Clearer reporting will help understanding of insurance industry

David Strachan, Director Insurance Firms Division, said:

"The publicly available Annual Return for insurers is an important document which we use to help assess the financial condition of insurers and how they are meeting their obligation to treat customers fairly. It is also heavily used by market analysts, consumer organisations, financial commentators and others with an interest in insurance.

The current format of the Annual Return has evolved over the years and has become unnecessarily complex and unwieldy, such that it is difficult even for expert users to understand. The amendments we are proposing for the Annual Return are designed to improve the timeliness and quality of analysis of the information, increase the transparency of the key risks which firms face, and allow easier comparison and benchmarking of firms. Ultimately, the revised Annual Returns should enable us and external users of the return to make better informed decisions about the industry as a whole."

The Consultation Paper published today also re-consults on more consistent and clearer arrangements for the Directors certification of the Annual Return and associated audit opinion, and the introduction of a reviewing actuary's opinion for life insurers.

The proposed new arrangements are intended to come into effect for financial years of firms ending on or after 31 December 2004.

Notes for editors

1. The new reporting arrangements are described in Consultation Paper 202: Insurance regulatory reporting: changes to the publicly available annual return for insurers. Comments are requested by 31 December 2003.

2. Consultation Paper 202 is the first stage in our consultation process for regulatory reporting of annual returns for insurers. We intend to implement similar changes for Friendly Societies. The CP also contains detailed discussion of proposed changes to the general insurance annual returns. Both of these proposals will be consulted on in future Consultation Papers.

3. Consultation Paper 167, published in January 2003, included proposed changes to insurance regulatory reporting including the Directors certificate, audit and financial condition reporting, which have implications for all insurance firms. Feedback on the Responses received in respect of those proposed changes is included in CP 202, which re-consults on changes to the Director's certificate and audit. Feedback on CP 167 proposals on with-profits governance and the role of actuaries in life insurers was published in June 2003 in the Policy Statement on CP 167.

4. The changes proposed align with the integrated reporting approach for all regulated firms detailed in > Consultation Paper 198: Regulatory reporting - a new integrated approach.

5. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection of consumers; and fighting financial crime.

6. The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal.