Opinion: Regulation ramifications for brokers

The new year has certainly started with a bang for the insurance industry, most notably thanks to the FCA and its general insurance pricing reform finally coming into full effect from 1 January 2022.

Most insurers kept their heads down in December, beavering away in back offices to prepare for the changes while outwardly telling the industry they were primed and ready to go.

Back in August 2021, LV= General Insurance chief executive Steve Treloar described the FCA’s rule change as “substantial”. Likewise, in July 2021, Sabre Insurance boss Geoff Carter labelled the focus on fair value as a “fundamental change” for the market.

Now that the rules are all in effect, these early months will paint an interesting picture as to what the insurance industry – as well as consumers – can expect in terms of premium pricing. We are all geared for change, so watching to see whether the myriad of pre-reform predictions play out will keep us all on our toes.

Brokers, however, have the chance to cash in on potential pricing confusion to explain market happenings and ramifications to their clients.

We more fully explore the fallout and opportunities arising from the FCA’s changes in our cover story this month.

Regulation is also a key theme within broking trade body Biba’s 2022 manifesto, which was published in January 2022. Although the subject did not have its own chapter, Biba emphasised that the impact of regulation is discussed throughout the 84-page manifesto because it has become such a prominent aspect of the industry.

The association is still calling for “appropriate” and “proportionate” regulation from the FCA. Biba chairman Jonathan Evans noted at the manifesto launch event in London last month that the regulator is “in danger of becoming an impediment to the effective working” of the insurance market if it continues its current reform trajectory.

I don’t doubt the sincerity of the FCA in looking to improve market conditions for consumers, but the increasing workload this subsequently places on brokers and the need for additional resources to ensure compliance could hamper startups from entering the market altogether, having a knock-on effect on industry innovation.