Regulatory FCA launches thematic review of insurance brokers' management of conflicts of interest
On the 2nd of July, the FCA published a speech by Simon Green, Head of General Insurance and Protection at the FCA, which launched a thematic review by the FCA of insurance brokers' management of conflicts of interest. The review is to focus on SME and micro-business customers.
Mr Green highlighted that the thematic review will be particularly interested in looking at how insurance brokers handle conflicts of interest in relation to revenue received, including payments received from insurance companies (outside of broking commission in the normal range), such as profit share and volume arrangements.
The findings and final recommendations of the FCA's thematic review are expected to be delivered in the last quarter of this year.
PRA publishes modification by consent of interim prudential sourcebook for insurers (IPRU)
IPRU Rules 9.17, 9.19, 9.20 and 9.20A require general insurance firms to complete certain reporting forms giving information about their insurance business.
The PRA have now announced a modification by consent procedure whereby certain firms may obtain a waiver or modification of these rules.
The procedure will generally only be available to an insurance business in run-off and whose business in each reporting category is less than GBP 100 million.
FCA launches thematic review of insurance claims process
On the 15th of May, the FCA published a speech by Martin Wheatley, Chief Executive of the FCA, to the British Insurance Brokers' Association conference, which launched a thematic review into the claims process across the general insurance market but with a particular focus on household and travel claims.
The thematic review is intended to address and investigate public concerns that policy holders might be facing delays; poor customer service; or having valid claims unfairly declined.
According to Mr Wheatley, evidence will be obtained on the following issues:
- Does the experience of customers vary according to whether they bought their insurance directly, through a broker or through an affinity scheme?
- How good are insurers in explaining up front what will happen when a customer makes a claim?
- How well do insurers keep customers informed on the progress of claims?
- Are payments to customers being made in a fair and consistent way when they are due?
- Are companies acting ethically towards their customers?
- Is the claims department as well resourced as the sales team?
Mr Wheatley emphasised that, whilst the thematic review might eventually lead the FCA to revisit its rules, the immediate preference is for firms to revisit their culture and to move away from overreliance on the mechanics of compliance and instead focus on a good outcome for consumers.
It is expected that the FCA will deliver its findings and final recommendations on the thematic review by the last quarter of this year.
Solvency II
On the 14th of June, the European Insurance and Occupational Pensions Authority (EIOPA) published the technical findings of its assessment on the "Long-Term Guarantee Package" (measures to be included in the Solvency II framework concerning supervision of long-term guarantee products).
EIOPA's findings supported some of the measures tested but advised on the exclusion of others (including the Extended Matching Adjustment).
Read the EIOPA technical findings
Lloyd's
Ratings Agency, Fitch, has affirmed Lloyd's 'A+' rating and revised the outlook to positive from stable.
According to Fitch, the affirmation of Lloyd's 'A' rating reflects Lloyd's strong financial profile, low financial leverage and significant market position in both insurance and reinsurance classes.
Fitch highlighted the positive role of the Lloyd's Performance Management Directorate (PMD) in increasing oversight of market participants and reducing earnings volatility as well as the investment by Lloyd's in preparing for Solvency II, which has enhanced risk and exposure management practices across the market.
Corporate
Application of the Takeover Code to be widened
As matters currently stand, the Takeover Code applies to offers for companies that have their registered office in the UK, the Channel Islands or the Isle of Man and whose securities are admitted to trading on a regulated market (as defined in MiFID) in the UK (which includes the Main Market of the London Stock Exchange, the Main Board of the ICAP Securities and Derivatives Exchange (ISDX) and any stock exchange in the Channel Islands or the Isle of Man). This is the case regardless of the location of the place of central management and control of such companies.
The Code also currently applies to offers for public companies (and certain private companies) which have both their place of central management and control (the so-called "residency test") and registered office in the UK, the Channel Islands or the Isle of Man.
Following the publication of a consultation paper on the 5th of July 2012 and subsequent consultation with respondents, the Takeover Panel has published a response statement on the 15th of May 2013, which concluded that the residency test should no longer apply to offers for companies that have their registered office in the UK, Channel Islands or Isle of Man and which have their securities admitted to trading on a multi-lateral trading facility (as defined in MiFID) in the UK, such as AIM or the ISDX Growth Market.
The extension to the Takeover Code's jurisdiction is to take effect from the 30th of September 2013.
Read the response statement by the Code Committee of the Takeover Panel
Global
Challenges for regional businesses purchasing insurance in the Middle East
Regional businesses across the Middle East face a number of challenges when considering the purchase of insurance. Key considerations include: understanding region-specific risks and liabilities to which a business operating in the Middle East may be exposed, as well as being aware of mandatory insurance requirements.
New personal accident compensation criteria announced in China
On the 8th of June 2013, The Insurance Association of China announced new personal accident compensation criteria called the 'Evaluation Standards for Personal Accident Injury and Disability'. These replace the old criteria and represent a significant expansion in the scope of personal accident injury insurance in China.
Sanctions
For all our latest articles on sanctions please see our sanctions web page.
Sanctions microsite
We have developed a dedicated sanctions microsite where you will find all our sanctions articles and events and useful information relating to Iran, Libya, North Korea, Syria, Cuba and Burma/Myanmar.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
