New system aims to bring insurers into line with banks
The PRA has proposed a new accountability regime for insurance companies’ most senior managers.
The regulator has issued a consultation paper on the proposals, and the industry has until 2 February 2015 to respond.
The PRA said the proposals are designed to embed a clearer system of accountability and responsibility for senior managers at insurance companies and groups.
PRA chief executive Andrew Bailey said: “Ensuring that senior managers of insurers are accountable supports our objective that firms should be run in a safe and sound manner. Policyholders are best served by insurance companies with senior managers who can be held to account and who are individually responsible for the decisions they make.”
In line with banks
The regulator consulted on a similar regime for banks in July 2014 as required by the Banking Reform Act 2013.
The regulator said: “Although many of the key legislative powers in the Banking Reform Act do not apply to insurers, the PRA believes that there should be a regulatory framework that reinforces similar standards of fitness and propriety, conduct, and accountability for individuals in positions of responsibility at both insurers and banks.”
But the PRA also noted that the insurers’ regime is not identical to the banking one. None of the criminal sanctions nor ‘presumption of responsibility’ in the banking rules will apply to senior managers at insurers.
The proposed regime will apply to managers running companies or with responsibilities for key functions (see below for list of affected roles).
The regulator said it is proposing that a more focused range of managers will be subject to regulatory pre-approval.
The proposed PRA accountability regime will apply to:
- Chief executives
- Chief finance officers
- Chief risk officers
- Heads of internal audit
- Chief actuaries
- With-profits actuaries (for life insurers writing with-profits business)
- Chief underwriting officers (for general insurance and reinsurance firms, and managing agents at Lloyd’s)
- The underwriting risk oversight function (for the Society of Lloyd’s)