European Insurance and Occupational Pensions Authority
Blockchain and smart contracts in insurance - EIOPA publishes feedback statement - 6 May 2022
The European Insurance and Occupational Pensions Authority (EIOPA) has published a feedback statement on its April 2021 discussion paper on blockchain and smart contracts in insurance. In the feedback statement, EIOPA sets out a high-level summary of comments received on the discussion paper, together with its response to them.
EIOPA notes that blockchain’s deployment in the European insurance sector is still at an early stage. Most use cases cited by stakeholders are still small-scale, while other projects are in a proof-of-concept stage. Respondents largely see the potential benefits of blockchain in speeding up transactions and claims handling, lowering operational costs and improving traceability, as set out in EIOPA’s discussion paper. However, they also acknowledge risks in cyber and operational IT, including the inadequate training of staff, encryption security issues and risks arising from incorrect coding. Respondents also expressed concerns about sustainability, given the high energy consumption of some blockchain solutions.
Respondents agreed with EIOPA’s proposal that there is potential for blockchain to be used in supervisory and regulatory processes. They highlighted that efforts should focus on lowering costs and reducing procedural burdens for both industry and supervisors.
EIOPA will continue to assess the use of blockchain in supervisory and regulatory processes as necessary, and will keep an open dialogue with all stakeholders.
EIOPA Feedback Statement: Discussion paper on blockchain and smart contracts in insurance (EIOPA-BoS-22/178)
The Financial Guidance and Claims Act 2018 (Commencement No. 9) Regulations 2022 - Statutory instrument published - 6 May 2022
The Financial Guidance and Claims Act 2018 (Commencement No. 9) Regulations 2022 (SI 2022/509) (the Regulations) has been published under section 37(5), (8)b and (9)(a)(i) of the Financial Guidance and Claims Act 2018 (the Act). The Regulations were made on 4 May 2022.
The Regulations bring into force on 1 June 2022 a number of provisions in sections 18 and 19 of the Act. This includes section 18(2) of the Act, which amends section 137FB of FSMA to confer powers on the FCA to make rules requiring the trustees or managers of personal or stakeholder pension schemes to refer members and survivors to appropriate pension guidance in certain circumstances.
The Financial Guidance and Claims Act 2018 (Commencement No. 9) Regulations 2022 (SI 2022/509)
Financial Conduct Authority
Multi-occupancy buildings insurance - FCA publishes letter - 10 May 2022
The FCA has published a letter sent to the Secretary of State for Levelling Up, Housing and Communities, Michael Gove, providing an update on the FCA’s review of the way the market for multi-occupancy building insurance operates. The letter follows Mr Gove’s January 2022 letter on reports of rising costs faced by residential leaseholders and other affected property owners across the UK in the wake of the Grenfell tragedy.
The letter summarises the FCA’s progress across three different areas:
- gathering data and engaging with industry to better understand their approach to pricing;
- understanding the drivers of harm that could be affecting leaseholders. The FCA observes that price increases could be a result of insurers shying away from bidding for new business of multi-occupancy buildings, or charging particularly high premiums to insure them, but could also be due to factors such as a lack of competitive pressure on prices; and
- ways to address identified harms. Among other things, the FCA is considering whether it could use its powers to improve the information given to leaseholders about their insurance, or potentially limit the commissions that are paid to brokers.
The FCA explains that it is too early for it to confirm the harms present in the market or to make any recommendations about how they can be addressed. It will use the information it gathers from industry to develop options for potential intervention, including where the FCA concludes that market or government-led interventions may be beneficial.
The FCA is working to produce its final report within Mr Gove’s six-month deadline.
FCA letter to Secretary of State for Levelling Up, Housing and Communities, Rt Hon Michael Gove MP: Multi-occupancy buildings insurance