Michael McGrath (Cork South Central, Fianna Fail)
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116. To ask the Minister for Finance the number of claims management companies operating here; if they are regulated by the Central Bank; the specific regulations that cover the operation of claims management companies; the specific penalties that arise for claims management companies which engage in poor conduct; and if he will make a statement on the matter. [28372/18]

Paschal Donohoe (Dublin Central, Fine Gael)
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I wish to clarify for the Deputy that ‘claims management companies’ are not a specific authorisation category for Central Bank of Ireland Regulated Financial Service Providers (RFSPs). Activities such as ‘loss assessing’ and ‘claims handling’ on behalf of a policyholder are considered to be regulated activities under the European Communities (Insurance Mediation) Regulations 2005 (the “IMR”).  The IMR specifically excludes the management of claims when acting on behalf of an insurance company (typically referred to as “loss adjusting”).

Firms who deal with claims under insurance contracts are required to be authorised by the Central Bank as ‘insurance intermediaries’ under the IMR.  Firms who undertake the management of claims on behalf of an insurance undertaking on a professional basis (i.e. loss adjusting) are not required to be authorised under the IMR.

The IMR sets out the rules for undertaking insurance mediation.  “Insurance mediation” as defined under the IMR is ‘any activity involved in proposing or undertaking preparatory work for entering into insurance contracts, or of assisting in the administration and performance of insurance contracts that have been entered into (including dealing with claims under insurance contracts), but does not include such an activity that –

(a) is undertaken by an insurance undertaking or an employee of such an undertaking in the employee’s capacity as such, or

(b) involves the provision of information on an incidental basis in conjunction with some other professional activity, so long as the purpose of the activity is not to assist a person to enter into or perform an insurance contract, or

(c) involves the management of claims of an insurance undertaking on a professional basis, or

(d) involves loss adjusting or expert appraisal of claims for reinsurance undertakings.’

The IMR does not provide for sub-categorisation of authorisation type, e.g. “Loss Assessors”, there are currently 2,235 registered Insurance Intermediaries regulated by the Central Bank, who are authorised to undertake insurance mediation, which includes ‘loss assessing’ and ‘claims handling’.  

The specific regulations that apply to loss assessor firms are, the IMR, the Consumer Protection Code 2012, and the Minimum Competency Standards.  Both the Consumer Protection Code and the Minimum Competency Standards include specific provisions and standards applicable to such firms; for example Chapter 7 of the Consumer Protection Code deals with claims processing and Appendix 3 of the Minimum Competency Code 2017 outlines the competencies required when handling claims.

As part of its consumer protection mandate, the Central Bank challenges firms to demonstrate compliance with regulatory requirements.  Any evidence of poor conduct may result in increased supervisory engagement or where appropriate, enforcement action, up to and including involuntary revocation of a regulated firm’s licence.  The Central Bank’s powers derive primarily from legislation, e.g., the Central Bank Act 1942 and the Central Bank (Supervision and Enforcement) Act 2013.