This report sets out the findings from our thematic review that looked at delegated authority arrangements in the general insurance market. The review focused on concerns over firms’ oversight of outsourced arrangements and the potential impacts any shortcomings could have upon the delivery of products and related services to customers.
Delegated authority is widely used in the UK general insurance market. This can include outsourcing of underwriting and claims handling to third parties and the allocation of other functions such as product design.
We wanted to understand how firms approached outsourcing across the general insurance marketplace (including the activities and functions being outsourced) and how responsibilities flowing from such arrangements were managed.
More importantly we wanted to understand how these arrangements impacted on customer outcomes.
This report is aimed at insurers delegating authority to third parties as well as firms participating in such arrangements, which include insurance intermediaries and third party administrators.
We reviewed the outsourcing arrangements of 12 insurers representing a broad range of firms operating in the UK general insurance market. We also reviewed the activities of 19 firms that held underwriting and/or claims handling authority from those insurers.
Our findings included:
We will continue to engage with industry to address the issues identified in the review and intend to provide individual feedback to firms included in our work, setting out any actions required as a result of our findings.
Our ongoing supervisory work with regulated insurers and intermediaries will focus on the questions and issues highlighted in this report to verify that firms have reviewed their activities in the context of these findings and have taken steps to address any issues identified.
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