Do insurance brokers need a compliance function?
Within the insurance industry, it has so far mainly been the insurance companies that have established compliance functions. Currently, insurance brokers have no legal requirement to establish any such function. However, we at Advisense do not believe that this answers the question of whether an insurance intermediary is in need of a compliance function.
At FCG, we have observed an increased need and demand for compliance expertise among insurance brokers. The insurance industry is developing and digitalizing to an ever-greater extent, which has led to an expanded role and a greater responsibility for insurance brokers in the distribution chain. On top of this, the legal requirements for insurance brokers have also increased in recent years. For many, the implementation and compliance of both IDD and GDPR have been and continue to be demanding. Without an established compliance function, it can be difficult for other parts of the business to get the advice and support needed in order to be compliant. To maintain a license to conduct insurance brokerage, it is a prerequisite to comply with applicable regulations. Without support from a compliance function, it can be very difficult for the business to ensure that it is compliant.
The question you as insurance intermediary should ask yourselves is: Can we be sure that we comply with all regulations without a compliance function?
Areas, where we at FCG see a need for support from a compliance function for insurance brokers, are, among other things, the following:
Knowledge and competence of insurance brokers
The IDD regulations place high demands on the knowledge and competence of insurance brokers, as well as the processes and control documents that must exist to ensure compliance.
Provision of information
In recent years, the Swedish Consumer Agency has reviewed the implementation of the information requirements put forth in the IDD regulations and found that some insurance brokers fall short in the information advisory services.
In 2021 the Swedish Financial Supervisory Authority reviewed the handling of complaints among insurance distributors. All insurance brokers should take note of the requirements and shortcomings that the authority has observed in the handling of complaints.
It has been a few years since GDPR came into force and new rulings and judicial practices have changed the GDPR landscape and in what way companies must comply with GDPR in practice. The work with GDPR is continuous and should be shaped according to the development of the company and applicable regulations.
Have you reviewed in what way the new sustainability regulations will affect your insurance distribution business and how you should set up your business in order to be compliant?
The new Whistleblower Directive will affect all businesses. Have you reviewed how the regulations will affect your business and what steps you need to take in order to be compliant?
Looking ahead, the insurance brokers must monitor upcoming regulatory changes such as the new sustainability regulatory framework.
If you, like many others within the insurance sector, find it difficult to monitor the regulatory changes in your industry, you should check out our system RegEye, which helps you monitor regulatory changes.
FCG has extensive experience in advising on insurance distribution and associated regulations. FCG can both support your business with advice and support and be your outsourced compliance function. Do not hesitate to contact us for a no-obligation meeting to hear more about how we can support your business in insurance distribution.