Home / International / UK regulator takes aim at harrassment, bullying in insurance
11 November 2019
The UK regulator is “deeply concerned” about recent reports of sexual harassment and bullying in the London market and has singled this out as a priority focus over the coming year.
In a letter to the CEOs of general insurance firms published on the Bank of England’s website on Tuesday, the Prudential Regulation Authority (PRA) says these reports “are of deep concern” and it will hold discussions with boards and management teams to gauge how firms are addressing the issues.
“It is clear that some firms have more work to do to improve aspects of corporate culture and individual behaviour,” Gareth Truran, acting director of insurance supervision at PRA, said in the letter.
The largest culture survey conducted in the Lloyd’s market found 8% of 6003 participants said they had witnessed sexual harassment in the marketplace during the past 12 months, and 38% said they don’t know where or to whom they could report concerns.
Mr Truran’s letter warns that non-financial misconduct may have implications for the regulator’s opinion of “the fitness and propriety of individuals”.
“These issues also raise broader questions about whether firms are promoting a culture where staff feel able to speak up about poor practices or unidentified risks within their organisations, including issues relating to a firm’s financial soundness,” he says.
“Senior management should be careful to ensure that commercial pressure to deliver results does not translate into inappropriate pressure on individuals within control functions to weaken assumptions.”
He says boards have a collective responsibility for articulating and maintaining a culture of risk awareness and prudent management of risk for their organisation, particularly when commercial pressures may be high in challenging market times.
He gives an example of key prudential judgements such as reserving assumptions, which might attract particular management scrutiny given the potential impact on reported results.
Boards should be alert to this risk and ensure that the effectiveness of the risk control framework is supported by the organisation’s culture, the PRA says. Some heads of control functions such as chief actuaries should have routine opportunities to meet non‐executives outside formal board meetings.
“As well as formal channels such as whistleblowing, we encourage boards to consider what other internal mechanisms may be useful in supporting key function-holders and allowing board members to understand directly their views and perspectives.”