The Senior Insurance Managers Regime

23 June 2016

The move to introduce greater accountability in insurance is due to a number of developments: Solvency II requirements, European Insurance and Occupational Authority (EIOPA) requirements and a desire to align the conduct rules within insurance to those of the banking industry post 2008 economic crash.

The Senior Insurance Managers Regime (SIMR) reflects the regulators’ increased focus on greater personal responsibility. In this bulletin we take a look at SIMR and what this could mean for your company and also you as an individual.

SIMR came into force last month, implementing new governance over the roles and conduct of senior managers in insurance companies (essentially those individuals who run the business, or have responsibility for critical areas). Individuals who fall within the SIMR scope are detailed with this bulletin.

The Conduct Standards

Those performing a senior insurance management function (SIMF), key function holders and persons working within key functions, are all bound by the new conduct standards. The conduct standards prescribed by the SIMR set out a basic standard of behaviour expected by all persons who are subject to the SIMR. They require, for example, all individuals subject to the regime to act with integrity, act with due skill, care and diligence and be open and co-operative with the regulator (tier 1 standards). Additional and more burdensome standards (tier 2 standards) apply for those holding a SIMF or key function holders, for example they are required to “take reasonable steps to ensure that the business of the firm for which [they] are responsible is controlled effectively”.

Governance maps and scope of responsibilities forms 

The SIMR requires an insurer to provide:

  • A governance map setting out the matrix of individuals who are responsible for running the insurer, identifying key functions within that insurer and putting names against each of those positions; and 
  • A “scope of responsibilities” form identifying in around 300 words precisely what each person holding a SIMF is responsible for.

Governance maps and Scope of Responsibilities Forms (SOF) are intended to make it easier for regulators to hold individuals personally responsible for regulatory breaches falling within their areas of responsibility. In light of these new burdens, it is important for individuals subject to the SIMR to ensure, on an ongoing basis, that their responsibility statements are accurate and reflect what they are actually responsible for in practice. Individuals subject to the SIMR should make sure that they are adequately protected (and can defend themselves) in the event things go wrong and the regulator challenges something falling within their area of responsibility.

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For more information, contact James Morris, Legal and Technical Executive on +44 (0)20 7528 4308 or email james_morris@jltgroup.com

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