Welcome to our August 2015 newsletter. We are always keen to receive constructive comments and would welcome suggested topics and ideas from members on how to improve our newsletter.
~The Editorial Board~
We extend a warm welcome to the following new members.
Stephen Lower Insurance Services
MGAA 1 DAY CONFERENCE
On Wednesday 1 July 2015 the MGAA held its inaugural conference at the America Square Conference Centre with in excess of 400 delegates registered.
In what turned out to be the hottest day of the year delegates were welcomed by the MGAA Chairman, Reg Brown, who thanked our sponsors. During his speech he announced the publication of the MGAAs best practice guidelines for the procurement, management and monitoring of external claims service providers. This document has been written with Associate members Applicco and a copy is available here.
The conference combined the MGAA Capacity Exchange with a programme of panel discussions, workshops and briefings. These were recorded and members are able to listen in on our podcasts which are available on our website. For more details click here.
During his speech our Chairman thanked our Key sponsors
Crawford & Company
Our thanks also go to HSB Engineering Insurance who sponsored the lunch and Xuber who sponsored the wine and canapés.
Members of the Compliance Forum met on Wednesday 22nd July 2015 and were joined by Joe Smith from FCA, who led the review on TR15/7. Joe was joined by Alison Walters and Olga Rakhamina who answered questions specifically about TR15/7.
FCA – THEMATIC REVIEW ON SME CLAIMS – TR15/6
In our June newsletter we published details of the FCA thematic review on SME claims.
Many of our members were unable to attend the meeting held at Canary Wharf on the 22nd May 2015. The FCA have confirmed that they recorded the briefing and members are now able find this on the FCA website ‘Related links’.
FCA THEMATIC REVIEW ON DELEGATED AUTHORITY & OUTSOURCING IN UK GI MARKET
Hot on the heels of the FCA’s thematic review of SME claims handling came their report on Delegated Authority and Outsourcing in the UK general insurance market. This was published on Tuesday 2nd June 2015. Members will recall that the MGAA was consulted in the FCA’s process of scoping out the thematic review, prior to taking their findings to the FCA board for approval. Again your association asked MGAA board members to provide assistance in meeting FCA prior to the commencing of this important piece of work.
Contemporaneous with the publication of the report, the FCA held a seminar, hosted by Simon Green - Head of General Insurance & Protection, where they discussed their findings along with the potential failings highlighted by the thematic review. The regulator’s conclusions were drawn from an analysis of around 120 delegated authority schemes, provided by 12 insurers. The FCA also reviewed the activities of 19 additional firms which held underwriting authority and/or claims handling authority.
Let’s remember that the FCA carried out this review as they “wanted to understand how firms approached outsourcing across the GI market place and how responsibilities flowing from such arrangements were managed.” It should also be remembered that the FCA focus was on customer outcomes, consequently the processes followed by the market were analysed in depth.
FCA findings included:
Whilst the report was mainly focused upon insurance products and services provided to retail and consumer customers, similar concerns were expressed by the FCA in relation to commercial (SME) customers.
The FCA also produced the schematic report which shows how their findings differed from their expectations.
On Thursday 4th June 2015, the Chairman of the MGAA’s Legal, Regulatory and Compliance Committee, together with its legal advisor and MD attended a meeting in Canary Wharf with Joseph Smith and other senior FCA personnel. The key message for the MGA insurance sector was that the FCA would again focus upon their “outcomes” principle. Therefore members should be taking proactive steps to assist their capacity providers in every way, to ensure that all elements of this review are being addressed.
Where an MGA is intrinsically involved in the policy design then they need to clearly establish who is responsible and for what. Moreover the MGA’s distribution channels may need to be reviewed to ensure that their chosen conduit to access the policyholder is competent to sell the product, and that this is capable of being evidenced.
The FCA have confirmed that their on-going supervisory work with MGAs will focus on the questions and issues highlighted in this report, as well as to verify that firms have reviewed their activities in the context of these findings and have taken steps to address any failings identified.
It is also recommended that MGAs familiarise themselves with the guidance given by FCA in RPPD [Responsibilities for providers and distributors for the fair treatment of customers].
The FCA have published the findings of their thematic review on delegated authorities and outsourcing - a recording of the seminar is now available here.
FCA DISCUSSION PAPER DP15/4 - "GENERAL INSURANCE ADD-ONS MARKET STUDY - REMEDIES: VALUE MEASURES"
As many of you will be aware, the FCA has published a discussion paper DP15/4 following their review on “Add-ons” in 2013. This thematic review identified that the market was not working well for consumers and as such they proposed a number of options for the market to introduce. Members will also recall that at our meeting with the FCA in October 2014 they alluded to the fact that they would revisit previous thematic reviews. This is one such review.
Members should be aware that measures of value, when introduced, will:
(a) apply to stand-alone products as well as add-ons; and
(b) cover a wide range of products, not just the areas looked at previously (although commercial products are likely to be excluded).
In addition, the FCA is considering asking for data on value measures to be reported by distribution channel, in the hope this could show the influence distributors (including MGAs) have on the final retail price, thus highlighting varying values across the different channels.
We would like to point out that there is an error in this Paper and would ask you to read under paragraph 5.5 “Managing Agent” and not “Managing General Agent”, as written.
A list of questions the FCA is asking the profession to respond to is available from our website. Whilst members selling/distributing consumer products are the ones who are going to be affected by the introduction of value measures, the fact that the FCA is even considering commercial products should, we believe, be met with resistance when it comes to the questions in Section 3 – Scope and granularity. On that basis, all members should be engaging with this paper.
The MGAA is proposing to respond to key questions asked in DP 15/4, particularly as the FCA is encouraging MGAs to engage with them as a ‘single voice’, through the Association. Therefore if you wish to contribute to this submission, please answer any questions in the attached question set on which you have particular views and return your answers to me at firstname.lastname@example.org by Monday 14th September 2015. Alternatively, if you are responding directly to the FCA, please let me have a copy of your submission, assuming you are happy to share this.
DATE FOR THE DIARY
MGAA will be hosting a "Meet the Regulator" at our annual get together on Wednesday 7th October 2015 in the Lloyd's Library. Further details to follow.
BROKER CHECKLIST (using third party information sources)
Members have been asking for a list of checks which MGAs can undertake on brokers and other types of intermediary from information which is available from public registers or third party information sources. This process can be used to supplement, as well as verify, answers given to questions in any application form the MGA may ask the broker to complete (which may themselves give rise to further enquiries) and any other due diligence enquiries (for example, in connection with third party payments).
Whilst this checklist is primarily aimed at UK brokers, equivalent checks can be undertaken by MGAs wishing to appoint overseas brokers, to the extent that equivalent information is available.
A copy of this checklist is available here.
Lloyd’s have recently issued a number of Market Bulletins which are directed at MGAs and delegated authority
Consolidated Taxation Advices – 2012 Year of Account Y4901
Transfers of Underwriting Capacity - Capacity Market Rules for 2015 Y4902
Proposals to Amend the Major Syndicate Transactions Byelaw Y4904
Code for Underwriting Agents: UK Personal Lines Claims & Complaints Handling Y4905
Solvency II Technical Provisions Guidance 2015 Y4910
2015 A.M. Best’s rating of the Lloyd’s market Y4914
Lloyd’s Sanctions Guidance – Sanctions Clauses Y4916
Members have been asking for more details with regard to Pool Re following their website being revamped. We are pleased to confirm that following the Boards meeting with Julian Enoizi we are able to provide a link to their website to enable you to access important information. For more details and up to date news click here.
Flood Re CEO Brendan McCafferty spoke at the MGAA market briefing on 14th July, 2015 where he details the current status of Flood Re’s authorisation. Brendan also explained how the current terms of operation differed from the original plan as outline by Government. Members can listen to this podcast by clicking here.
For further details of Flood Re and news click here.
The IUA have issued their June newsletter which looks at their new Delegated Authority working group for more details click here or their July newsletter.
FINANCIAL OMBUDSMAN NEWS
The Ombudsman have issued their news issue 125, June 2015 edition. A copy of this newsletter can be seen here.
INFORMATION COMMISSIONER NEWSLETTER 2015
The Information Commissioner has issued their July newsletter which can be downloaded here.
For those of you who missed our last compliance newsletter this can be viewed here.
Our compliance consultant, CMS, has updated our regulatory calendar which can be accessed here.
ON THE ROAD
Member will recall that throughout the year Peter Staddon and Jane Comerford have been travelling the country and speaking at numerous local Chartered Insurance Institute functions. Up to the 9th July we have visited and spoken at 9 local institutes with a combined audience in excess of 500. Peter and Jane already have Leicester, Stoke and Bradford dates in the diary for the 4th quarter 2015 and we would welcome members joining us.
The CII have also asked the MGAA to embark upon a new series of educational lunchtime lectures and this will commence later this year. If members would like Jane and Peter to visit their local institute then please email Teresa.
Members MSL have issued their newsletter which includes a review of the new Renault Captur as well as an article on the Modern Claims Awards 2015. To review this newsletter click here
Members can also see MSL’s comment on the change of IPT in the July budget, click here for more details
LLOYD’S MEET THE MARKET - BIRMINGHAM
Lloyd’s is delighted to invite you and your colleagues to their regional ‘Meet the Market’ event which will take place on Wednesday 7th October 2015 at the Hilton Metropole in Birmingham. Please register here.
Insly software solution were an exhibitor at the MGAA conference on the 1st July. To read their current newsletter click here.