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FSA to visit insurance offices as it admits to concerns

The FSA says it does not know enough about how insurance companies

operate and plans to visit offices to carry out risk assessments by

the end of March.

It is aiming to complete a risk assessment of all sectors of the

market by the end of the year under its new risk-based approach to

regulation but is speeding up the assessment of insurers because of

worries about the sector.

Insiders say that the regulator&#39s worry about life companies is an open secret.

FSA managing director John Tiner recently gave a speech detailing his

concerns about risk management in life companies. He also relaxed

some of the solvency criteria for life offices.

The FSA is concerned that previous monitoring of insurance companies

depended simply on analysis of regulatory returns. But it now intends

to increase the level of scrutiny by visiting the firms to carry out

its own inspections on site.

The FSA note says: “Insurance firms are on a different timetable: we

do not know so much about the firms in this sector and they are under

particular stress caused by current market conditions. So we are

planning to complete their reviews by the end of March 2003.”

Annuity Bureau director Ronnie Lymburn says: “This is closing the

stable door after the horse has bolted. The markets are not going to

bounce back and the ability of some companies to write new business

must be marginal. The FSA should have seen this coming. What they

find out will be interesting.”

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