Recovery planning for Irish insurers – what's next?

Are your recovery plans ready for IRRD? 

Irish insurers are no strangers to recovery planning. Under the Central Bank of Ireland’s 2021 recovery planning regulations, many have already developed robust frameworks to manage financial stress. 

Under the EU’s upcoming Insurance Recovery and Resolution Directive (IRRD), firms will have to reinforce their efforts. They’ll face harmonised requirements for both recovery and resolution planning. 

This article looks to the banking sector for lessons on how Irish insurers can move beyond compliance, building resilient strategies that meet evolving regulatory expectations.

The IRRD doesn’t mandate using playbooks or running recovery simulations. But these tools have become standard practice in the banking sector under the Bank Recovery and Resolution Directive (BRRD). 

Introduced in 2015, BRRD encourages institutions to adopt playbooks and simulation exercises as best practice. Though not formally required, they’re increasingly viewed as a regulatory expectation.  

There’s also a strong emphasis on board-level engagement, depending on the complexity of the firm. Many institutions regularly involve their boards in these exercises. 

Regulatory bodies such as the European Central Bank (ECB) and national authorities frequently advocate for playbooks and recovery simulations. They recognise their value in ensuring institutions are equipped to respond effectively to periods of financial stress. 

Playbooks and simulations are now seen as best practice in the insurance industry. And they may soon be seen as a regulatory expectation.  

A playbook is a recovery plan implementation guide that promotes swift and effective decision-making. 

• Summary-style playbooks are high-level guides. They give an overview of the recovery plan, enabling senior management and boards to grasp the key elements quickly during a crisis. 
• Recovery option playbooks are essentially operational manuals. They contain detailed, step-by-step documents outlining how to carry out specific recovery or resolution actions.

The banking sector uses four common simulation exercises.

1. Facilitated walkthroughs are guided discussions to embed understanding of crisis plans.
2. Desktop exercises are mock crisis meetings to rehearse structures and processes.
3. Simulation exercises are real-time, multi-team scenarios to test mature capabilities.
4. Wargaming entails strategic decision-making simulations for confident, well-prepared teams.

Our experience in the market has shown us some common pitfalls in recovery planning:

How can we help?

Our PwC team has deep insurance expertise, from both industry and professional services perspectives. 

Our insurance experience and strong understanding of the key risks facing insurers supports our development of recovery plans. 

Our banking team brings extensive BRRD expertise. PwC has helped banks in Ireland, the UK and across the EU with their recovery and resolution planning needs, including:

• drafting recovery plans
• developing playbooks
• designing and executing simulation exercises.  

Our experts understand regulators’ expectations. They’ve even supported resolution authorities in developing their own readiness programmes. 

This experience underpins our comprehensive methodology in carrying out recovery and resolution simulation exercises.