work

Answer 27

Every insurer pays 2% of gross premiums into a fund that is used to pay out if an insurer becomes insolvent