1 Obligations under the regulations
Solvency II is implemented in Ireland by the European Union (Insurance and Reinsurance) Regulations 2015. The Central Bank of Ireland is the supervisor. The regime has three pillars: quantitative capital (SCR and MCR), a system of governance including the ORSA, and public and supervisory reporting.
An undertaking must hold eligible own funds to cover the Solvency Capital Requirement and the Minimum Capital Requirement, run a risk-management system that includes an Own Risk and Solvency Assessment, and notify the Central Bank before outsourcing critical or important functions (Regulation 51(3) — the Bank expects at least six weeks’ notice). Counterparty default risk is a standard formula module: the solvency of the firms you trade with is part of your own capital picture.
That last point is where many compliance managers spend their time. Distribution partners, MGAs, coverholders and reinsurers concentrate premium and credit risk. The Central Bank also expects due diligence on outsourcees and, for material exposures, an assessment of default and downgrade scenarios in the ORSA. Concentration in a small number of counterparties — including at second level, where your partner’s partners sit — is a recurring supervisory theme.
2 What do I need to do
Keep your own solvency file current, and run a live view of every trading partner that can move your SCR, your liquidity, or your ability to write business.
1. Know your own SCR, MCR and ORSA calendar
Agree owners for quarterly QRTs, the Regular Supervisory Report, the SFCR and the annual ORSA. Board packs should show the ratio, the buffer to MCR, and what would breach it. Regzact can assist: hold the evidence, generate tasks for each return, and send reminders before filing dates.
2. Track GWP and solvency ratios for every trading partner
For each insurer, MGA or broker you rely on, record written premium and the latest solvency ratio. Set a threshold that triggers review before the ratio becomes a capital or concentration problem. Regzact can assist: record GWP and solvency ratios on partner profiles and alert you when a ratio moves.
3. Run annual reviews and credit checks
CBI outsourcing guidance expects documented due diligence on the provider’s ability to perform. Repeat it at least annually: accounts, credit checks, regulatory status, and whether they still meet your appetite. Regzact can assist: schedule annual partner reviews, run credit checks, and keep the questionnaire and evidence on the partner file.
4. Look through to second-level partners
Your coverholder’s brokers, or your MGA’s capacity panel, can concentrate risk you do not see on the first-level file. Map those relationships and watch their health with the same ratios and reviews. Regzact can assist: track the health of second-level partners on the same partner network view.
3 What records do I need to keep
If the Central Bank asks how you oversaw counterparty and outsourcing risk, you need a file per partner and a group view of concentration — not a folder of last year’s PDFs.
- Own-funds, SCR and MCR figures used in board and ORSA papers, with the dates they applied
- Partner register: legal entity, GWP, solvency ratio, credit check, last review date and next due date
- Annual review packs and the decision to retain, restrict or exit the relationship
- Credit-check reports and the appetite threshold you applied
- Second-level partner map and the health indicators you monitor
- Outsourcing notifications to the Central Bank for critical or important functions
- ORSA extracts that show counterparty default and partner-failure scenarios
4 Using AI to streamline the process
The capital calculation stays with actuarial. AI helps the oversight file that sits around it:
- Flag partners whose solvency ratio or GWP has moved since the last review
- Draft an annual-review briefing from the latest accounts, credit check and questionnaire
- Spot second-level concentrations — the same downstream broker appearing under several MGAs
- Remind owners when a review, credit check or filing is coming due
Do not let a model decide that a partner is “fine”. Use it to surface movement; keep the retain-or-exit decision with underwriting, finance and compliance.
5 How Regzact can help
Regzact’s Third Parties solution is built for Solvency II partner oversight. It tracks solvency information by recording the GWP and solvency ratios of your trading partners, supports annual reviews and credit checks, and tracks the health of their second-level partners.
- Partner profiles with GWP, solvency ratios and live monitoring
- Scheduled annual reviews, questionnaires and credit checks
- Visibility of second-level partners and their financial health
- Tasks, reminders, alerts, evidence files and management reporting
Staff fitness, registers, sanctions screening and risk analysis sit on the same platform if a solvency issue overlaps with another event. Regzact can assist with each step of this process.
This is a practical how-to for compliance managers. It is not legal advice. Always check the current text of the regulations and your own policies before you act.