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Appointed representatives in the UK general insurance market

“Distribution is king” – is compliance ace?

The FCA has recently published its long-awaited thematic review: “Principals and their appointed representatives in the general insurance sector” (the “ARTR”). The ARTR raises significant questions for general insurance intermediaries and insurers (“firms”) about the effectiveness of compliance in relation to:

  • Product distribution appointed representatives (ie persons exempt from authorisation by virtue of certain contractual arrangements with firms – “ARs”).

  • The capability and culture of the UK general insurance market overall as to regulation.

The phrase ‘distribution is king’ is often used in UK insurance markets: being able to sell products to customers whose individual or collective risk and claims profiles result in profits for insurers. Such profits depend in part on the costs of such sales / distribution. These costs – remuneration for intermediaries – can often arise in the form of: (i) brokerage or commissions (part of the ‘gross’ premium paid by each customer); and/or (ii) arrangements as to financial results relating to customers collectively (eg ‘overriding’ commissions relating to aggregate premium volumes, or ‘profit commission’ or ‘share’).

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This article was originally written for Thomson Reuters ‘Accelus Regulatory Intelligence’ website.

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.