Dear CEO | Release Date: 20th September 2023
To read a longer summary of this Dear CEO letter, click here.
To access the original FCA document, click here.
Short Summary
The Financial Conduct Authority (FCA) outlines the Insurance Market Priorities for 2023-2025, highlighting our commitment to maintaining a robust and compliant insurance sector in the UK. The focus is on both general insurance markets and specific aspects of the wholesale insurance portfolios, notably Lloyd’s and London Market Insurance Intermediaries and Insurers.
The insurance industry plays a crucial role in the UK’s economic stability, providing essential services to millions. This includes a vast range of products from personal and commercial lines to life insurance. Particularly in wholesale insurance, which significantly contributes to the global economy with substantial Gross Written Premiums.
The sector faces challenges including the aftereffects of COVID-19, economic pressures, and the impacts of climate change and technology on operations and profitability. Our strategic aim is to ensure the market supports the long-term financial needs of consumers and businesses effectively, especially in crisis situations.
Significant concerns have been raised about practices within the market, such as the sale of under-valued products, discriminatory pricing, and inadequate claims handling. These issues underline the need for improved governance and compliance with our established standards.
Our priorities include enhancing operational resilience, promoting sound governance and culture, embedding the Consumer Duty effectively, and improving oversight of Appointed Representatives. These areas are critical for preventing financial harm and ensuring that the market can withstand and adapt to operational disruptions and regulatory changes.
Firms are urged to align their operations with these priorities and demonstrate proactive compliance. It is essential for Boards to ensure that these are not merely seen as compliance exercises but are integrated into the core operational strategies of the firms.
Key takeaways for affected readers include the necessity of integrating Consumer Duty into business practices, maintaining high standards of operational resilience, and ensuring transparent and fair treatment of customers. Firms should review their practices against these expectations and prepare for stringent oversight and potential regulatory actions.