Welcome to Insurance Briefing - a fortnightly round-up of insurance legal and business developmemts with analysis and commentary from the insurance team at Pinsent Masons.

The topics we're focusing on this week include:

FCA Introduces New Travel Insurance Rules (Pinsent Masons Insurance Briefing 19 February 2020)

The UK's Financial Conduct Authority (FCA) has introduced new 'signposting' rules to help customers with pre-existing medical conditions obtain travel insurance. The FCA published a policy statement following up on earlier findings that consumers with pre-existing medical conditions – particularly more serious conditions such as cancer – can struggle to find insurance firms willing to provide affordable travel cover. The policy statement, issued in the wake of a consultation last year, outlines requirements that will affect all firms offering travel insurance, including insurers, intermediaries and appointed representatives. Firms will now have to point consumers with pre-existing medical conditions to a directory of specialist providers, either at the start of a policy, on renewal or on mid-term adjustments. The FCA said consumers with more serious conditions could save around 40% if they go to a specialist provider, and said the changes would apply to around 1% of travel insurance customers. "The new signposting rules serve as an example of the FCA's focus on the protection of vulnerable consumers across financial services sectors," said insurance expert Sophia Hytiris of Pinsent Masons. Read more here...

FCA sets out regulatory priorities for platforms

The UK's Financial Conduct Authority has set out its regulatory priorities for platform service providers in its latest 'Dear CEO' letter to firms. In the letter the FCA said it was focusing its supervision strategy on addressing three 'key harms': technology and operational resilience; third-party outsourcing, and conflicts of interest. It also reminded firms that they may need to take action on the recommendations from the FCA's Investment Platforms Market Study (IPMS), and consider how Brexit will affect their business. Financial services expert Tobin Ashby of Pinsent Masons, said the FCA's 'Dear CEO' letters were generally reminders to firms of actions they should be taking: "In common with other recent letters, the FCA may not be raising new issues, but have made very clear what they expect of platforms portfolio firms in the areas of most concern to the regulator. Firms should use this letter as a checklist and to prioritise their areas of regulatory focus". Ashby said the warning to platform providers that their technology and operations need sufficient investment was an area of particular concern for the FCA, as customers are required increasingly to use firms' systems to invest online. Read more here...

Tougher climate change reporting proposed for UK pension schemes

Large UK occupational pension schemes would be required to assess the impact of climate change on their investments and report that information to scheme members under plans put forward by the government. The proposal, which is set out in an amendment to the Pension Schemes Bill, goes much further than current rules requiring pension scheme trustees to disclose how they take account of climate change and other environmental, social and governance (ESG) factors to the extent that these may have a material impact on scheme members' savings. Pensions expert Carolyn Saunders of Pinsent Masons, described the proposal as "a potential game changer for trustees". "The resulting obligations on trustees could extend far beyond the disclosure that is the main focus of the current statutory regime to require trustees to place climate change risk and opportunity at the heart of their investment strategies," she said. "And the need to publish information relating to the effects of climate change on a scheme will increase reputational risk for trustees and scheme sponsors." The changes would apply to the trustees or managers of an occupational pension scheme "of a prescribed description", to be defined by the government in regulations. Read more here...

Financial services equivalence regime: rules-based vs outcomes-based

As negotiations start between the EU and the UK to agree the scope of their relationship in a post-Brexit world, continued access to the EU market for many financial services firms appears to be reliant on an 'enhanced equivalence regime'. Equivalence is the process through which the European Commission formally recognises that the regulatory or supervisory regime of a non-EU country is equivalent to the corresponding EU regime. Equivalence allows the EU to rely on supervised entities' compliance with equivalent rules in a non-EU country and may make certain services, products or activities of non EU authorised entities acceptable for regulatory purposes with the EU. It also has the benefit of creating a consistent regulatory regime and accordingly reduces capital and compliance costs. The UK is in the unique position of having been a member of the EU and therefore should, in theory, have no trouble obtaining equivalence across the full range of equivalence provisions at the end of the withdrawal agreement implementation period. As Nausicaa Delfas, the executive director of international at the Financial Conduct Authority (FCA), said in a recent speech: "The UK will have the most equivalent framework to the EU of any country in the world". Read more here...

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