IRLA NATIONWIDE TRAINING INTRODUCTION TO THE LONDON INSURANCE MARKET

Transcription

1 IRLA NATIONWIDE TRAINING INTRODUCTION TO THE LONDON INSURANCE MARKET PLEASE TAKE YOUR SEATS 12 th February 2016 DISCLAIMER The views and opinions expressed in the written and oral presentations made today do not necessarily represent the views or opinions of the speakers or of the firms by whom they are employed or engaged. IRLA and the presenters do not guarantee the accuracy of the data included, and accept no responsibility for any consequence of their use. 12 th February

2 RESTRUCTURING WELCOME & AGENDA Ben Baker IRLA Head of Academy Leslie-Ann Giovnilli IRLA Secretariat HEALTH & SAFETY PROGRAMME WHY ARE YOU HERE WHERE DID WE COME FROM 2

3 ANY QUESTIONS? The London Insurance Market An overview of insurance The London Market Lloyd s of London 3

4 Role of the underwriter Equitable contributions of the many COMMON POOL Losses of the few The insurance market THE BUYERS THE SELLERS (The Insured) THE INTERMEDIARIES Insurers Reinsurers Commerce Lloyd s brokers Lloyd s Brokers Composite/General Insurance Companies Industry Agents Industrial Life Assurance companies Consultants Friendly societies Mutual indemnity associations Reinsurance Companies The Public Home Service representatives Captive insurance companies Self insurance The state Direct insurers 4

5 The insurance market (cont d.) C A P T I V E Location A Location B Captive Insurer Reinsurer Location C Captive insurer issues policies, provides claims handling service and retains risk at agreed level. Above all, tax advantages. Captive reinsures in excess of its desired retention Professionals in insurance The insurance market Underwriters Claims Personnel Loss adjusters Loss assessors Surveyors/forensic services Actuaries Risk Managers Compliance officers 5

6 TIntermediaries he insurance market Authorised persons Appointed representatives Introducer appointed representatives Lloyd s insurance brokers Role of intermediaries has expanded over the years and accompanied by consolidation The insurance market L L O R I S K The Room Underwriters R I S K L L O Y Y D Syndicates D S S Corporate capital/names 6

7 Underwriting policy and practice Insurable Interest Utmost Good Faith Proximate Cause Indemnity Subrogation Contribution The regulatory and commercial environment SOLVENCY II PILLAR 1 PILLAR 2 PILLAR 3 QUANTITATIVE REQUIREMENTS QUALITATIVE REQUIREMENTS & RULES ON SUPERVISION SUPERVISORY REPORTING & PUBLIC DISCLOSURE Market Risk Credit Risk Regulations On Minimum Capital Requirements Regulations On Financial Services Supervision Transparency Liquidity Risk Solvency Capital Requirement [SCR] Own Risk & Solvency Assessment [ORSA] Disclosure Requirements Underwriting Risk Operational Risk Technical Provisions Investment Rules Capabilities & Powers Of Regulators, Areas Of Activity Competition Related Elements QUANTIFICATION GOVERNANCE DISCLOSURE 7

8 The regulatory and commercial environment HM Treasury & Parliament THE BANK OF ENGLAND CLEARING & SETTLEMENT SUBSIDIARY FPC FINANCIAL POLICY COMMITTEE Powers of direction and recommendation to PRA and FCA in relation to financial stability PRA Prudential Regulatory Authority Cooperation & Coordination FCA Financial Conduct Authority PRUDENTIAL & CONDUCT REGULATION DUAL-REGULATED FIRMS (Deposit Takers, Insurers And Significant Investment Firms) ALL OTHER REGULATED FIRMS The regulatory and commercial environment (A) Background and objectives The Financial Services Authority (FSA) was given its wide powers by the Financial Services and Markets Act 2000 (FSMA) The Financial Services Act 2012 placed responsibility for regulation in: Financial Policy Committee (FPC) Prudential Regulatory Authority (PRA) Financial Conduct Authority (FCA) 8

9 The regulatory and commercial environment Solvency I Minimum Guarantee Fund Claims Method Premium Method SOLVENCY Assets Liabilities The regulatory and commercial environment The Financial Conduct Authority (FCA) The FCA is a separate regulator responsible for the conduct of business and market issues for all firms, and prudential regulation of small firms Strategic objective: Operational objectives: - Protect and enhance confidence in the UK financial system - Consumer protection - Integrity - Competition 9

10 The regulatory and commercial environment The Financial Conduct Authority (cont.) Approach will require a flexible focus on bigger issues as they emerge Powers to intervene to prevent detriment occurring Seeks to build a better understanding of consumer behaviour Works closely with the PRA The regulatory and commercial environment The Prudential Regulation Authority (PRA) The PRA is responsible for the prudential regulation of all systemically important firms such as insurers Primary objective: - Promote the safety and soundness of PRA-regulated persons Secondary objectives: - Avoid adverse effect on stability - Minimise adverse effect 10

11 The regulatory and commercial environment The Prudential Regulation Authority (cont.) A risk assessment framework supports the PRA s additional objective to protect policyholders as well as the financial system PRA expects insurers to have a culture that supports their prudent management Uberrimae Fidei Utmost Good Faith Private & Confidential 11

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39 San Francisco 18 th Earthquake April 1906 San Francisco Earthquake Private & Confidential 39

40 Cuthbert Heath Our job is to get a man out of trouble. That s what he s paid us for Titanic: Unsinkable 15 th April 1912 Titanic: Unsinkable Private & Confidential 40

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43 9/11 11 th Twin Towers September /11 Twin Towers Private & Confidential 43

44 Hurricane 23 rd Katrina August 2005 Hurricane Katrina Private & Confidential 44

45 Deepwater 20 th Horizon April 2010 Deepwater Horizon Private & Confidential 45

46 Christchurch 22 nd Earthquake February 2011 Christchurch Earthquake Private & Confidential 46

47 11 th March 2011 Great Japanese Earthquake Great Japanese Earthquake Private & Confidential 47

48 Thailand Floods July 2011 Thailand Floods Private & Confidential 48

49 Interesting Risks! Private & Confidential 49

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53 The insurance market THE BUYERS THE SELLERS (The Insured) THE INTERMEDIARIES Insurers Reinsurers Commerce Lloyd s brokers Lloyd s Brokers Composite/General Insurance Companies Industry Agents Industrial Life Assurance companies Consultants Friendly societies Mutual indemnity associations Reinsurance Companies The Public Home Service representatives Captive insurance companies Self insurance The state Direct insurers ANY QUESTIONS? 53

54 SUMMATION & CLOSE Please complete the feedback sheets. They help us to set the annual programme. 54