Philip Smith, the former chief executive and executive director of RSA Insurance Ireland, has been disqualified for 13 years by the Central Bank for his admitted participation in a breach of financial services law by the company.
Mr Smith was CEO of RSA Insurance Ireland from 2009 to 2013.
RSA Insurance Ireland was previously fined in 2018 by the Central Bank after admitting that there was a significant shortfall in its technical reserves resulting from the under-reserving of 17 large loss claims on 30 September 2013.
The Central Bank said that large loss claims, due to the severity, nature and/or extent of the insured event, represent a significant liability for insurance undertakings.
It said that RSA Insurance Ireland's procedures required large loss claim reserve estimates to be assessed by claims handlers and the recommended claim reserve estimate to be recorded on its claims database, adding that the accuracy of this information was critical for the proper calculation of RSAII's technical reserves.
But instead for certain large loss claims Mr Smith, while CEO, oversaw a process whereby claims handlers were prevented or delayed from recording their recommended estimates on the insurer's database.
The Central Bank said that as a result of the claims estimates on the database being understated, the technical reserves did not reflect the company's estimated liability for certain large loss claims creating a risk that RSA Insurance Ireland might not have been in a position to pay claims made by and against its policyholders.
The Central Bank is not allowed to impose a fine that would be likely to make a person bankrupt.
It said that it had considered Mr Smith’s participation in the breach also merited a monetary penalty of €120,000.
As part of the settlement process, Mr Smith submitted sworn information detailing his financial circumstances and the Central Bank said that after a thorough analysis of this information, the regulator determined that Mr Smith's financial circumstances are such that it could not impose a monetary penalty.
Colm Kincaid, the Central Bank's Deputy Governor, said the actions of directors and senior executives shape the conduct and operating culture of the firms they lead - none more so than the CEO.
"For consumers of financial products, including policyholders, to have trust in financial services, they need to be confident that their best interests will be secured," Mr Kincaid said.
"These consumers rely on directors and senior executives to manage their businesses in a way that not only adheres to the rules but builds an effective organisational culture based on standards such as professionalism, integrity and accountability to deliver fair outcomes that have the interests of consumers at heart," he said.
The Central Bank Deputy Governor said that since the period to which today's announcement relates, Ireland has enhanced the statutory framework for the accountability of senior individuals in financial services firms through the Central Bank (Individual Accountability Framework) Act 2023.
"These enhancements support the ultimate goals of better outcomes for consumers and a more sustainable financial system by driving higher standards of behaviour for individuals in financial services firms," he added.
