Neville’s Notes
Updated: Dec 16, 2020
Hello and a very warm welcome to our relaunched website. As CEO of Helodrium I would like to introduce you to our broad range of services, from supporting you in FCA and Lloyd’s Applications, to ongoing Compliance and back-office services including Xchanging Processing. We hope you will enjoy exploring our website to learn more about how we can help your business.
A Year in Review
It has certainly been a year of challenges both within and beyond the insurance sector. Having dealt with the trio of IDD, SM-CR and GDPR, the challenges have got substantially greater, with COVID and Brexit both deeply affecting everyone’s lives.
In the light of COVID-19, 2020 has proved a particular a steep learning curve for operational resilience. Businesses have been challenged to review major risks facing their operations, affecting Business Continuity, including Keyman dependencies, and Supply Chain issues. Business Continuity Plans that have been gathering dust have had to be quickly rewritten as a result!
The FCA has been keen to ensure firms minimise harm to customers during the pandemic. In published guidance back in March, the regulator emphasised the importance of financial resilience (and within that the preservation of client assets and money) and acting with integrity.
The FCA is also focusing on firms’ Wind Down Plans, which are there to enable a firm to cease its regulated activities and achieve cancellation of its permission with minimal adverse impact on its clients, counterparties or the wider markets. In addition to where firms undertake a strategic exit, COVID-19 has highlighted the importance of planning for an unexpected crisis or insolvency that makes the firm unviable. The FCA wants to see proactive assessments by firms on their adequate resources (e.g. capital, liquidity, knowledge and manpower) on an ongoing basis, with consideration given to unexpected events like the pandemic.
One of the more (in)famous consequences of COVID-19 has been the FCA business interruption test case and at the subsequent appeal to the Supreme Court. Its judgements will have implications across that market. The central issue: “proximate cause” and whether the Covid-19 pandemic and the UK government’s response to it can be considered as an interconnected cause of loss under the sample policy wordings, may have serious implications for the insurance industry. Will this precedent force insurers to provide cover in spite of policy exclusions? What effect will this have on capacity, as carriers of this type of business exit the Business Interruption market segment After paying massive losses?
Finally, there is Brexit, which has been pushed down the pecking order by COVID; what happens at the end of the transition period? Are the recent tussles over the Common Fisheries Policy evidence of a wider disagreement on several issues – and where does Financial Services appear in the list of priorities? For the London Market, losing its Passporting Rights will lead to more confusion as to what can be done by whom. Lloyd’s is famous for underwriting bespoke and specialist risks around the world sowhat does “no deal” mean for European brokers who have UK clients and vice versa? In particular, what will replace the FCA’s Temporary Permissions Regime in the light of EIOPA Recommendation 9 and how will the FCA work with European Union countries’ regulators going forward? Let’s hope the posturing is nothing more than last-minute dramatics before a deal is signed.
At Helodrium we have all been pondering all these issues (and others) over the past year, so if you would like to talk about any of the above and what it means for your business, please, get in touch, we are here to help.