Succession and Contingency Planning – What Irish (Re)Insurers Should Know
HBO’s black-comedy hit Succession offered amusing yet insightful lessons about the political minefield of succession and contingency planning, vividly illustrating the chaos that ensues when these crucial processes unravel. Fortunately, governance systems of most (re)insurers are considerably less dramatic (and far less satirical) than those of the show’s fictional conglomerate, Waystar RoyCo. Nevertheless, succession planning remains challenging for Irish insurers as regulators continually raise governance standards.
The first part of this article summarises key obligations arising from European and Irish insurance regulations. The second part outlines some practical solutions we offer to help insurers meet these obligations.
The Regulatory Landscape
Boards and executives within insurance undertakings face extensive regulatory demands regarding succession and contingency planning. Below, we highlight crucial regulatory obligations, beginning with European directives before moving on to specific requirements relevant to insurers operating in Ireland.
Solvency II Directive (2009/138/EC)
The Solvency II Directive revolutionised governance systems for insurers across Europe, particularly under its Pillar II requirements.
Article 41 emphasises that, "Member States shall require all insurance and reinsurance undertakings to have in place an effective system of governance which provides for sound and prudent management..." and explicitly mentions the necessity for "...continuity and regularity in the performance of their activities, including the development of contingency plans."
Article 42 adds that insurers must ensure all key individuals fulfill fit and proper requirements, stressing transparency in notifying regulators of changes in key personnel.
Logan Roy's business empire was marked by unclear reporting lines and glaring incompetence among his heirs apparent. It made for gripping television, though it's safe to say most of his leadership team would fail any real-world 'fit and proper' assessment
Solvency II Delegated Regulations (EU) 2015/35
Article 258(3) of the Delegated Regulations points to the importance of maintaining robust business continuity policies. Insurers must ensure that, in the event of operational disruptions, essential functions are preserved, allowing key insurance activities to continue or swiftly resume.
Article 258(5) highlights the need for insurers to manage and prevent conflicts of interest effectively. This may limit the ability of insurers to rely solely on existing personnel for contingency planning.
EIOPA Guidelines on System of Governance (EIOPA-BoS-14/253)
Guidelines from EIOPA have further stipulated that “...the undertaking should identify material risks to be addressed by contingency plans covering the areas where it considers itself to be vulnerable, and it should review, update and test these contingency plans on a regular basis.”
CBI Corporate Governance Requirements for Insurance Undertakings (2015)
The Central Bank of Ireland (‘CBI’) has expanded upon European-level requirements through several publications, including their Corporate Governance Requirements for Insurers. Specifically, Section 14.7 of these requirements obliges the board to "...ensure that there is an appropriate succession plan in place," while Section 15.8 further states that "the board shall ensure that it identifies risks to be addressed by contingency plans…" Additionally, insurers must regularly review, update, and test contingency plans, especially in vulnerable areas.
Source: Corporate Governance Requirements for Insurance Undertakings
CBI Cross-Industry Guidance on Outsourcing (2021)
Section 4.2 and Section 7.1 set out clear expectations on contingency planning around outsourced staffing functions and emphasise regular testing of contingency plans.
CBI Cross-Industry Guidance on Operational Resilience (2021)
Under Guideline 1, the Board holds ultimate responsibility for operational resilience, while Guideline 2 requires integration with overall governance and risk frameworks. Guidelines 3 and 4 instruct Boards to clearly define and approve criteria for critical business services.
Critically, as per Guideline 11 “key personnel should be identified and have completed the necessary training. Training and awareness programmes should be customised based on specific roles to ensure that staff can effectively execute contingency plans when responding to a disruption.”
The plot of Season One of HBO’s Succession revolves around the hapless Roy siblings, who find themselves utterly unprepared for the leadership roles suddenly thrust upon them after their father falls ill—exposing a critical lack of operational resilience within the Waystar Royco Group.
Guidance on the Individual Accountability Framework (IAF)
The IAF places heavy emphasis on succession planning. Section 2.7.6 recommends integrating succession planning into Statements of Responsibilities and Management Responsibilities Maps, highlighting that execution of succession plans should leave no gaps or areas of activity for which no one is accountable.
With regards to the ‘Reasonable Steps’ requirements under IAF, Section 3.13.2 highlights that individuals should be able to evidence “..steps taken to ensure adequate resources were in place…” and “…satisfy themselves that effective processes were in place in relation to managing disruptions to staffing levels such as departures, vacancies and illnesses (e.g. that a succession plan/resource plan was in place)…”.
Individuals should also be satisfied with reasonable steps taken to “…ensure appropriate transition, where applicable, including whether the individual took reasonable steps to ensure an orderly transition of responsibilities was completed as required.”
Section 6.2.7 goes on to directly addresses succession planning, requiring comprehensive and orderly transitions during personnel changes. It advocates for detailed guidance documents, regulatory compliance measures, effective controls, and structured transitional handover meetings involving all relevant parties.
Temporary and interim appointments are covered in Section 6.3.4, stressing the need for arrangements that maintain compliance, manage risks, and avoid disruption, during transitions.
The IAF also introduced ‘Prescribed Responsibilities’ (‘PRs’), assigning explicit succession-planning responsibilities to specific individuals:
PR11: Responsibility for Board-level succession planning, induction, training, and professional development.
PR13: Responsibility for monitoring implementation of effective succession planning, induction, training, and professional development policies for all staff.
The board of Waystar Royco suffered from significant planning shortcomings, which brought about multiple unwanted consequences during the show’s four-season run — including a federal raid, hostile takeover attempt, and extensive reputational damage.
Our Solutions
Our dedicated solutions cover five core areas.
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We offer cost-effective solutions allowing insurers to pre-select contingency role holders to cover unexpected staff losses. Pre-agreed terms, training, and contact procedures ensure smooth transitions.
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We quickly fill unexpected absences due to illness or resignation. Coverage durations vary from days to months, enabling orderly succession planning and offering critical crisis management support.
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We provide interim support for planned absences like maternity or career breaks, typically including overlap with the incumbent role holder to maintain business continuity and minimise disruption.
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Our mentorship services support internal emerging talent who are parachuted into senior roles sooner than anticipated. We offer initial hands-on oversight, evolving gradually into an advisory role as successors become proficient.
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Boards bear ultimate responsibility for succession planning. Our independent approach supports Boards by ensuring robust, compliant, and industry-aligned policies, providing additional assurance and perspective.