UK: FCA Publishes 'Immediate Call To Action' For General Insurance Sector (Pinsent Masons Insurance Briefing: 17 April 2019)

Last Updated: 22 April 2019
Article by Nicholas Bradley, Alexis Roberts and Colin Read

Welcome to Insurance Briefing - our fortnightly round-up of insurance legal and business developments with analysis and commentary from the insurance team and others at Pinsent Masons.

The topics we're focusing on this week are:

FCA publishes 'immediate call to action' for general insurance sector

The FCA has published one single report with findings from its thematic work in the General Insurance (GI) sector on Value in the Distribution Chain and the Multi-firm review of Delegated Authority arrangements. Referring to the findings as "extremely disappointing", the regulator has stated that many firms have failed to respond sufficiently to its previous work in the area. Since the end of last year, there is a new and tighter regulatory framework in place for firms and senior managers with the new IDD and SM&CR rules which the FCA states will help it take a "more interventionist approach" with any future failings. Draft non-Handbook Guidance for insurance manufacturers and distributors has been published and is being consulted on until July 2019. Firms have been requested to review the documents published in their entirety and "act promptly". A key theme that emerged from both sets of findings was that "customers were not being consistently placed at the heart of firms' business models" and "a customer focus had not been fully embedded within the culture of these firms." Read more...

Insurers which act fast can capture new sharing economy business

ANALYSIS: Insurers that move quickly have an opportunity to provide new kinds of services to the rapidly-expanding sharing economy, but established insurers face challenges from new companies with new, innovative products. The sharing economy has grown as web and mobile app technology has allowed the easy, cheap short-term use of assets by strangers. Drivers using Uber to connect with people who need a lift and home owners using Airbnb to connect with travellers are two examples of the sharing economy. By its nature this activity blurs the lines between personal and commercial use of assets, and the insurance industry must respond with insurance that provides cover and allocates risk accurately to meet this market need. Traditionally, insurers have provided either personal or commercial products with clearly defined end users. But this will have to change to account for activity which is sometimes simultaneously personal and commercial. Insurers will have to create products which make it clear who bears liability for events when asset use is more fluid. Read more...

UK 'leading market' for autonomous vehicles

The UK will be the best place in the world to deploy connected and autonomous vehicles (CAVs) over the next 10 years, provided the country avoids a 'no deal' Brexit, an automotive industry association has said. The Society of Motor Manufacturers & Traders (SMMT) highlighted the UK's "forward looking regulations, such as insurance legislation for AVs, strong connected car uptake, and its significant potential for AV deployment on urban, rural and motorway operating domains" as the reasons for its projection. It had assessed the relative attractiveness of the UK as a market for deploying CAVs in comparison to the US, Germany, the Netherlands, South Korea, Japan, France and China. Manufacturing expert Nicole Livesey of Pinsent Masons said: "The UK is in a unique position within Europe given its engineering and automotive heritage which is now successfully combining with its strong and vibrant tech community. Toyota's recent decision to headquarter its Toyota Connected Europe business in the UK is a testament to this. However, the UK needs to run hard to maintain this position and eliminate any friction." Pinsent Masons recently published a new paper highlighting the opportunities and issues facing both incumbents and new entrants in the automotive sector as they seek to develop and commercialise CAV technologies. Read more...

Scottish parliament passes discount rate and damages reform

ANALYSIS: A bill to reform the method of setting the discount rate for personal injury  damages claims, and to permit the courts to order periodical payments of damages awards rather than a lump sum, has passed its final stage in the Scottish parliament. The Damages (Investment Returns and Periodical Payments) (Scotland) Bill ('the Bill') aims to provide, in an accountable way, the framework under which the discount rate should be set and maintained, placing responsibility for it with an appropriate professional and away from the political arena where there is the potential for pressure from external interests to attempt to influence the outcome. Whilst similar changes have been introduced to the discount rate in England and Wales following the joint consultation between the UK and Scottish governments on the issue, some differences remain. This raises the possibility that different discount rates could apply north and south of the border: although the rates have differed for short periods in the past, wholly different rates may now be set. Read more...

For regular comments, news and views from the insurance team at Pinsent Masons, see our insurance content on Out-law here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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