The Financial Conduct Authority (FCA) has revealed its regulatory activities for the insurance sector as it published its business plan for 2017 and 2018.
The industry watchdog intends to conduct a review of pricing practices in general insurance and assess how effectively competition is working in the wholesale insurance market.
According to the FCA, its proposed market study on the wholesale insurance market seeks to determine how firms ensure practices do not create market integrity and conduct risks.
“We want to ensure that the wholesale insurance market is working well and fosters innovation and competition in the interests of a diverse range of consumers,” the regulator said.
The FCA also said it will conduct a further review to understand the end-to-end relationships in insurance distribution chains. The findings will help the FCA decide whether and what additional action is needed in the sector.
The regulator also expressed concerns about the resilience of insurance firms’ IT systems, which are facing heightened operational risk issues that affect the ability of companies to provide the expected levels of customer service.
“The risk of compromise to the integrity of firms’ systems, particularly where large volumes of personal and commercially sensitive data exist, is heightened by the increased likelihood of cyber-attack,” the FCA said. “Increasing digitisation exacerbates these issues and presents significant consumer protection and market integrity risks.”
In response, the Association of British Insurers (ABI) welcomed the FCA’s business plan, saying it provides “a sense of direction of travel” at the regulator under its CEO, Andre Bailey.
“We are pleased that the FCA remains committed to using its powers consistently, transparently and proportionately… We look forward to engaging with the work outlined in today’s publications,” said Hugh Savill, ABI director of regulation.
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