FCA publishes interim report on general insurance pricing practices market study

The FCA’s latest market study (MS18/1.2), on general insurance pricing practices, continues its focus on general insurance markets. Building on an earlier thematic review on home insurance, the FCA has looked in particular at how firms adapt the margins they aim to earn according to the likely behaviour of individual customers.

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The new regulatory regime for insurance intermediaries in Hong Kong – are you ready for 23 September 2019?

On 23 September 2019, the new statutory regime for the regulation of insurance intermediaries will take effect.

This represents the final stage of implementation of the insurance reforms which established the Insurance Authority (IA) as Hong Kong’s independent insurance regulator. The IA assumed the regulatory responsibilities of the Office of the Commissioner of Insurance in June 2017 and will take over the regulation of insurance intermediaries (agents and brokers) from the three self-regulatory organisations (SROs) on 23 September 2019. On the same day, the requirements relating to the intermediary management function, one of the control functions of an authorised insurer, will also come into effect.

The IA will be responsible for all aspects of regulation of insurance intermediaries, including issuing rules, codes and guidelines, approving licences, monitoring compliance, conducting inspections and investigations, and imposing disciplinary sanctions where breaches have occurred.

In the lead-up to 23 September 2019, authorised insurers and insurance intermediaries should conduct a final review (if they have not already done so) to ensure that they are ready to comply with all relevant requirements under the new regime.

In this e-bulletin, we provide an overview of the new rules, codes and guidelines which will apply under the new regime, as well as the transitional arrangements relating to licensing, approval of key persons in the intermediary management control function, and ongoing complaint and disciplinary cases.

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Guideline on Cybersecurity for Hong Kong authorised insurers will come into effect on 1 January 2020

Last Friday, the Hong Kong Insurance Authority published its Guideline on Cybersecurity (GL 20) for authorised insurers. GL 20 will take effect on 1 January 2020.

Cybersecurity is a global regulatory focus and a top priority area for the Insurance Authority, given the growing exposure to cyber risk as a result of increased digital connectivity.

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FCA review of the general insurance distribution chain – “at a glance” guide

In line with its continuing focus on fairness in pricing and customer value, the FCA has published a thematic review on the general insurance distribution chain (TR19/2). The review contains a clear warning to firms involved in the design and sale of general insurance products that they must do more to protect customers from harm.

That warning is further emphasised in its Dear CEO letter, which sets out expectations of general insurance firms and reminds them of their responsibilities under both the new rules introduced by the Insurance Distribution Directive (IDD) and the Senior Managers and Certification Regime (SMCR).  Alongside the thematic review, the FCA has published proposed guidance (GC19/2) for insurance product manufacturers and distributors (including, for example, retail banks) to clarify its expectations in terms of product development and distribution approaches.

The FCA has indicated that it intends to conduct further supervisory activities in this area and will intervene using its full range of enforcement tools to ensure firms meet their regulatory obligations.

Our “at a glance” guide (which can be found here) provides a summary of the thematic review and guidance consultation, as well as the implications for insurance manufacturers and distributors. The deadline for responses to GC19/2 is 9 July 2019.

Geoffrey Maddock
Geoffrey Maddock
Partner, London
+44 20 7466 2067
Barnaby Hinnigan
Barnaby Hinnigan
Partner, London
+44 20 7466 2816
Alison Matthews
Alison Matthews
Consultant, London
+44 20 7466 2765
Grant Murtagh
Grant Murtagh
Senior Associate, London
+44 20 7466 2158
Caroline Hagg
Caroline Hagg
Associate, London
+44 20 7466 6311

Hong Kong Insurance Authority prepares for direct regulation of insurance intermediaries in mid-2019 – what is the progress so far?

It is anticipated that in around mid-2019, the Insurance Authority (IA) will take over the regulation of insurance intermediaries from the three self-regulatory organisations (SROs). In preparation for the commencement of the new regime, the IA has launched several public consultations on guidelines and rules. For our full briefing on these developments, please click here.

 

Second Wave of United States Sanctions Against Iran Re-Imposed

Following President Trump’s decision on May 8, 2018 to withdraw the United States from the Joint Comprehensive Plan of Action (“JCPOA”), the US government announced that it would re-impose pre-JCPOA nuclear-related Iran sanctions (both primary and secondary) that were lifted under the JCPOA. As we reported previously, two “wind-down” periods—of 90 and 180 days respectively—commenced from the day of the announcement, during which non-US, non-Iranian companies were encouraged by the US government to withdraw from operations in Iran that would be affected by re-imposed sanctions. OFAC’s guidance discouraged non-US persons from engaging in new activity during the wind down periods, and stated that any such new activity may be a factor in connection with future enforcement action for actions taken after the wind-down period.

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SANCTIONS CLAUSES IN A CHANGING SANCTIONS REGIME

How far can a sanctions clause protect a party from having to perform their contractual obligations – and in the case of Iran-related sanctions concerns, how does this interact with the Blocking Regulation? In Mamancochet Mining Limited v Aegis Managing Agency Limited and Others[2018] EWHC 2643, the High Court held that, in order to avoid payment of a claim, insurers were required to show that payment would expose them to sanctions under US or EU law. A mere exposure to the risk of a sanction was not sufficient.

In this post, our Insurance Disputes team consider the implications of the decision. Continue reading