FSA calls for reform in the insurance industry
13/12/2004
John Tiner, FSA Chief Executive, today called for the insurance industry to change its handling of commercial insurance contracts. Speaking in New York he told his audience that the FSA wants to see the end of the practice of "deal now, detail later", which has led to estimates of several hundred thousand outstanding policy wordings across the insurance market. This lack of certainty at the time of signing commercial contracts creates risk for policyholders, insurers and brokers. He added:
"As the FSA prepares to take on regulatory responsibility for insurance mediation, we challenge the London Market the underwriters, the brokers, the infrastructure providers and the clients to develop and execute as rapidly as is possible a market based solution to this issue of contract certainty. Consistent with our philosophy of working with the grain of the market, the FSA wants to see the insurance industry grasping this nettle and moving to a business and operating model which is transparent and efficient."
John Tiner has invited a number of key insurance industry personnel to meet with him to discuss the issue. The FSA will look to industry to take the lead role in delivering solutions within the next two years.
Notes for editors
In December 2001 HM Treasury announced that the FSA's powers would be extended to include the regulation of general insurance sales and administration. This will take effect from 14 January 2005. The FSA has no powers at present in this area and currently broking business is regulated under a (non statutory) voluntary arrangement by the General Insurance Standards Council ('GISC').
John Tiner was speaking at the LeBoeuf, Lamb, Greene and MacRae 2004 Life and Property/Casualty Industry Symposium in New York.
View speech
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 for consumers; and fighting financial crime.
The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal.