The UK insurance regulator’s critical review of delegated authorities reinforces the value of local representation, according to Talbot Australia MD Adam Matteson.

The Financial Conduct Authority (FCA) says insurers delegating underwriting or other authority to third parties must improve risk assessment and oversight.

Mr Matteson says the report “is a shot in the arm” for Lloyd’s coverholders opening offices outside London.

Talbot writes business here from its Lloyd’s Syndicate 1183 and he says the FCA report reinforces the need to support partners.

“It is about being able to provide the support they need, and with support comes better understanding of the business, and from that comes oversight,” he told insuranceNEWS.com.au.

The FCA reviewed 12 insurers, including Lloyd’s syndicates, plus 19 intermediaries and third-party administrators operating in lines for retail and SME customers.

It found a lack of due diligence in selecting third parties and inadequate monitoring, and says some intermediaries do not consider the extent of their responsibilities as product providers.

Lloyd’s Australia General Representative Chris Mackinnon told insuranceNEWS.com.au there is little in the report to cause the local market disquiet.

The Australian Lloyd’s operating model has been established for a long time and incorporates levels of oversight from the FCA and Lloyd’s in London, plus Lloyd’s here, the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission.

“Nothing in the report is a major issue,” he said. “We agree with the importance of oversight and it is something we do pretty well here.”

Lloyd’s already has a project under way to improve oversight of third-party claims-handling arrangements.

Mr Mackinnon says Lloyd’s is considering service standards and implementing a code of conduct for third-party claims handlers. This will protect the Lloyd’s brand and increase consumer confidence.

He has begun to seek feedback from the local market on what it would like the project to deliver.

See ANALYSIS