FCA to rip up insurance rules in drive for growth
The Financial Conduct Authority has outlined plans to ditch “outdated or duplicated” insurance rules in a bid to help firms reduce costs and drive competition.
The City regulator’s fresh proposals would hand firms greater responsibility over reviewing the value of their product.
This would involve companies using the risks and characteristics of each individual product to decide how often they review, as opposed to the mandated 12 months at present.
Proposals would grant firms more flexibility in appointing a lead insurer to comply with its rules in scenarios where more than one party are behind the creation of a product.
The watchdog also plans to remove minimum training hour requirements for workers in insurance and funeral planning.
The consultation documents propose creating a new definition for big commercial insurance customers, who should not be captured by its conduct rules.
FCA: Rules must ‘promote effective competition’
The FCA said the changes would ease pressure on firms insuring bigger businesses that can manage risks independently.
The regulator added that they would also open up access for firms and consumers who rely on insurance to manage risk while maintaining appropriate levels of protection.
The consultation document said: “Given the global nature of the commercial market, it is important that our rules deliver proportionate regulation that promotes effective competition.”
Matt Brewis, director of insurance at the FCA, said: “We are stripping back our insurance rule book by removing ineffective, outdated or duplicated regulation, as part of our drive to become a smarter regulator and support growth.”
“We have listened to industry and we are taking action. In doing so we will reduce regulatory costs and increase the competitiveness of the already world-leading UK insurance sector, while maintaining vital protections for smaller customers.”
The FCA will hear feedback on the proposals until July 2 2025.
Changes to the insurance regime come as the watchdog looks to support the government’s ambition for economic growth.
The regulator wrote to Prime Minister Sir Keir Starmer in January pledging: “Growth will be a cornerstone of our strategy, through to 2030.”
City AM previously revealed the FCA had told industry stakeholders it sought to “put the P back in IPO” as it aimed to open up avenues for retail investors.