| Link(s): | Insurance brokers: serving consumers and businesses in times of uncertainty and change | FCA |
Context
Sheldon Mills, the FCA’s Executive Director, Consumers and Competition, delivered a speech at the British Insurance Brokers’ Association (BIBA) Conference on 12th May 2022. Mills started by thanking the insurance broking community for the contributions it has made to consumers and local communities up and down the country during a time of change and uncertainty. He also confirmed that, collectively, general insurance brokers arrange over £74 billion of insurance each year. That is 67% of all general insurance business and 81% of all commercial insurance business in the UK. The sector serves an important function through providing the economy the confidence and support it needs to thrive.
Key points to note
The highlight messages of the speech were:
- Brokers play a vital role in helping consumers and businesses access the insurance products they need, especially in times of uncertainty, safeguarding them against unexpected financial losses.
- The FCA wants to support competition, innovation and growth in the sector – like other parts of the financial system where it is seeing innovation and disruption through technology, data-sharing, and novel business models.
- FCA regulation takes into account the size and complexity of regulated businesses, but it is mindful of its impact on smaller firms, and it is paying close attention to the views of different stakeholders as it reviews its regulatory and redress framework.
- Insurance brokers have the power to deliver social good, through helping consumers and businesses manage risks, supporting the UK’s transition to net zero, and fostering a more diverse and inclusive culture to better support customers and the sector.
The speech was split into five main sections:
- Innovation, growth and competition – innovation is key to ensuring that firms continue meeting the changing needs of consumers and businesses.
- Fair value – In the face of a rising cost of living, brokers can add value by securing appropriate cover, at the right price, while ensuring that commission is reflective of the value that brokers provide to their customers, and not recommending a product based on the broker’s remuneration rather than the best interests of the customers.
- Minimising risks – referencing financial and operational resilience, safeguarding client money, AR oversight and increased scrutiny by the FCA at the ‘gateway’.
- Proportionality and pace – the FCA is mindful of its impact on smaller firms, including the many firms in the insurance broking sector, but the Future Regulatory Framework will allow the FCA to tailor rules to better address the issues that are specific to the UK market.
- ESG and Culture – including commentary on diversity and inclusion, and the FCA’s work on sustainability and climate change.
Next actions
None – for information and awareness.