The Central Bank of Ireland (CBI) reprimanded and disqualified former RSA Insurance Ireland DAC (RSAII) CEO Philip Smith for 13 years from management roles in regulated financial service providers due to his admitted role in under-reserving large loss claims, breaching Article 13(1)(a) of the European Communities (Non-Life Insurance) Framework Regulations 1994 (S.I. No. 359/1994). This enforcement action underscores CBI's commitment to individual accountability for senior executives who circumvent controls, risking policyholder protection and firm solvency, as evidenced by RSAII's subsequent need for a major capital injection. It matters for compliance professionals as it demonstrates CBI's use of prolonged disqualifications and inquiries under the Administrative Sanctions Procedure (ASP) to deter governance failures in insurance firms.
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What Changed
This is not a regulatory change or new requirement but an enforcement precedent reinforcing existing obligations under the 1994 Regulations for insurers to maintain adequate technical reserves reflecting true liabilities. It highlights CBI's focus on senior executive accountability for deliberate policy circumvention, such as undocumented processes overriding claims handlers' estimates, which inflated reported profits and understated liabilities. No new rules were introduced; instead, it applies
What You Need To Do
- Review senior management oversight of claims handling; document all approvals and prohibit informal (e
- Enhance governance training for executives on personal liability under ASP, including simulations of reserving decisions and policyholder risk scenarios
- Assess historical exposures for under-reserving; remediate if needed, and prepare for potential CBI inquiries (noting 10+ year investigation timelines)
- Update conduct and culture frameworks to align with CBI expectations for CEOs to drive compliance, as per Deputy Governor Colm Kincaid's comments
Key Dates
2014 - CBI enforcement investigation into Mr Smith and RSAII commences.
December 2018 - CBI reprimands and fines RSAII €3.5m for related breaches, including reserve failures.
November 2022 - CBI decides to hold an Inquiry into Mr Smith's participation under Part IIIC of the Central Bank Act 1942.
1 December 2025 - Reprimand and 13-year disqualification imposed on Mr Smith, effective immediately under IAF Act transitional provisions (no High Court confirmation needed).
12 December 2025 - CBI publishes public statement on the enforcement action.
Compliance Impact
Urgency: High – This action signals intensified CBI scrutiny on individual accountability in insurance reserving, with 13-year bans possible for deliberate breaches risking policyholders, even without actual losses. It matters now (post-1 Dec 2025 effective date) as firms face elevated enforcement r