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August 5, 2024
The FCA has published a Discussion Paper DP24/1 about the regulation of commercial and bespoke insurance business. The FCA wants to ensure that customers in the commercial insurance market are protected appropriately, while also not placing unnecessary regulatory costs on firms. The FCA is therefore considering whether there are changes which can be made to better achieve this balance. The Discussion Paper sets out a number of options and the FCA is seeking feedback on these.
The FCA is inviting views on whether changing how customers are categorised could significantly reduce the time needed to take on new customers, or renew their contracts, and allow products to be custom made. This would reduce regulatory costs and may increase the competitiveness of the commercial insurance market.
The Discussion Paper includes sections looking at:
- determining which rules apply to commercial insurance, including a comparison of some differing definitions of commercial clients based on balance sheet size / turnover / no. of staff etc., and options to change the FCA’s current ‘SME’ classification;
- how the rules currently apply where more than one firm is responsible for manufacturing insurance products (so where there are co-manufacturers);
- the application of ICOBS to co-manufacturing; and
- some of the challenges around how the PROD rules apply to bespoke insurance products, and the ‘bespoke products’ exclusion.
Responses are requested by 16th September 2024, which is a short response time.
