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Guest blog: Questions NEDs and Chairs should be asking when developing a proportionate approach to the senior insurance managers’ regime

Lee Clarke, Insurance Conduct Partner, PwC Lee Clarke, Insurance Conduct Partner, PwC

The senior insurance managers’ regime will usher in a new era of heightened personal accountability. The potential benefits are a more assured basis for decision making and fewer unwelcome surprises on your watch. In our experience, the big dilemma is how to comply in a way that satisfies the regulators without wrapping your business up in stifling controls.

The challenge is heightened by the fact that an awful lot of what you are accountable for under this regime is delegated to others – you can delegate authority but not responsibility. Moreover, the expectations over integrity and conduct apply to your entire workforce, making this is as much about the culture and behaviour within your organisation as the decisions you personally make, and their consequences.

Fundamental considerations

So how can your business develop an assured, but workable approach to meeting the demands of this new regime? In working out the best way forward, I think that there are a number of fundamental questions that will need to be addressed:

  1. How can you avoid the need for multiple extra controls by developing a solid basis of organisation-wide understanding, management information and trust?
  2. What governance procedures do you currently have in place, how do they map together and how might they need to change?
  3. How can you ensure that you have the right people, in the right roles and with the right training, understanding and incentives to do the right thing? Looking at your responsibility for remuneration, in particular, how can performance management and reward promote desired behaviour?
  4. How can you measure concepts such as integrity in a credible and demonstrable way?
The senior insurance managers’ regime will usher in a new era of heightened personal accountability.

I think that the key to making this all work is ensuring that your board is fully engaged and driving implementation, rather than leaving it all to HR and Compliance. This will help you to make sure that everyone knows what’s expected, and the right governance and reporting structures are put in place, without adding a needless extra layer of red tape.

I will be joining Jonathan Davidson from the FCA in a Q&A at the upcoming ABI NEDs and Chairs lunch on the 1st February, 2016.

Lee Clarke is Insurance Conduct Partner at PwC

Last updated 29/06/2016