Central Bank deputy governor Cyril Roux told the Department of Finance in March it did not have sufficient powers or staff to effectively regulate the insurance sector and gently rebuked it for requesting that he provide a report on issues relating to the sector.
This emerges from correspondence between the Central Bank and the department, released on Tuesday to The Irish Times.
In a letter to Mr Roux dated March 19th, Aidan Carrigan, assistant secretary in the department's financial services division, raised concerns at press reports suggesting price competition in the insurance market "may not be viable", and that reserve levels and actuarial knowledge in the sector might not be adequate.
“I am therefore requesting that you provide a report setting out any issues of concern in the insurance industry, including in relation to RSA Insurance,
and FBD Holdings,” he said.
Mr Carrigan asked Mr Roux to provide a statement outlining how the Central Bank was dealing with these issues, and an “assurance” it would take the “necessary action to underpin the financial stability of the system”.
Mr Roux sent a reply to secretary general Derek Moran on March 20th.
"In my role as deputy governor [financial regulation] I am accountable to the [Central Bank] commission and to the Oireachtas but I do not report directly to the department of finance," he said.
Mr Roux said Mr Moran’s position on the commission was the “statutory avenue” for “information sharing” with the department on supervisory matters.
He added that the “disjointed” nature of the regulator’s enforcement powers over non-life companies was an “impediment to their effectiveness” and needed consolidation.
In addition, Mr Roux said the the staff “vacancy rate” in its enforcement division was close to 40 per cent due to Government pay restrictions.
On April 29th, Mr Moran told Mr Roux that the minister could seek such information from the bank under section 6A of the Central Bank Act 1942.
He added its enforcement powers had been “consolidated and modernised” over several years and that the Commission was working to ensure that the best staff were available to the regulator.