The International Underwriting Association has urged UK insurance regulators to state clearly the prime authority of company boards over individual responsibilities for complying with industry rules.
Responding to a consultation exercise on a new Senior Insurance Managers Regime, the association called for a strong overarching statement that individual duties remain subordinate to those exercised by a firm’s board.
Under proposals from the Prudential Regulation Authority (PRA) senior executives, such as chief executive officers, chief finance officers and chief risk officers, would be charged with demonstrating integrity, honesty and skill and dealing with regulators in an open and co-operative way.
Chris Jones, the IUA’s Director of Market Services welcomed the PRA’s general approach. “The new regime appears to be reasonable and proportionate, ” he said. “It is particularly encouraging to see that a similar set up for the banking industry has not been directly transposed into insurance, and the different supervisory requirements of our industry have been acknowledged.
“As the main focus is on individual culpability, however, it is not entirely clear how this would complement collective board responsibility. These two elements could seem to be at variance and companies would therefore like to see a stark statement affirming the board’s supremacy.”
Elsewhere in its consultation response the IUA also requested further guidance on the type of roles that the PRA might designate as ‘key function holders’, in addition to named senior insurance managers.
Mr Jones added: “IUA members widely support the need to formally embed regular assessments and reviews for those people performing key responsibilities. In order to ensure that these requirements remain proportionate and relevant it would be helpful if the PRA could be as clear and transparent as possible about its expectations of firms.”
The treatment of non-executive directors is not included in the current consultation but is expected to be considered in a separate process this year. The IUA urged this to be completed at the earliest opportunity, as continuing uncertainty may discourage good candidates from accepting roles.
About the IUA
The International Underwriting Association of London (IUA) represents international and wholesale insurance and reinsurance companies operating in or through London. It exists to promote and enhance the business environment for its members.
The IUA’s London Company Market Statistics Report shows that premium income for the company market in 2013 was £17.445bn with a further £6.831bn controlled by London but written elsewhere. These results are based on a comprehensive survey of 57 companies and combined give an overall intellectual and economic premium total of £24.276bn for the London company market.