UK: FCA 2017/2018 Business Plan - Sector priorities for general insurance

by Hogan Lovells
Contact

Hogan Lovells

[co-author:

In its recently published 2017/2018 Business Plan the FCA outlines its priorities for the general insurance sector over the coming year and beyond.

In general, the Business Plan identifies a shift in focus towards market structures, incentives and distribution and away from issues directly affecting retail/SME consumers (though the FCA will continue to monitor and review its previous work in this area):

The general insurance and protection (GI&P) sector protects individuals and businesses against the cost of uncertain and often unpredictable events. Without the protection of insurance, many social and economic activities could not take place.  It is vital that this market, including the wholesale market underpinning it, works well.”

The Business Plan identifies three specific general insurance initiatives:

Market study on wholesale insurance market

  • This market study will assess how effectively competition is working in the wholesale market, including how firms ensure practices do not create market integrity risks or conduct risks.
  • Following publication of the market study in 2018/2019 the FCA will consider appropriate remedial actions.

Value in the distribution chain

  • The FCA’s previous review into delegated authority and outsourcing in the general insurance market showed that insufficient focus and consideration has been given to how the interests of customers might be impacted by outsourcing.
  • Accordingly, the FCA intends to conduct a further review to understand the “end-to-end” relationships in the distribution chains. This review is scheduled to complete in early 2019.

Firms’ pricing practices

  • In September 2016 the FCA published its Feedback Statement on its Call for Inputs on Big Data in retail general insurance.
  • Building on this, the FCA now intends to look (during 2017/2018) at pricing practices in a limited number of retail general insurance firms to gain a better understanding of how these developments are affecting the market.
  • In particular, the FCA will look at how firms’ pricing approaches and rating factors work in practice, as well as the drivers and the types of systems and data firms use to decide the final price for consumers.
  • Following this, the FCA will consider whether any further steps need to be taken.

In addition to these specific initiatives, the FCA has also identified a number of issues and risks affecting the general insurance sector.

Chief among these is IT resilience and the risk that IT failures, data protection issues and cyber-attacks may lead to customer detriment.

In particular, the FCA notes that the use of legacy systems and the rise in outsourcing of functions all contribute to a level of complexity that increases the risk of poor consumer outcomes.

This is linked to the FCA’s recent work on cyber security in relation to financial services firms, more generally. In conjunction with the Financial Policy Committee, the FCA has examined the critical national infrastructure and sought to investigate firms which hold large quantities of sensitive data – which if compromised could then have a ripple effect to other areas of the financial sector.

Other issues and risks identified include:

  • Customers may choose unsuitable products by focusing on headline price rather than on suitability.
  • Intense competition which could lead to poor advice and gaps between consumer expectations and reality.
  • Vulnerable or high-risk consumers may not be able to access general insurance products and services.
  • Firms which do not have effective systems and controls to mitigate issues of financial crime, conflicts of interest and inducements.
  • Small businesses (SMEs) are susceptible to purchasing inappropriate cover for their needs, and underestimating the levels of cover required.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Hogan Lovells | Attorney Advertising

Written by:

Hogan Lovells
Contact
more
less

Hogan Lovells on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.