Context
The FCA has included a reminder to insurers in respect of responsibilities regarding risk transfer agreements in its recent regulation round up email. The FCA’s regulation round up email is not published on the FCA website but firms may sign up to receive a copy by following this link: https://www.fca.org.uk/firms/sign-up-regulation-round-up
Key points to note
The FCA confirms that it has seen instances where Terms of Business Agreement (TOBAs) do not reflect the intent of the arrangements, or accurately reflect the intermediaries’ operations.
Insurers are reminded that the FCA expects them to regularly review their agreements for inappropriate wording and maintain adequate oversight to ensure the TOBAs are complied with.
Insurers and intermediaries have a duty to their clients to ensure that risk transfer agreements are properly in place.
Next actions
Where brokers rely on risk transfer, they should have in place clear processes to review the content of their TOBAs with insurers and ensure that the actual operations of the business meet the requirements as laid out in the TOBAs.