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Insurance executive fined €70,000, banned from senior jobs for 8 years



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The former executive director and chief financial officer of RSA Ireland Insurance (RSAII), Rory O'Connor, has been fined €70,000 and banned from taking a senior role in the financial sector for eight years and four months, following an investigation by the Central Bank.

The sanctions follow a massive accounting scandal at RSA Insurance Ireland seven years ago.

In 2013, RSA Insurance was thrown into chaos after a massive hole was discovered in its balance sheet. An investigation found that the claim reserve estimates on RSAII's claims database were understated in the sum of approximately €29m as at 30 September 2013.

RSAII was fined €3.5m by the Central Bank in 2018.

The Central Bank's investigation found that Mr O'Connor knowingly and actively participated in RSAII's failure to maintain sufficient technical reserves through his involvement in the under-reserving of large loss claim reserve estimates.

The Central Bank said he had knowingly provided it with inaccurate and misleading financial information in his role as CFO.

Its investigation determined that Mr O'Connor's misconduct merited a disqualification period of 12 years and a monetary penalty of €100,000, but the sanctions were reduced to 8 years 4 months and €70,000 respectively.

"The Central Bank takes enforcement action against senior individuals in regulated financial services firms in order to hold them accountable where they have participated in serious or significant breaches of regulatory requirements," said Central Bank Director of Enforcement Seána Cunningham.

"For over three and a half years Mr O'Connor knowingly participated in the systematic under-reserving of large loss claims, actively facilitated the ongoing operation of the under-reserving and concealed it from the Central Bank through the provision of inaccurate financial information."

In practice, the under-reserving meant a claim relating to a serious motor accident should have been recorded on RSAII's claims database with a recommended estimate of €2.7m.

However, the claim was in fact recorded with a claim reserve estimate of just €20,001 thus, making RSAII's potential liability for that claim appear to be far less than it actually was.

The Central Bank has previously said that individuals within RSA Insurance Ireland had "deliberately manipulated claim reserve estimates through the under-reserving of multiple large loss claims from 2009 until October 2013".

This was done by recording claim reserve estimates on the firm's claims database which were much lower than the claims handlers' recommended reserve estimate.

The insurer was also accused of delaying the recording of recommended claim reserve estimate increases.

Irish Independent