The Lloyd’s Market Association (LMA) has issued guidance on the updated regulations on pricing practices and product reviews rolled out by the Financial Conduct Authority (FCA).
Under the new rules, carriers are required to provide important information on most products, such as the product’s features, its target market and those whom the product is not likely to be suitable for. Intermediaries are also required to report details of remuneration, including fees and commission, throughout the distribution chain.
In March, the Chartered Insurance Institute reacted positively to the pricing reform update, while insurance data insight firm Consumer Intelligence expressed some apprehensions regarding the implementation timetable.
The LMA’s guidance, published on its website, includes a template, with notes and examples to help carriers and intermediaries supply the required information. According to the LMA, the guidance was created through collaboration between various market sectors. The representatives of the managing agents sector were Ark, Beazley and Brit, while Aon, Marsh and Willis Towers Watson represented the brokers.
The Lloyd’s and London market product information exchange template and associated guidance have also been published on the Lloyd’s Wordings Repository with reference numbers of LMA 9197 and LMA 9198, respectively.
“The new rules, although seemingly relatively simple, had the potential to snowball into an unmanageable administrative burden for both carriers and intermediaries,” said Steve Morrell, LMA head of regulatory affairs. “It made sense therefore to adopt a co-ordinated approach and the LMA has worked closely with the ABI, BIBA, IUA, LIIBA and MGAA to agree a standard template, which should minimise the burden on our members.”
“The new rules had the potential to create significant work,” said Joanne Hart, head of conduct risk and complaints at Brit. “However, we welcome the benefits they should bring. Intermediaries should be able to ensure a proper understanding of the value of the products they distribute and, in turn, carriers should gain a better understanding of the value of the distribution chain. Most importantly, it should go a long way to ensuring that end customers are receiving valuable products at fair prices.”
