GIM1170 - The UK insurance market: regulation and supervision

The diversity of forms of insurer operating in the United Kingdom market reflects the historical development of the market, the evolution of different forms of business organisation in the UK, and the development of the regulatory framework.

In recent years in the UK, insurers have been regulated and supervised by the DTI and the Treasury, and are now regulated and supervised by the FSA.

The language of the regulatory framework has changed over the years. The Insurance Companies Act 1982 applied to authorised ‘insurance companies’. The statute which replaced it, the Financial Services and Markets Act 2000 (FSMA 2000), refers to ‘authorised persons’ who may carry on ‘regulated activities’, of which the ‘effecting’ or ‘carrying out’ of contracts of insurance is one.

Authorised persons are either those who have received permission under Part IV FSMA 2000 from the FSA, or an EEA or Treaty firm which qualifies for permission under Schedules 3 or 4 to the Act. In essence these are firms which are subject to regulation in their home State.

Authorised persons must also meet the FSA’s “threshold conditions”, one of which for insurers is the person must be a body corporate, a registered friendly society or a member of Lloyd’s.

More details on the regulatory framework are given in GIM3000+.