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Out-Law Legal Update | 10 May 2017 | 3:59 pm | 3 min. read
The Insurance Act 2015 came into force on 12 August last year. Although the Act is directly applicable to insurers and insureds, and therefore does not require amendments to relevant regulatory rules, the Financial Conduct Authority (FCA) consulted in July last year on updating the insurance conduct rules in its Handbook in line with the Act to, amongst other things, "avoid inappropriate overlap between our rules and the new legislation, and reduce any potential for confusion."
Planned changes to the Insurance Conduct of Business Sourcebook (ICOBS), applicable to general and non-investment insurance business, and to the Conduct of Business Sourcebook (COBS), applicable to life and investment insurance businesses, have now been published and these will become effective in less than three months, on 1 August 2017. The changes fall primarily within the claims-handling provisions of the Sourcebooks and detail the regulator's revised approach to dealing with firms' rejection of policyholder claims given the more stringent requirements introduced by the Act.
For contracts entered into or variations made before the amended rules come into force – expected on 1 August 2017 - the FCA's current rules will apply. For contracts and variations after the proposed rules come into force, the amended rules will apply.
The planned changes include:
In its Handbook Notice published this week notifying the changes to be brought in via Insurance Act 2015 (Consequential Amendments) Instrument 2017, the FCA states that its policy approach is to amend the rules to avoid undermining the scope of primary legislation, to focus on those instances where consequential changes are needed to preserve existing policy, and also to align the Handbook with the legislation. It had three responses to its consultation from trade bodies whose concerns mainly related to making sure the regulator made explicit where the application of certain rules applied to consumer policies only and/or to policies subject to the Act and not those that, for example, had properly contracted out of the Act. In its Handbook Notice, the FCA set out how it had taken this feedback into account in finalising the amended rules.
Fintech meet up