International Association of Insurance Supervisors
Assessing insurer conduct - IAIS publishes report on supervisors’ use of key indicators - 29 June 2022
The International Association of Insurance Supervisors (IAIS) has published a report which sets out the findings and recommendations from a survey of IAIS members on current supervisory approaches and challenges related to firms’ use of key indicators to assess insurer conduct (the Report). The survey was launched in December 2020.
The broader context of the survey is the IAIS’s recognition of conduct and culture as a key supervisory focus and that conduct risks can lead to financial soundness concerns within the insurance industry. Supervisors are increasingly looking to adopt more forward looking and outcomes-based approaches to supervision, which includes the use of data as key indicators for assessing insurer conduct.
Key findings from the Report include:
- most respondents have formalised powers and frameworks for collecting conduct data, and most commonly receive this data from both insurers and third parties, or just insurers. The IAIS observes no strong trends regarding the tools being used for collection, processing validation or analysis;
- 201 unique conduct indicators were reported by respondents (the high number is explained by the slight variations in indicators used), although most supervisors reported collecting 20 or fewer indicators to assess insurer conduct. The IAIS notes that there is a concentration of indictors that focus on claims, and which then link to assessing the appropriateness of particular products or customer value. Complaints data is regarded by supervisors as a top source of information across all conduct outcomes;
- analysed conduct data is often used to identify potential misconduct and support formal enforcement measures. Approximately half of respondents indicated they also use it to inform product interventions and consumer education initiatives;
- the top two challenges encountered by supervisors are: (i) poor prioritisation of conduct-related issues by insurers; and (ii) a lack of supervisor resources. The IAIS also notes that recurring themes reported as difficulties in interpreting and using conduct data collected from insurers and third parties include, among others: (i) definitional issues; (ii) insurers’ inability to provide the requested data; and (iii) poor data quality; and
- many supervisors initiated specific data collections relating to insurer conduct in response to COVID-19. However, most respondents report having no plans to change their general approach to supervision.
The IAIS is working on developing practical guidance for member supervisors on the use of key indicators to proactively monitor conduct risks, in order to achieve more timely responses to emerging conduct trends and risks. The IAIS expect to make this available to members in Q1 2023.
IAIS Report: Supervisors’ use of key indicators to assess insurer conduct
Press release
Financial Conduct Authority
Business interruption insurance - FCA updates webpage - 24 June 2022
The FCA has updated its webpage on business interruption insurance, setting out guidance and statements for policyholders.
The FCA stopped providing regular updates to its published guidance and statements for policyholders following the test cases on 16 August 2021. It, therefore, cautions that these documents may not fully reflect the current law. The FCA’s updated webpage directs policyholders to alternative resources which can be used in respect of rules that have been updated or introduced after that date.
The FCA notes that, when new court rulings are published, firms will need to consider how the ruling may impact the interpretation of their policies, and their claims, and complaints, handling. Where it is identified that a new court ruling has a possible wider beneficial impact for customers, the FCA expects firms to provide either: (i) details of any proposed remedial action; or (ii) reasons why such remedial action may not be carried out. Where it has been determined that a new court ruling has no wider beneficial impact, the FCA expects firms to explain to customers the reasons for this. Where firms decide not to reopen claims, the FCA expects firms, in appropriate circumstances, to be open and transparent about their reasons for doing so, to allow customers the opportunity to consider those decisions and complain if they disagree.
Updated webpage
Financial Ombudsman Service
Pre-paid funeral plans - FOS publishes blogpost - 28 June 2022
The Financial Ombudsman Service (FOS) has published a blog post providing an introduction to the FOS for pre-paid funeral plan providers.
FOS Blog: Pre-paid funeral plan providers - an introduction to the Financial Ombudsman Service
Webpage: Complaints about pre-paid funeral plans
