I think this issue with cross-border selling of annuities is not really regulatory; it's largely commercial considerations that lead insurers to choose not to do this.
Couple of points:
1. Annuities are low-margin products. The market is competitive and the pricing is transparent, so the product is not very profitable for providers. Insurers who are in this market mostly see it as a way to bulk up the volume of funds under management.
2. They're priced on the basis of mortality tables, which are country-specific. Annuities sold to Irish residents are priced on the basis of mortality data about the population of Ireland (the Irish Life Tables, issued by the Central Statistics Office) and the same goes for other countries.
3. So, if a (say) German insurer did decide to write an annuity contract on the life of an Irish resident, he wouldn't do so at the same price at which he would write an annuity contract on the life of a German resident of the same age and gender. If he did, he'd probably lose out; Irish people live (on average) two and a half years longer than Germans. So he'd calculate a price based on the Irish Life Tables. In other words, his Irish annuities and his German annuities would be different products, differently priced, sold into different markets. And this means they'd be accounted for with separate reserves in the insurer's own funds.
4. Annuities (like other insurance products) work because of risk-spreading. The spreading of risk generates efficiencies from which insurers find their margin. An insurer is not interested in devising a product which is priced uniquely and sold to just one person; there's no spreading of risk there. So he's not interesting in writing annuities based on the Irish Life Tables unless he has, or expects to have, a pool of Irish annuitants large enough to enable him to access the benefits of risk-spreading. His actuary will tell him how large that pool needs to be before it is rational for him to enter the market.
The reason, I think, why most (all?) Irish insurers don't write annuities, other than in the context of retirement savings arrangements, is that outside that context there is very little demand for them. It's hard to build up the critical mass of annuitants that is needed of the product is to be attractive to providers. And if insurers operating in the Irish market, with an established profile and a marketing/distribution avenue find the product unattractive, I can't see how an overseas insurer, with no commitment to the Irish market, could find it attractive.
Couple of points:
1. Annuities are low-margin products. The market is competitive and the pricing is transparent, so the product is not very profitable for providers. Insurers who are in this market mostly see it as a way to bulk up the volume of funds under management.
2. They're priced on the basis of mortality tables, which are country-specific. Annuities sold to Irish residents are priced on the basis of mortality data about the population of Ireland (the Irish Life Tables, issued by the Central Statistics Office) and the same goes for other countries.
3. So, if a (say) German insurer did decide to write an annuity contract on the life of an Irish resident, he wouldn't do so at the same price at which he would write an annuity contract on the life of a German resident of the same age and gender. If he did, he'd probably lose out; Irish people live (on average) two and a half years longer than Germans. So he'd calculate a price based on the Irish Life Tables. In other words, his Irish annuities and his German annuities would be different products, differently priced, sold into different markets. And this means they'd be accounted for with separate reserves in the insurer's own funds.
4. Annuities (like other insurance products) work because of risk-spreading. The spreading of risk generates efficiencies from which insurers find their margin. An insurer is not interested in devising a product which is priced uniquely and sold to just one person; there's no spreading of risk there. So he's not interesting in writing annuities based on the Irish Life Tables unless he has, or expects to have, a pool of Irish annuitants large enough to enable him to access the benefits of risk-spreading. His actuary will tell him how large that pool needs to be before it is rational for him to enter the market.
The reason, I think, why most (all?) Irish insurers don't write annuities, other than in the context of retirement savings arrangements, is that outside that context there is very little demand for them. It's hard to build up the critical mass of annuitants that is needed of the product is to be attractive to providers. And if insurers operating in the Irish market, with an established profile and a marketing/distribution avenue find the product unattractive, I can't see how an overseas insurer, with no commitment to the Irish market, could find it attractive.
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