Industry experts predict more regulation to be incoming around insurance for SMEs as the regulator wants these firms to be treated ‘like personal lines customers’
BrokerFest 2021: The FCA wants to treat SME businesses “like personal lines customers”, so regulation standards are “going to be a lot higher for people selling commercial policies to smaller organisations”, according to Phil Bayles, chief commercial officer at Ardonagh Advisory.
Speaking at Insurance Times’ BrokerFest 2021 conference on Monday 11 October, former Aviva staffer Bayles told delegates that he expects more regulation from the FCA around insurance for SMEs.
He said: “[The FCA wants] to treat [SMEs] like personal lines customers, so I think there will be a lot more regulation moving into that space. The bar is going to be a lot higher for people selling commercial policies to smaller organisations.”
Fellow panellist Owen Thomas, chief sales officer at Premium Credit, agreed with Bayles’ sentiment, adding that he “wouldn’t be surprised to see more from the regulator in this space post the fair value pricing change going live in January”.
From his perspective, there are already interesting changes afoot in the personal lines market ahead of the FCA’s general insurance pricing reform deadline at the start of 2022. He feels this trajectory will only continue, especially in the SME arena, following the new year.
Consumer Duty benefits
Simon McGinn, chief executive of Allianz Commercial, believes, however, that “the regulator tends to drive its compliance regime through its insurers”.
“It certainly feels like that from where I sit anyway,” he added.
For him, the next key regulatory component to be aware of is the FCA’s proposed Consumer Duty, which was initially announced in May 2021.
The Consumer Duty aims to enhance consumer protection for retail financial market customers and strives to “drive a shift in culture and behaviour for firms, meaning that consumers always get products and services that are fit for purpose, that represent fair value and are clearly communicated and understandable”, the regulator explained at the time.
It plans to have these rules in force by July next year after undertaking industry consultations this year.
McGinn said the Consumer Duty “has got very, very big implications”.
He continued: “The whole Consumer Duty piece, when that’s finally defined what that is, has got very, very big implications which actually, if you are a good broker giving good advice, I think will be beneficial.”