PRA unveils insurance accountability regime

The Prudential Regulation Authority (PRA) has revealed the ways in which it will hold senior insurance managers accountable under a new regime.

The regime will see senior managers held individually accountable for the areas that they are responsible for.

The authority said it will implement a parallel accountability regime for insurance companies which is tailored to the differing business models and associated risks of insurers, compared with those of banks.

Andrew Bailey, Deputy Governor, Prudential Regulation, Bank of England and chief executive officer (CEO) of the PRA said: “The simple principle that you can delegate tasks and work, but you cannot delegate responsibility for the safety and soundness and conduct of your firm must become embedded at all levels of banks and insurers.

“Today’s publications provide the certainty for firms to implement all necessary changes to achieve this objective.”

Michael Ruck, a senior financial services enforcement lawyer at Pinsent Masons and formerly with the Financial Conduct Authority, said: “The regulator’s clear aim is to hold individuals accountable for the failings in areas for which they have taken responsibility.

“Whilst the reverse burden of proof is not included in the insurance regime, the statement that ‘senior managers will be held individually accountable for the areas they are responsible for’ puts down a clear marker that individuals will need to be able to evidence the steps they took to meet the relevant regulatory requirements.

“Any senior manager responsible for an area in which there is a regulatory breach will be for the regulatory high jump.”