Welcome to Insurance Briefing - a fortnightly round-up of insurance legal and business developments published on Out-Law - with analysis and commentary from the insurance team at Pinsent Masons.
Our five topics in focus this fortnight are:
Third FCA consultation on IDD proposes 'detrimental impact' test for inducements
Advisers recommending insurance-based investment products (IBIPs) must make sure that any inducements will not have a "detrimental impact" on the quality of the relevant service from next year, the FCA has said. The new test forms part of the FCA's approach to implementing the EU's Insurance Distribution Directive (IDD), which comes into force on 23 February 2018, into UK law. It is set out in a third IDD-related consultation paper, on which the FCA is seeking feedback until 25 November 2017.
First set of "near-final" IDD rules" announced by the FCA
The FCA has published a policy statement setting out its near-final IDD rules including regimes for ancillary insurance intermediaries; professional, organisational and prudential requirements for insurance distributors; complaints and out-of-court redress; and conduct of non-investment insurance and pure protection business. This policy statement was informed by industry feedback to the FCA's first IDD consultation paper, which it published in March. The "near-final rules" have been published in advance of required changes to domestic legislation which has not yet been made, in order to give firms more time to continue their plans for IDD implementation. It intends to publish its final rules alongside a third policy statement in January 2018.
Price comparison websites 'forcing businesses to up their game', says CMA
The widespread use of price comparison websites and other 'digital comparison tools' (DCTs) is helping consumers to shop around and forcing businesses to "up their game" to hold on to customers, the UK's competition watchdog has found. However, sites must do more to ensure that the information they present is clear, accurate, responsible and easy to use, the Competition and Markets Authority (CMA) said in its final report into DCTs. It has published a set of "clear ground rules" which sites should use, covering how they should communicate their plans to use consumers' personal data and display price, product description and other important information.
EU and US sign bilateral insurance deal
EU insurers will no longer have to post collateral before they can reinsure risks underwritten in the US, under the terms of a bilateral agreement. The agreement will principally benefit EU reinsurers operating in the USA, the European Commission said, by progressively removing collateral requirements. "For several decades, EU reinsurers have had to post collateral when signing reinsurance contracts in the US, while US reinsurers are not subject to such requirements," it said. Local presence and collateral requirements will be fully eliminated after five years and US states will begin to reduce the collateral requirements for EU reinsurers immediately by 20% per year for five years.
House of Lords committee to look into need for Brexit transition deal
A House of Lords committee is to examine the legal basis for, and potential costs to the UK of, a time-limited Brexit transitional period. The new inquiry was prompted by prime minister Theresa May's recent speech in Florence, in which she said the UK would be seeking a "period of implementation" after the UK leaves the EU, during which both parties would be able to continue to access one another's markets on existing terms.
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