Regulation is complex, which is arguably the result of some three decades of digital transformation across the insurance chain, but delivered at varying speeds, depending on the particular market and the mood of the government in power. The UK regulator’s continued efforts to streamline rules and reduce complexity for insurance firms and can be found here: https://www.fca.org.uk/consultation-papers/cp26-22-simplifying-insurance-rules
Here’s some comment from Broadstone;
Cormac Bradley, Senior Actuarial Director at leading independent financial consultancy Broadstone, commented:
“The FCA proposals represent a shift towards a more principles‑based regulatory framework, reducing unnecessary complexity while maintaining appropriate consumer protections. The optional nature of many of the changes is particularly welcome, avoiding unnecessary implementation costs.
“Aligning the territorial scope of ICOBS and PROD 4 more closely with genuine UK customer connections should materially reduce duplication for international insurers and intermediaries. Stepping back from detailed, prescriptive requirements and relying more on high‑level frameworks such as the Consumer Duty and SYSC should make the UK a more attractive base for cross‑border insurance business.
“The proposals to streamline disclosure requirements are also significant. Removing elements such as ICOBS 4.2 and other low‑value disclosures recognises the reality that length boilerplate does little for customer understanding. A more flexible approach to communication, particularly through digital channels, better reflects how customers engage today, while reducing reliance on costly paper‑based processes.
“Importantly, the FCA has avoided introducing a ‘local regulatory backstop’, which would have risked reintroducing complexity and uncertainty. However, striking the right balance on disclosure simplification will be key and industry feedback ahead of the 4 September deadline will be critical in ensuring consumer understanding is not diluted.
“Taken together, these reforms are part of a broader direction of travel, moving away from rigid rulebooks towards more flexible, outcome‑focused regulation. While the full benefits will emerge cumulatively across the FCA’s wider simplification agenda, this package goes to the heart of how firms engage with customers in a clearer, more modern and proportionate way.”
LIIBA COMMENT
“The other proposals around disclosure and reporting – whilst primarily aimed at the retail markets that LIIBA members do not participate in – also show a reassuring willingness on the part of FCA to examine the impact its rules have – especially on small broker businesses – and seek to be proportionate in its application.”
IUA
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