THE REGULATOR yesterday hit out at insurance firms’ approach to delegated authority agreements with intermediaries and brokers, and said that better due diligence and oversight of the arrangements is needed.
The Financial Conduct Authority (FCA) reviewed the outsourcing arrangements of 12 insurers operating in the UK general insurance market, and also looked at 19 firms that held underwriting and/or claims handling authorities from those insurers.
According to the watchdog’s findings, “in many cases, insufficient focus and consideration has been given to how the interests of customers might be impacted by outsourcing”.
The FCA said it intends to provide the firms included in its review with individual feedback, setting out any actions required as a result of the regulator’s findings.
Maxine Cupitt, insurance partner at CMS, said concerns over delegated authorities and outsourcing are “long-standing”, adding that in personal lines insurance “responsibility for product design and governance is a real danger, and remains an area of potential confusion between intermediaries and insurers”.