Welcome to a special edition of the Insurance Briefing in which we bring you the analysis and commentary of the insurance team at Pinsent Masons on the recent portfolio strategy letter from the UK's Financial Conduct Authority to the board of directors of Personal & Commercial Lines Insurers.
Addressed to PL & CL insurers, the FCA's message is likely to be of interest to the broader general insurance market and we hope you find this special edition of the Insurance briefing helpful.
'Step-change in culture' needed from personal and commercial insurers
The UK's personal and commercial insurers must deliver a "step-change in their culture" in order to protect consumers and avoid the risk of regulatory action, the Financial Conduct Authority (FCA) has warned. "Our view of the General Insurance (GI) sector overall is that there are significant risks of harm that both the market and individual firms need to address," the FCA said in its letter. "Firms should consider the degree to which they present risks of harm to consumers and markets and have implemented effective strategies to mitigate these risks. Where we identify firms that have not taken sufficient steps to do so we will intervene and consider all our regulatory tools to take appropriate action," it said.
Tobin Ashby of Pinsent Masons said: "Whilst the FCA's letter does not open up new ground - referring back to the work it has carried out in relation to distribution chains, pricing, governance and culture and operational resilience in particular – the tone of the letter should serve as a warning to all insurance firms within the GI sector of the seriousness with which the FCA intends to approach and monitor these issues". Iain Sawers of Pinsent Masons explains that "The FCA makes it clear it will focus on firms' effective implementation of regulatory change on the basis this is fundamental to treating customers fairly and to those customers having products that suit their needs. Firms will need to ensure not only that regulatory changes have been properly implemented, but also that there is a clear audit trail to provide evidence of effective implementation to the regulator if necessary." Read more here...
The regular Insurance Briefing will be issued as normal next week and for more comments, news and views from the insurance team at Pinsent Masons, see our insurance content on Out-law here.
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