PRA vows to improve its protection of policyholders

The Prudential Regulation Authority (PRA) has vowed to increase its focus on protecting policyholders by devoting more resources to those who would suffer most if insurers do not pay out as promised.

 

In a speech, PRA chief executive and Bank of England (BoE) deputy governor Sam Woods said “now is the ideal time to refresh our approach to insurance supervision.”

 

Woods said: “It is, in my view, entirely appropriate that we should direct more of our resources towards policyholders who will suffer greater financial hardship if their policies do not pay out as promised, or those for whom there is the greatest asymmetry of information between company and customer, or who face the highest possibility of being unable to replace cover if it is lost.”

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She said insurers, particularly those that provide cover for critical illness or personal accident, are responsible for the society’s oldest and most vulnerable individuals.

 

“Insurers commit to being there when you need them most,” Woods said. “So when we talk about promoting insurers’ safety and soundness, and protecting their policyholders, this is what we have in mind.”

 

Woods made her remarks on the same day that the BoE published an independent evaluation report on the PRA’s approach to its insurance objective.

 

Anthony Habgood, chairman of the BoE court, said in the report that the PRA’s approach to policyholder protection had been “somewhat crowded out by live supervisory issues” and by the work needed to implement the EU’s Solvency II capital rules for insurers.

 

“The PRA’s articulation of its policyholder protection responsibilities appears to be unfinished business,” Habgood said.

 

Habgood noted, however, that the BoE found no evidence of PRA supervisors falling short of their policyholder protection duties or of formal overreach.