The FSA has set out some of the aspects of the general insurance market that it will be looking to i...
The FSA has set out some of the aspects of the general insurance market that it will be looking to improve through regulation.
Speaking at a recent Association of Insurance and Risk Managers lecture, FSA chairman, Howard Davies, said that transparency of relationships between brokers and the companies they represent and of the policies themselves are the main issues. There will be improvements in transparency regarding commissions, in order to bring them into line with other financial products.
It also expressed concern about high pressure selling within the general insurance market.
Davies said: 'We cannot say with confidence how serious these issues are. But I note the industry itself was sufficiently concerned about standards of business to establish the General Insurance Standards Council to use self-regulation to raise quality and confidence.'
The FSA would also like to see strengthening of the entire insurance industry's capital base. It is worried at the growth of insurance-based investment banking between insurers and banks and the industry's reinsurance practices. The FSA has required a number of companies to renegotiate their reinsurance arrangements.
Davies said: 'I believe a number of companies should be asking themselves some hard questions about the prudence of their reinsurance practices and indeed about the business ethics of arrangement of this kind.'
He added that this strengthening was bound to require some increases in premium rates and the industry would have to satisfy customers that it was controlling its own costs.
