The Financial Services Authority (FSA) has earmarked an extra £3m in its annual budget, specifically for life and general insurance regulation.
This is a 15% increase on the £20m the FSA spent in t ...
The Financial Services Authority (FSA) has earmarked an extra £3m in its annual budget, specifically for life and general insurance regulation.
This is a 15% increase on the £20m the FSA spent in the last financial year on monitoring insurance companies.
In a statement to be released later today (31 January), the FSA is expected to say the money is to be spent on an "ongoing overhaul of insurance regulation and enhance regular supervision of insurance companies".
A source close to the FSA said the money would be collected from the industry through a levy, but said it would come as no surprise.
"This is very much a targeted increase, to make sure there are more bodies out there in the industry," he said.
The FSA's overall annual budget was £166.7m last year.
Meanwhile, FSA chairman Howard Davies said too many insurers had collapsed, but that the FSA's new job of regulating the industry could improve the situation.
Davies was speaking at the Association of Insurance and Risk Managers (Airmic) annual lecture on Tuesday night.
He said to completely eliminate company failure would damage the industry, but that its failure rate was higher than ideal.
Davies said the FSA's new responsibility under the insurance mediation directive would give it a better understanding of the industry's prudential requirements.
"It may help us to identify companies who are mis-pricing risk and whose business practices are questionable," he said.
He said the past year had been a "challenging one" for insurance.
However, he vowed the FSA would take a moderate regulatory approach, with minimal impact on competition.
In the meantime, he said that the FSA was keen to ensure the General Insurance Standards Council (GISC) remained in existence until the new statutory regime took over.
"We don't want to see a hiatus, in which standards are allowed to slip back," he said.
The Association of British Insurers (ABI) applauded Davies' support of the GISC, while Airmic said sound regulation would contribute to a stronger, more predictable market.
