The Financial Conduct Authority (FCA) has published a consultation outlining plans to simplify its insurance rulebook by removing what it considers “ineffective, outdated or duplicated regulation.”
The proposed changes aim to reduce costs for insurers and improve access for both businesses and consumers, while maintaining protections for smaller commercial clients.
One of the key proposals is the introduction of a new definition to identify large commercial insurance customers who are deemed capable of managing their own risk. These customers would be exempt from certain conduct rules, allowing insurers to focus their compliance efforts on smaller clients.
The consultation also suggests changes to the frequency with which insurers review the value of their products. Currently, insurers are required to conduct annual reviews. Under the proposed changes, this fixed 12-month requirement would be replaced with a more flexible system, allowing insurers to determine review timelines based on risk and product characteristics.
Additionally, the FCA is also considering allowing a single lead insurer to take on compliance responsibilities for co-manufactured products. The aim is to simplify processes and broaden the availability of bespoke contract exclusions, while also eliminating duplicative reporting obligations, such as the annual employer liability notifications.
Caroline Wagstaff, CEO of the London Market Group, welcomed the FCA’s consultation, calling it “important progress” towards a more proportionate regulatory system for the London market.
“A new definition of large commercial insurance customers is particularly welcome. If applied consistently across the rulebook, it will allow the regulator to focus on protecting the retail and SME consumers who really need it, while reducing unnecessary regulatory requirements for corporate clients,” Wagstaff said.
In response to the FCA’s consultation on simplifying the insurance rulebook, Graeme Trudgill, CEO of the British Insurance Brokers’ Association (BIB), expressed support for the proposals.
He noted that the changes align with many of BIBA’s key regulatory points from its Manifesto. Trudgill commended the FCA for addressing issues that have long been a focus for BIBA, particularly in making regulation more proportionate for insurance brokers.
Trudgill also highlighted the increased engagement between the FCA and BIBA, citing their collaboration through initiatives like the Tour of the Regions. Trudgill welcomed the FCA’s willingness to act on suggestions and feedback from BIBA members, calling the consultation a positive step forward.
The FCA has invited feedback on the proposals by July 2, 2025. If implemented, these changes would simplify the regulatory environment for insurers and provide more flexibility, particularly for larger clients, while ensuring that protections for smaller businesses remain intact.
