b'INSURANCE REGULATORY|UK/BREXITCOVID-19: OperationalGeneral Insurance PricingResilienceThe FCA is concerned that home and motor On March 29, 2021, the FCA, PRA and Bank ofinsurance markets are not working well for England released a joint Policy Statementconsumers and has set out proposed remedies to outlining their finalized rules on operationaladdress this.resilience. The final rules apply to firms includingIn May 2021, the FCA published a policy statement banks, insurers and PRA-designated investmentwhich set out its final rules to address the harm it firms, among others.had found in its earlier General Insurance Pricing The FCA and the PRA have made it clear thatPractices Market Study and consultation. On regulated financial services firms, includingAugust 18, 2021, the FCA published a further insurers, must pay careful attention to thepolicy statement, making minor changes to these operational requirements and challenges createdrules. The policy statements aim to improve the by COVID-19 and must be operationally resilient.way insurance markets function and will be of Operational disruptions (as evidenced by COVID- interest mainly to general insurers and 19) can cause wide-reaching harm to consumersintermediaries, life assurers and intermediaries and pose a risk to market integrity, threaten theselling pure protection business.viability of firms and cause instability in theThe rules ensure that renewing home and motor financial system. Firms will need to identify andinsurance consumers are quoted prices that are no map important business services, set impactmore than they would be quoted as a new customer tolerances and complete scenario testing with athrough the same channel. The FCA is also making view to developing strategies and plans toit simpler for customers to stop automatic renewals, enhance operational resilience and meetif they wish to do so. The new requirements for regulatory expectations. The rules and guidancepricing and renewal of policies came into force in will come into force on March 31, 2022. January 2022. The FCA is also enhancing its product In addition to the requirements on operationalgovernance rules, controls and systems resilience, the PRA published final rules onrequirements to ensure that firms deliver fair value outsourcing in March 2021 which apply to insuranceon all their insurance products; these requirements and reinsurance firms and groups in scope ofcame into force in October 2021.Solvency II, including Society of Lloyds andThese are very significant developments and reflect managing agents (insurers). These requirements arean ongoing change in the way the FCA has been broadly aligned with the guidelines anddealing with pricing across all retail insurance recommendations on outsourcing from Europeanmarkets (not just in relation to home and motor supervisory authorities including the Europeaninsurance), as well as in other retail financial services Insurance and Occupational Pensions Authority.markets, and in particular reflects the FCAs Insurers are required to comply with thesewillingness to intervene where it believes prices are requirements by March 31, 2022. excessively high or otherwise unfair.104|Global Insurance Industry Year in Review 2021'