Financial Services Authority (FSA) managing director John Tiner promised unlimited fines for individuals and companies under new tough rules for the industry, writes Jason Woolfe from the Labour Party conference in Brighton.
From December 1, a new set of rules will hold senior company figures personally liable for the financial management of insurance companies.
Speaking exclusively to Insurance Times, Tiner said: "Management will face formal responsibilities and, if managers fail to exercise them, they will get into trouble with us. We can fine and we can take people's livelihoods away."
Tiner said the new regime would be fair, not tough. "Getting tough on insurance isn't our objective. It won't be tougher, it will be more appropriate. If that means more fines, so be it, but if the insurance industry is brilliantly well managed, there won't be any fines and it won't be a tougher regime,"he said.
"We would hope that by taking this approach to regulation, consumers will have a greater level of confidence in the industry."
He said there was no upper limit to fines and that the new regulations were similar to those faced by banks.
A key part of the new regime requires insurers to make their own assessments of how much money they need to safely face the risks of their business, according to the FSA. Insurers will need to plan for a double whammy of high claims and bad investments, as happened with the stock market crash in the immediate aftermath of the September 11 terrorist attacks, the FSA added.
Under the new rules, fines can be levied against companies and individuals with responsibilities for key areas of the business, according to the FSA. There are 180,000 people in such positions across the financial services sector, including senior managers in insurance firms and dealers in stockbroker companies, it added.