Senior Insurance Managers Regime
Strengthening accountability in insurance
On 26 November 2014 the Prudential Regulation Authority (“PRA”) and Financial Conduct Authority (“FCA”) each published a consultation paper (“CP”) on the overhaul of the Approved Persons Regime (“APR”) for insurance and reinsurance firms in the UK including branch undertakings within the scope of Solvency II, and Lloyd’s Managing Agents (“Senior Insurance Managers Regime”). The CPs follow on from those published in July 2014 for banks, building societies, credit unions, and PRA-designated investment firms (“Senior Managers Regime”).
The proposals seek to embed Solvency II measures relating to governance and fitness and propriety of individuals and are consistent with the European Insurance and Occupational Pensions Authority (“EIOPA”) technical standards and guidelines. The aim of the proposed regulatory framework is to encourage individuals to take greater responsibility for their actions and to make it easier for firms and regulators to hold individuals to account.
The CPs set out proposals for identifying and approving senior persons responsible for: running an insurer or who have responsibility for a key function; allocating responsibilities amongst senior persons; documenting a governance map; and introducing new conduct standards and fitness and propriety requirements. The proposals are aligned to Solvency II measures and provide practical steps to enable firms to meet those requirements, particularly in relation to the fitness and propriety provisions.
This paper addresses the key points in the CPs and our expectations of what this will mean for firms and individuals in practice, having regard to insights gained from the proposed banking sector Senior Managers Regime.