The Prudential Regulation Authority has published a consultation paper to introduce a accountability regime for insurance.
The proposals will cover senior individuals working for insurance firms and groups and follow reforms for the banking sector, and be called "The Senior Insurance Manager's Regime" (TSIMR).
There will be similar standards of fitness and propriety, conduct and accountability at both insurers and banks, the regimes however will not be identical.
Neither the criminal sanctions, nor the presumption of responsibility in the banking regime will be in the insurance regime.
The regime will also cover measures relating to governance as well as fitness and propriety measures required as part of Solvency II.
TSIMR will apply to senior managers running insurers or who have responsibility for key functions.
The regime will apply to
• the Chief Executive Officer
• the Chief Finance Officer
• the Chief Risk Officer
• the Head of Internal Audit
• the Chief Actuary
• the With-Profits Actuary (for life insurers writing with-profits business)
• the Chief Underwriting Officer (for general insurance and reinsurance firms, and managing agents at Lloyd's)
• the Underwriting Risk Oversight Function (for the Society of Lloyd's)
Developing and embedding the culture of the firm will be the responsibility of one or more of these office holders, while the PRA is also proposing to introduce new conduct standards for these individuals.
Andrew Bailey, deputy governor of Prudential Regulation at the Bank of England and CEO of the PRA said: "Ensuring that senior managers of insurers are accountable supports our objective that firms should be run in a safe and sound manner.
"Policyholders are best served by insurance companies with senior managers who can be held to account and who are individually responsible for the decisions they make."
Andrew Tyrie MP, Chairman of the Treasury Committee and former Chairman of the Parliamentary Commission on Banking Standards, said: "Today's proposals - which address some of the deficiencies of the APR for insurers - are a welcome step towards improving regulatory oversight of senior individuals in insurance.
"They are going with the grain of the intentions of the Treasury Committee and the Banking Commission."
He added: "It needs to operate not as an initial gateway to taking up a post, but rather as a system through which the regulators can ensure the continuing exercise of individual responsibility at the most senior levels."
Tyrie said: "The regulators did not initially appear enthusiastic about extending the Senior Managers Regime beyond banking and winding down the APR. They clearly agree that this is needed after all.
"Indeed Clive Adamson, the FCA's Director of Supervision, told the Treasury Committee in January that the FCA wanted the SMR to apply to all financial services firms."
