«INSURE InSure This month's roundup of developments affecting the insurance industry sees the final provisions of the CMA’s Order on Private Motor ...»
FCA, August 2016 FCA policy statement on renewal process The FCA has published a policy statement (PS16/21) on increasing transparency and engagement at renewal in general insurance markets. This follows from the consultation it carried out in 2015 to address the lack of competition within the general insurance industry (CP15/41). The consultation proposed a number of changes, such as for instance including the previous year's premium on renewal notices. In the policy statement the FCA confirms it will implement the changes it has proposed but with minor amendments to reflect some of the responses to the consultation. Insurers and intermediaries have until 1 April 2017 to comply.
Subsequently the FCA published Handbook Notice 36 setting out changes to be made to ICOB 6 to implement the proposals made in the above policy statement.
FCA, 10 August 2016 The Association of British Insurers has published its response to the policy statement, stating it is pleased about the changes but disappointed the FCA has not followed the ABI's recommendation to exclude health and pet insurance products.
FCA & ABI, 10 August 2016 FCA "Dear CEO" letters on ARs The FCA has published a "Dear CEO" letter referring to its thematic review of "Principals and their Appointed Representatives in the general insurance sector" which we reported on in our last edition. The FCA notes the serious shortcomings it has identified and requires the CEOs to consider the review and to take any necessary remedial action.
FCA, 27 July 2016 PRA supervisory statement on capital extractions by run-off firms The PRA has issued a supervisory statement (SS4/14 – updated July 16) on capital extractions by run-off firms within the general insurance sector. The supervisory statement has been updated and now sets out expectations for senior management considering making a request to the PRA to extract capital from the firm during a run-off. Reflecting proposals considered in consultation CP42/15 published in November 2015, it has been amended to align with a revised approach when considering requests.
PRA, 28 July 2016 Solvency II PRA Solvency II policy statement on remuneration requirements A policy statement, PS22/16, published by the PRA sets out responses to its April 2016 consultation paper on expectations around remuneration requirements in Article 275 of the Solvency II Delegated Regulation which applies to UK insurance and reinsurance firms. In general, responses supported a proportionate approach and requests for clarity on some points have been reflected in the final text of the statement.
PRA, 12 August 2016 EC Implementing Regulation on information for calculation of technical provisions and basic own funds On 8 August, the European Commission adopted Implementing Regulation (2016/1376) laying down technical information for the calculation of technical provisions and basic own funds for reporting with reference dates from 30 June until 29 September 2016 in accordance with the Solvency II Directive. The Regulation was published in the Official Journal of the EU on 18 August 2016.
European Commission, 18 August 2016 EIOPA publishes compulsory Solvency II information on equity capital charges EIOPA has set out what compulsory information must be applied by EU insurance and reinsurance undertakings under Solvency II for the calculation of the symmetric adjustment based on the behaviour of an equity index built by EIOPA.
EIOPA, 5 August 2016 New EIOPA Q&As
EIOPA has published new sets of questions and answers on its webpages concerning the following:
► Valuation of technical provisions guidelines ► Guidelines on reporting for financial stability purposes ► Final report on the ITS on the templates for the submission of information to the supervisory authorities (CP -14-052) ► Final report on the ITS on procedures, formats and templates of the solvency and financial condition report (CP -14EIOPA, 04 August 2016 Fraud Supreme Court decisions on fraud The Supreme Court has made two recent decisions on fraud that should be of interest to all those involved in the insurance industry. The first is the case of Versloot Dredging BV v HDI Gerling Industrie Versicherung AG, where the Supreme Court found that the use of a fraudulent device (reckless untruth to support an otherwise valid claim), which it described as a "collateral lie", did not constitute a fraudulent claim. In practice, it means that a claim is still valid and payable even if some of the evidence in support is false. See out briefing for more information.
In the second case, Hayward v Zurich Insurance Company plc, the Supreme Court unanimously held that a settlement agreement could be set aside for fraudulent misrepresentation, even if the insurer had suspected fraud at the time it had entered into the agreement. This was a case were the insurer suspected fraud but had decided to settle because of the risk that, in the absence of compelling evidence, the judge may believe the claimant. See our briefing for more information.
Suspended jail term for "ghost broker" A London-based ghost broker has been given a 21 month suspended sentence for attempting to defraud 25 companies of over £39,000. He took out several fraudulent motor insurance policies between October 2010 and April 2012 and submitted fraudulent injury claims to insurers based on fake collisions. The City of London Police’s Insurance Fraud Enforcement Department (IFED) and the Insurance Fraud Bureau (IFB) worked together sending a clear message of commitment to tackling fraud.
IFED, 19 August 2016 Former broker jailed over conspiracy to defraud Willis A former broker for maritime insurance at Willis Towers Watson and his partner have been jailed over a conspiracy to defraud Willis by lying about commissions. Together they defrauded Willis of $2,300,000 over a ten year period by making false statements concerning a sham third party introducer.
IFED, 19 August 2016 Contact
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