Fixed fees for Med-Mal?
The Government is looking to introduce new measures to curb clinical negligence costs - including an implementation of fixed fees, as announced by the Legal Gazette today.
Published 1 September 2015
Making predictions about the future of the insurance market is not for the faint-hearted. Our experts have boldly looked ahead at the challenges you may face over the next year and produced 50 focused predictions.
London will begin to understand that its real advantage in the global insurance market is underwriting expertise and experience, not proximity to capital, which is now genuinely global. Competing for a share of the established cat bond market, or repackaging existing capacity in consortia will not take the fight to Bermuda or establish London insurers in the high-growth markets of Asia and Latin America. We wait to see which London players will bring game-changing innovation to the market this year. Three things we’d like to see are Insurance Linked Securities for new types of risk, insurance solutions for Basel III capital requirements and cover for fractional ownership in the sharing economy.
Although the new EU-wide Data Protection Regulation is not expected to be in force until January 2018 at the earliest, we have seen much of its predicted content implemented by the back door in the UK through the courts and guidance from the Information Commissioner’s Office. We expect this trend to continue into 2016. Insurance companies should be implementing policies, procedures and new initiatives (such as big data analytics) now, not only to be ready for the go-live in 2018 but to meet current expectations and guidance.
Insurers will need to reinvent their investment strategies in the search for optimal capital treatment under Solvency II. With funds and investments packaged as funds under the microscope of Article 84 ‘look-through’ valuation and securitisation subject to asymmetric capital loading, the need for investment return will push complexity to the portfolio level. The life market will make use of the matching adjustment rules to create segmented portfolios, but the general market will need to think about investment return more widely than it has before. As always, hedge funds and investment managers seeking insurance clients will treat the new prudential regulations as design parameters.
Many UK insurers will face upheaval over the next few months preparing for the new Senior Insurance Managers Regime (SIMR) and reformed Approved Persons Regime, which come into effect on 7 March 2016 (although some elements start on 1 January 2016). Some grandfathering will be permitted, but insurers will need to identify which individuals will perform which functions under the new rules and to ensure they are aware of what will be required of them. The SIMR will implement Solvency II requirements as well as applying some aspects of the senior managers regime for banks to insurers subject to Solvency II. The key features include a requirement to produce and maintain a governance map, a wider requirement to identify those performing ‘key functions’, a new conduct standard and a Group Entity Senior Insurance Manager function, potentially catching senior people in parent companies. Many might question the need for such ‘platinum plating’ of European insurance regulation, which will inevitably affect the UK’s competitive position, when conventional insurance contributed so little to the financial crash of 2008.