The New Insurer Start-up Unit – or NISU – is part of the regulators’ ongoing work to improve the authorisation process for prospective new insurers in the UK. They want the process, information and materials to be helpful for potential applicants so that they can have an effective and efficient way of working together, and ultimately a better quality of application when the time comes. If you’re an insurer thinking of applying for authorisation the first step is to consult the NISU’s new guide.
Any firm that wants to be an insurer (which includes the activities of effecting contracts of insurance or carrying out contracts of insurance) must be authorised to do this by the PRA. And the PRA will only agree to authorise a firm if the FCA is also happy for it to be authorised.
The FCA and PRA have jointly developed the NISU to reduce perceived barriers to entry for prospective insurers and to increase choice for consumers. Applicants looking to fill a gap in the market – whether in terms of products and services or in terms of market sectors – will be able to take advantage of this new initiative.
The NISU have published a guide providing information and support to those becoming new insurers in the UK, from the pre-application stage to post authorisation.
The guide covers four main areas:
- Early stages – setting out the basics, including whether setting up an insurer is the right thing for a prospective applicant, and what their choices might be.
- Pre-application – containing details of the pre-application meetings which have been found to be useful to both sides since the PRA/FCA share their expectations of an application that is as complete as possible.
- Application – including information about what the PRA/FCA will evaluate, and how long it could take to get a decision.
- After authorisation – providing answers to what regulatory after becoming an insurer in the UK and what to expect in the early days of being supervised and the following years.
To make sure applicants engage fully with the NISU, the guide advises applicants to consider a number of components for any authorisation pre-application.
Some of these components include:
- Business plan – What products will the new insurer offer and how will they offer them and to whom? What is the applicant’s competitive advantage? How will the new insurer make money?
- Senior management, the board and governance – Who will run the new insurance firm and how will they do it?
- Risk management – What control framework will the new insurer need?
- Customer journey – What is the customer journey? What are the products, pricing, complaint handling and on-boarding arrangements (including Anti-Money Laundering/Know Your Customer processes)?
- Financial resources – How will the new insurance firm be funded?
- IT strategy – What systems will the new insurer need and who will operate them?
- Outsourcing – What will the new insurer do in-house and what will it outsource?
Applicant firms who follow this guide and make full use of the NISU will save time and accelerate their application process. It is envisaged that the new unit will help applicants at the pre-application stage to determine exactly which regulated activities they are most likely to carry out and which they are not. By discussing their initial business plans with the NSIU, it is hoped that applicant firms will use any feedback to save time and to ensure that they increase their chances of submitting a successful application.
How we can help
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