Welcome to this edition of the IMU newsletter which provides you with a summary of the latest accounting, actuarial and regulatory developments in the insurance market.
In this edition you can find out more about the following topics:
- CEA calls for separation of systemic risk identification.
- FSA issues insurance newsletters.
- FSA proposes guidance for price comparison websites.
- FSA publishes feedback on product intervention.
- FSA releases paper on insurance supervision.
- IASB and EFRAG discuss work plan and future agenda.
- IASB completes improvements to off balance sheet accounting.
- About this newsletter and the Insurance Centre of Excellence.
This newsletter is prepared by the Deloitte Insurance Centre of Excellence (ICoE).
We hope you find it informative and would welcome any feedback or suggestions you may have.
CEA calls for separation of systemic risk identification
On 7 June 2011, the Comité Européen des Assurances ("CEA") called on the leaders of the G20 to separate insurance from the systemic risk identification process which currently focuses on banking. Insurers are suggesting that a separate exercise focused on insurance be conducted in order to treat banks and insurance companies separately and better reflect the risks of each.
Interactive link to related information
FSA issues insurance newsletters
On 9 June 2011, the Financial Services Authority ("FSA") issued the fifth editions of the General Insurance
Newsletter and the Life Insurance Newsletter.
The general insurance newsletter contained articles including:
- the FSA's current thinking on Solvency II;
- current considerations on the EU Gender Directive;
- a letter to online aggregators on regulatory compliance; and
- a note on the Consumer Insurance (Disclosure and Representations) Bill.
The life insurance newsletter contained articles including:
- the FSA's current thinking on Solvency II;
- current considerations on the EU Gender Directive;
- the proposals to improve protection for with-profits policyholders; and
- a note on the Consumer Insurance (Disclosure and Representations) Bill.
Interactive links to related information
General Insurance Newsletter (pdf)
Life Insurance Newsletter (pdf)
FSA proposes guidance for price comparison websites
On 8 June 2011, the Financial Services Authority ("FSA") proposed guidance to price comparison websites on regulatory compliance and the sale of general insurance policies. The guidance arises as a result of a thematic review in 2010 which identified a lack of understanding and regulatory failures which could lead to unfair treatment of consumers.
Primarily, firms should ensure that they:
- are appropriately authorised;
- only deal with those who are appropriately authorised to conduct the relevant business;
- should cease dealing with third parties who are in breach of the regulations; and
- should review their compliance with the regulations for treating customers fairly.
The consultation period on the proposed guidance closes on 8 August 2011.
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FSA publishes feedback on product intervention
On 14 June 2011, the Financial Services Authority ("FSA") released a feedback statement summarising the feedback received on their Product Intervention discussion paper. Product intervention is a response to product failures identified by the FSA resulting in "significant consumer detriment". As a result, the FSA intends to implement oversight on the entire product life cycle, from design and development through to management after the point of sale.
In general, the FSA indicates that consumer organisations are supportive while industry reactions were more mixed. The FSA also noted that they remain convinced that product intervention is necessary and will be continuing to implement this project.
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FSA releases paper on insurance supervision
On 20 June 2011, the Financial Services Authority ("FSA") published a joint paper with the Bank of England on the Prudential Regulation Authority's ("PRA") approach to insurance supervision. The paper spells out the two primary objectives of the PRA – protection of policyholders and systemic stability – with the majority of resources focused on those firms that pose the greatest risk to these objectives. Among other things, the paper outlines:
- the principles underlying the PRA's approach;
- the scope of the PRA;
- the PRA's risk assessment framework; and
- the PRA's approach to supervision.
Interactive link to related information
IASB and EFRAG discuss work plan and future agenda
On 16 June 2011, the International Accounting Standards Board ("IASB") and the European Financial Reporting Advisory Group ("EFRAG") published a press release noting their meeting on 14 June 2011 and the discussions that took place. Principally, the two bodies reviewed the IASB's current work programme, with the EFRAG making recommendations on some of the key projects, including revenue recognition, leases and insurance contracts. The EFRAG will continue to work with the IASB to organise field testing and bring
European viewpoints into the standard setting process.
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IASB completes improvements to off balance sheet accounting
On 12 May 2011, the International Accounting Standards Board ("IASB") issued a press release that it has completed its project to improve the accounting requirements for off balance sheet activities and joint arrangements. These improvements have resulted in three new standards – IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities and broadly represent alignment between IFRS and US GAAP. The key changes being made include modifications to the principles of control, a focus on rights and obligations rather than legal form and enhanced disclosure requirements. Insurers will need to carefully consider the impact of these changes to their reporting process, particularly where they have off balance sheet funds and other structures.
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Any comments or questions about this newsletter?
This publication is designed to keep readers abreast of current developments, but it is a general guide only and is not intended to be a comprehensive statement of the law or regulations and not an exhaustive treatment of those current developments. Accordingly, the information in this publication is not intended to constitute accounting, tax, legal, investment, consulting, or other professional advice or services. It therefore cannot be relied on to cover specific situations; application of the principles set out will depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any of the contents of this publication.
Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific circumstances. If you would like more information or would like to discuss any of the issues set out in this newsletter please contact your usual Deloitte contact or any of the ICoE team listed below and they will be pleased to help you.
Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of any material in this publication.
The Insurance Centre of Excellence
The Deloitte Insurance Centre of Excellence (ICoE) is a dedicated technical group, within our insurance practice, with a reputation for outstanding technical quality and thought leadership embracing senior professionals from all areas of the business.
We play a guiding role in our profession and liaise with industry and trade bodies – an inside track on the latest accounting and regulatory changes means that we are perfectly placed to advise on current issues. We understand the insurance market and as part of a significant practice with a wide breadth of expertise the ICoE team can draw on a blend of skills to deliver outstanding financial, actuarial, tax, commercial and regulatory advice and knowledge that addresses the issues and challenges facing the industry.
Our expertise allows us to help insurance firms turn challenges into opportunities.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.