Cantillon: Insurance job awaits Prof Patrick Honohan’s successor

A testy exchange between Central Bank deputy governor Cyril Roux and the Department of Finance highlights apparent lacunae in insurance regulation and the sector’s relentless advance. Insurance assets in Ireland now exceed €200 billion.

At issue was a request from the department to Mr Roux to report on any issues of concern. The request followed a news item that suggested price competition in the market may not be viable. Mr Roux replied that he was primarily accountable to the Oireachtas and Central Bank Commission and not directly to the department. Ouch.

The correspondence came not long before an International Monetary Fund report which called on the Government to tackle “significant” challenges the Central Bank faces in attracting and retaining insurance supervisors.

Among other concerns, the IMF last month noted that emergency laws to cut public pay after the crash had left the Central Bank with a staffing problem in this area.

Such remarks echo Mr Roux, who told department secretary general Derek Moran in March that a 40 per cent vacancy rate in the enforcement division was attributable to Government pay restrictions.

All this is for settlement another day. Still, the affair tends to underscore the view that the regulatory work of the Central Bank will be increasingly directed at the expanding insurance sector. It will be recalled that bank regulation is now in the command of the European powers.

Admittedly, insurance regulation is not quite the most enthralling enterprise in the world. But it is likely to be core to the tasks of Prof Patrick Honohan’s successor in Dame Street. Take note, candidates. Take note.