The number of on-site ‘ARROW' inspections of insurers by the FSA has jumped 38% over the year, with 47 visits in 2012 to (to September 30) compared to 24 for 2011, according to law firm Reynolds Porter Chamberlain LLP (RPC).
‘ARROW' visits are regulatory probes where the FSA assesses risk handling and conducts on-site interviews.
RPC said the FSA will be using its ARROW visits to scrutinise insurers' readiness for Solvency II, their reserving against possible claims and any retail business the insurer has, even if very small.
Richard Burger, partner at RPC, said: "The level of regulatory scrutiny during an ARROW visit is intense.
"ARROW visits are gruelling, time-consuming and expensive for businesses under the FSA's microscope."
RPC said the rise comes despite the FSA's decision to revise the ARROW regime because of previous failures like Northern Rock, which received an ‘all clear' ARROW visit shortly before the bank's collapse.
Burger added: "The FSA has really put the insurance sector in the spotlight over the last year.
"The FSA may have decided that it's the insurance sector's ‘turn', but that will be very unwelcome news to insurers who have seen significant increases to the cost of regulation since the financial crisis."
"Insurers are very angry that they've been hit by the same regulatory backlash from the credit crunch as banks, even though the insurance sector has fared relatively well throughout the financial crisis and downturn."
