Welcome to the March edition of the IMU newsletter which provides you with a summary of the latest accounting, actuarial and regulatory developments in the insurance market.
In this edition you can find out more about the following topics:
- FSA issues waiver by consent on market and counterparty limits.
- ABI discussion paper on regulation and markets.
- ABI issues Solvency II bulletin.
- IAIS publishes issues paper on group-wide solvency assessment and supervision.
- BAS issues Exposure Draft on reporting actuarial information.
- FSA requires the cessation of sales of single-premium PPI.
- FSA consults further on changes to the with-profits rules.
- FSCS issue Plan and Budget 2009/10.
- About this newsletter and the Insurance Centre of Excellence.
This newsletter is prepared by the Deloitte Insurance Centre of Excellence (ICoE).
We hope you find it informative and would welcome any feedback or suggestions you may have.
FSA issues waiver by consent on market and counterparty limits
In March 2009, the Financial Services Authority ("FSA") issued a waiver by consent on the market and counterparty limits in relation to exposures to entities that have HM Treasury as a common shareholder. This waiver is available to insurance companies, and will allow insurers to treat exposures to entities with HM Treasury as a common shareholder separately (i.e. they will not be considered to be closely related counterparties solely because of the HM Treasury interest).
Interactive link to related information
ABI discussion paper on regulation and markets
On 13 March 2009, the Association of British Insurers ("ABI") published a discussion paper titled 'Regulation and Markets for the 21st Century'. This paper discusses the current market conditions and related crisis of confidence and proposes that the solution, while considering UK competitiveness, should be based on what is best for consumers. To achieve this, the ABI proposed 5 key principles which should drive future policy making and regulation:
- A safe and secure financial services system,
- Prudentially sound firms,
- Competition and innovation,
- Regulation that works across borders, and
- Capital markets that are connected to users' needs.
Interactive link to related information
ABI issues Solvency II bulletin
On 11 March 2009, the Association of British Insurers ("ABI") issued its latest bulletin on Solvency II. Among other things, this issue covers: the current state of Solvency II in Europe, in particular the complexities and potential problems relating to the implementation of the group solvency regime, and the results of the De Larosiere report issued on 25 February 2009.
Interactive link to related information
ABI Solvency II Bulletin (pdf)
IAIS publishes issues paper on group-wide solvency assessment and supervision
On 9 March 2009, the International Association of Insurance Supervisors ("IAIS") published a paper on group-wide solvency assessment and supervision. The paper highlights a number of important issues and challenges that should be considered in developing a group-wide solvency regime and notes that there are a number of disparate supervisory approaches currently in place. The IAIS also notes that this paper is a preliminary exploration, and that further analysis and consideration will be required.
Interactive link to related information
BAS issues Exposure Draft on reporting actuarial information
On 5 March 2009, the Board for Actuarial Standards ("BAS") issued its second Exposure Draft of the generic standard on reporting actuarial information. This follows recent consultations on the two other generic standards on data and modelling. The reporting standard is likely to be the first one issued by the BAS. It is expected to be in force from April 2010 and apply to all work that an entity is required to obtain from a qualified actuary; this represents a change in scope, which is still being consulted on.
The consultation period for the exposure draft ends on 29 May 2009.
Interactive link to related information
BAS Press Notice and link to ED
FSA requires the cessation of sales of single premium PPI
On 24 February 2009, the Financial Services Authority ("FSA") issued a 'Dear CEO' letter to all firms selling single-premium payment protection insurance ("PPI") asking them to withdraw the product as soon as possible and forbidding sale after 29 May 2009.
This follows on from the Competition Commissions January 2009 report which found that there are features of the current market practices which prevent, restrict or distort competition for the sale of PPI. Two speeches on the subject of PPI were given at the recent British Bankers' Association seminar, one by Dan Waters of the FSA, the other by Tony Boorman of the Financial Ombudsman Service.
Interactive links to related information
FSA Press Release and link to"Dear CEO" letter
FSA consults further on changes to the with profits rules
On 23 February 2009, the Financial Services Authority ("FSA") published CP09/9 'With-profits funds – compensation and redress', a further consultation paper relating to compensation and redress payments from operational failures made from with-profits funds. This follows from the initial consultation paper CP 08/11 published in June 2008.
This new consultation proposes that compensation and redress payments, arising from events after the rule takes place, will not be payable from with-profits funds unless it is paid from that part of the with-profits fund that is attributable to shareholders.
The consultation period closes on 22 May 2009.
Interactive link to related information
FSA Press Release and link to CP
FSCS issue Plan and Budget 2009/10
On 12 February 2009, the Financial Services Compensation Scheme ("FSCS") published its Plan and Budget for 2009/10. The FSCS noted the significant impact of the current market conditions, particularly the failures of various banking institutions, which is driving a significant increase in the levies for the current year (largely on deposit taking institutions).
Interactive link to related information
Any comments or questions about this newsletter?
This publication is designed to keep readers abreast of current developments, but it is a general guide only and is not intended to be a comprehensive statement of the law or regulations and not an exhaustive treatment of those current developments. Accordingly, the information in this publication is not intended to constitute accounting, tax, legal, investment, consulting, or other professional advice or services. It therefore cannot be relied on to cover specific situations; application of the principles set out will depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any of the contents of this publication.
Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific circumstances. If you would like more information or would like to discuss any of the issues set out in this newsletter please contact your usual Deloitte contact or any of the ICoE team listed below and they will be pleased to help you.
Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of any material in this publication.
The Insurance Centre of Excellence
The Deloitte Insurance Centre of Excellence (ICoE) is a dedicated technical group, within our insurance practice, with a reputation for outstanding technical quality and thought leadership embracing senior professionals from all areas of the business.
We play a guiding role in our profession and liaise with industry and trade bodies – an inside track on the latest accounting and regulatory changes means that we are perfectly placed to advise on current issues. We understand the insurance market and as part of a significant practice with a wide breadth of expertise the ICoE team can draw on a blend of skills to deliver outstanding financial, actuarial, tax, commercial and regulatory advice and knowledge that addresses the issues and challenges facing the industry
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.
