An evaluation of the effects of the insurance pricing rules enacted by the Financial Conduct Authority (FCA) in the 2021-2022 financial year will be published later this year.
The regulator announced the analysis alongside a review of the complaints reporting process.
A response to the HM Treasury-led consultation on captive insurance is also likely to be published this summer while the Prudential Regulation Authority (PRA) is expected to reveal the results of its life insurers stress tests by the end of the year.
Details of the measures were revealed within the FCA’s regulatory initiatives grid update.
Insurance pricing analysis
Announcing the evaluation of general insurance (GI) pricing intervention, the FCA said it was conducting “an ex-post impact evaluation of the effect of the GI pricing practices rules which came into effect in 2021/22. Completion of the evaluation is planned for Q3 2025.”
The regulator published its rules for general insurance pricing practices, which included the health and protection insurance markets, in May 2021 and firms needed to fully introduce them by 17 January 2022.
It excluded health insurance and cash plans from rules preventing auto-renewal of policies.
During the process the FCA also sought to reassure the industry it was not seeking to limit margin or profit with its measures.
However, in August 2022 the FCA slammed general insurance and pure protection manufacturers and distributors for failing to get to grips with its final rules on insurance pricing and enhanced product governance.
In the letter seen by Health & Protection, FCA director of insurance Matt Brewis said the regulator “was disappointed that a material proportion of the market appears to have failed to adequately consider the applicability and the impact of the rules on both the manufacture and distribution of their products”.
Complaints reporting review
A review of complaints reporting procedures has also been scheduled by the regulator.
The FCA said it was “developing proposals to improve complaints reporting”.
This will enable it to “better assess whether firms are putting things right themselves.
“This will also help the FCA spot issues earlier and support assertive interventions”, it continued.
Engagement with stakeholders including volunteer firms on prototype proposals including implementation costs carried out to inform cost benefit analysis (CBA) and return design will be conducted.
Consultation on any proposed changes is due in in the first half 2025.
Captive insurance consultation
In November HM Treasury (HMT) published a consultation into the captive insurance market which closed to respondents in February.
As part of the consultation, HM Treasury said the government’s initial view was that there are strong arguments that captives should not be able to write life insurance policies.
“Life insurance policies generally have long-term liabilities to third parties, and insurers are therefore subject to a strong regulatory regime to deliver high probability of being able to meet long-term future claims,” it said.
The FCA timetable noted that a consultation response was likely from HMT this summer.
“Captive insurance is a method of self-insurance and risk management,” the FCA said.
“In this consultation the government aims to understand the potential of a new approach to captives to support the growth and international competitiveness of the UK’s insurance sector.”
