Insurance in Financial Services UK

Avoiding the Impending Storm - Financial Risks from Climate Change

Banner Image

In recent years, the effects of climate change have become more apparent, attracting attention from financial regulators globally. In a recent speech Sabine Lautenschläger, Member of the Executive Board of the ECB,  stated “climate change is not an issue for next century. It’s an issue for now, and it’s a topic not only for other sectors but also for the financial sector and for central bankers and supervisors”.1

The regulatory response to a transition to a greener economy is currently accelerating rapidly. A number of EU initiatives put climate change at the forefont of the financial regulatory agenda, and it is clear that the UK regulators will take an active lead.

Against a backdrop of institutional investor pressure and industry actions, central banks and regulators are placing a greater focus on the financial risks that arise from climate change. Banks and insurers incresingly need to think about how to adapt their business models and how the transition to a low-carbon economy may affect the business models and creditworthiness of the companies to which they are exposed.

The timeline below shows this regulatory response and the expected developments. We foresee regulators will continue to clarify their approach over the course of 2019.

Continue reading

Posted on 20/05/2019 | 0 Comments

Liquidity risk management for insurers – the challenge of CP4/19

Liquidity
The PRA’s consultation paper on liquidity risk management for insurers (CP4/19), released in March 2019, represents a significant enhancement to the regulator’s expectations around the ways in which insurers should assess and manage liquidity risk. The expectations apply to firms across the UK insurance industry, whatever their business model.

Liquidity risk is already an explicit consideration which firms should evidence in their compliance with the Prudent Person Principle (PPP) section of Solvency II (article 132) which requires firms “to ensure the security, quality, [and] liquidity…of the firm as a whole”. The PRA is placing more emphasis on the PPP when engaging with firms, and the degree of compliance with CP4/19 will be an important piece of evidence.

Continue reading

Posted on 25/04/2019 | 0 Comments

EIOPA embraces the latest trends in European conduct regulation on value for money, firm culture and customer vulnerability

ER3FJJ_Yellow_Pills_lo
The European Insurance and Occupational Pensions Authority (EIOPA) recently published a framework to help EU national supervisors (also known as National Competent Authorities – NCAs) assess conduct risks throughout the lifecycle of insurance products. The framework is designed to foster supervisory convergence amongst EU supervisors, and to “provide input to the types of risks EIOPA and NCAs should focus on.”

Importantly, EIOPA has highlighted conduct themes that have been of growing importance and visibility across EU markets. These include the need for supervisors to assess firms’ culture; the importance of value for money as one of the key outcomes firms must deliver to consumers; and the need to protect more vulnerable groups of customers. Some of these conduct themes are already being pursued, to varying degrees, across the EU. However, EIOPA’s framework shows that they are also gathering momentum at a pan European level, and that EIOPA will, as part of its convergence remit, increasingly push for these issues to be scrutinised by supervisors across the EU.

Continue reading

Posted on 09/04/2019 | 0 Comments

The FCA takes forward investment pathways and other remedies from its Retirement Outcomes Review

Nest egg 1
The FCA recently published a package of measures to address the potential harm it found during its Retirement Outcomes Review (“ROR”). The package includes:

  • a consultation aimed at improving outcomes in the drawdown market including the introduction of ‘investment pathways’ to help non-advised consumers choose the best way to invest their money; and
  • final rules and guidance aimed at improving the information consumers receive in the lead-up to, and after, accessing their pension savings.

Continue reading

Posted on 08/03/2019 | 0 Comments

Reinsurance under IFRS17 – are you addressing the tax issues?

E3MJFF

Many insurance businesses are struggling with the treatment of reinsurance held under IFRS17.  Much of the struggle is to understand the accounting implications, but there are a number of tax issues that businesses should be addressing at the same time.  This highlights the importance for businesses of making a place for their tax team within the leadership of the IFRS 17 implementation project. 

Continue reading

Posted on 24/08/2018 | 0 Comments

London calling: how the Risk Transformation Regulations can facilitate the next generation of ILS

78121933

In December 2017 the Risk Transformation Regulations were passed, enabling the incorporation of Insurance Linked Securities (ILS) vehicles in the UK for the first time. So far there have been 2 issuances (a collateralised reinsurance vehicle for Neon syndicate and a cat bond for SCOR), with rumours of many more in the pipeline.

Continue reading

Posted on 08/08/2018 | 2 Comments

De-risking IFRS17 technology delivery – more collaboration; less complexity

DATHKE

As someone who has delivered systems changes in finance and actuarial teams for insurance clients for over two decades, I have mixed feeling following the firming up of the IFRS 17 rules and deadlines.

Continue reading

Posted on 30/07/2018 | 0 Comments

Innovation and data privacy: the ICO’s technology strategy 2018-21

Innovation

New technologies and evolving business models have required regulators to review their capabilities and respond to new risks posed. And the UK Information Commissioner’s Office (ICO) is no exception. The new General Data Protection Regulation (GDPR) has vested considerable powers to the ICO to regulate and supervise data privacy risks. Increasing concerns about the wholesale use and processing of personal data by firms are reflected in the ICO's recently published Technology Strategy, which outlines its objectives and focus areas through eight technology goals.

The ICO strategy’s leitmotif is that technological advances “need not come at the expense of data protection and privacy rights” and that “privacy and innovation are not mutually exclusive”. Through the development of its technology strategy, the ICO’s overall aim is to remain relevant by ensuring that the monitoring and understanding of technological change, and its impact on information rights, are a core component of its work going forward.

Continue reading

Posted on 10/05/2018 | 1 Comments

Open-Source or Proprietary Software for Credit Risk: It’s all about asking the right questions

Open source

It is no secret that technology and its impact on companies’ business models is shaking up the general market. Technology disruption isn’t limited to media, retail, or transport (to name a few industries), but this disruption is widespread, also impacting financial services. The general theme is that technology enabled companies can execute quicker, cheaper and with greater precision.

Continue reading

Posted on 25/04/2018 | 0 Comments

PRA Business Plan 2018/19

Swirl

The PRA published its Business Plan for 2018/2019 on 9 April 2018. The Business Plan, structured around the PRA’s eight core strategic goals, is cross-sectoral, outlining the work the PRA intends to undertake for the upcoming year across both banking and insurance sectors.

Continue reading

Posted on 17/04/2018 | 0 Comments