Insurance company senior executives in the UK will be made more directly accountable to regulators under new proposals from the Prudential Regulation Authority (PRA), part of the Bank of England. The PRA had already drawn up plans for senior bank executives and the insurance rules follow similar lines, although they are less stringent in some respects.
The new rules would require insurers to allocate to one or more senior managers specific responsibility for the development of a responsible culture.
PRA chief executive Andrew Bailey, who is also deputy governor of the Bank of England, said that "policyholders are best served by insurance companies with senior managers who can be held to account and who are individually responsible for the decisions they make".
The PRA insurance rules, entitled Senior Insurance Managers Regime (SIMR) do not have the controversial "reverse burden of proof", which banks have claimed are against natural justice, requiring executives to prove that they were unaware of or had challenged any dubious behaviour uncovered at a later date.
For insurers, the PRA would have to show that any misconduct by an insurance official was deliberate, or that the behaviour of the senior executive had fallen below reasonable standards.
The Association of British Insurers (ABI) said that it was reassured that the PRA proposals recognised the fundamental differences between insurers and banks. It said that it would be working with its members "to ensure that the regime is fit for purpose and ensures a continuing flow of high-level talent into the insurance industry".
A public consultation will run through to February 2 2015, with the new rules being introduced from late 2015. The published insurance proposals relate to executive directors. A consultation on the responsibilities of non-executive directors at banks and insurers is to follow in 2015.