his autumn will see the Financial Conduct Authority (FCA) issue its interim report on the London market’s wholesale
insurance brokers. The regulator’s 2018 business plan reiterated the importance it places on its review into the sector. The regulator says its review into wholesale insurance brokers, which are responsible for placing the majority of the £68bn in premiums underwritten in London every year, will concentrate on three main areas – pricing levels, conﬂicts of interest and broker facilities – amid concerns that it fails to deliver value for money and is skewed towards larger players. It could result in a wide range of outcomes, from a boost to the market’s competitiveness in the international arena to a full-blown investigation conducted by the Competition and Markets Authority (CMA).
When it announced the review late last year, the FCA said it wanted to ensure the sector was “working well and fosters innovation and competition in the interests of its diverse range of clients”. “Given the size of the wholesale insurance sector and the type of large-scale risks it covers, the way it functions can have a wide-ranging impact on the broader economy. If businesses cannot get appropriate cover or pay more for services than they should, it can impact on their ability to operate and grow,” says Christopher Woolard, FCA executive director of strategy and competition. The FCA acknowledges that the size of the wholesale insurance sector and the nature of the risks covered mean that “the way it functions can have a wide-ranging impact on the broader economy.” The regulator also notes that it has been a decade since the sector was last reviewed, during which time there have been numerous developments. According to the FCA, these developments include the evolution and growth of the volume of business being placed into alternative facilities.
thejournal.cii.co.uk / The Journal / June - July 2018
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