IRELAND Trends and Developments Contributed by: Grainne Callanan and Elaine Long, Matheson LLP
Although the Central Bank has not published any specific guidance on the use of AI in the financial services sector, it did, in its September 2025 Insur- ance Newsletter (“Newsletter”), address the Europe- an Insurance and Occupational Pensions Authority’s (“EIOPA”) August 2025 opinion on AI governance and risk management (“Opinion”). In so doing, the Central Bank stated that the Opinion is addressed to nation- al supervisors and clarifies “the key principles and requirements in insurance-sector legislation for the use and supervision of AI systems”. The Central Bank encouraged (re)insurers to familiarise themselves with the Opinion, as it sets out supervisory expectations regarding the use of AI. From the speeches we have seen from the Central Bank over the last number of months, it is clear that AI is a theme that they are very much engaging in, with the ethical and responsible use of AI being a main focus, especially in terms of firms having appropriate governance and risk management systems in place. It is clearly seen as a driver of risk, as evidenced by the February 2025 RSO report, specifically the “Spotlight” in the RSO on balancing opportunities and risks as regards AI. Climate change The February 2025 RSO included climate- and envi- ronment-related risks as one of the longer-term struc- tural forces at play in the main drivers of risk, and indeed included firms’ addressing of climate change and the net zero transition as a supervisory priority. It is clear that there has been a global trend of dep- rioritising climate change-related issues amid the shifting geopolitical environment. This very issue was addressed by the Central Bank at the end of Novem- ber 2025 in a speech delivered by Deputy Governor, Monetary and Financial Stability, Vasileios Madouros. From an insurance perspective, he noted that the Central Bank’s work on the flood protection gap shows that approximately 1 in 20 buildings already face difficulties accessing flood insurance, with the potential for uninsured losses increasing in tandem with rising flood risk. Analysis carried out by the Office of Public Works has shown that there is a potential for an increase in underinsurance.
Deputy Governor Madouros highlighted that one of the Central Bank’s key supervisory activities has been to strengthen the financial sector’s ability to manage climate-related financial risks, noting that the effective management of climate-related financial risks across the financial system remains one of the Central Bank’s key supervisory priorities. As to the question of a reduction in the Central Bank’s focus on climate change, the Deputy Governor was unequivocal in his rejection of such a contention, stating that the Central Bank is “staying the course.” Indeed, he pointed out that, if anything, delays in mit- igating climate change would only result in macro- financial risks stemming from climate change increas- ing. Fitness and probity In November 2025, the Central Bank published its feedback statement to its consultation on amend- ments to the fitness and probity regime (“CP160”), the Fitness and Probity Standards 2025 and the revised Guidance on the Standards of Fitness and Probity (“Guidance”). The Central Bank highlighted that there had been mostly positive feedback on the proposed approach. Particularly, respondents welcomed the consolidation of all fitness and probity-related material into a single document – the Guidance – to ensure a clear, trans- parent and comprehensive articulation of the overall framework and the additional clarity provided through the enhancements introduced to the framework. On the basis of the feedback received, the Central Bank has amended the draft Guidance on the Stand- ards of Fitness and Probity to provide additional detail, to reflect the application of the principle of proportion- ality, and to confirm the appropriateness of case-by- case assessments. The changes include: • the nature and complexity of the firm should be taken into account when determining the appropri- ate level of due diligence required; • the introduction of new guidance to facilitate the appointment of a Temporary Officer when a PCF role becomes vacant;
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