Insurers must improve workplace culture

The Prudential Regulation Authority has warned insurers they need to improve their workplace culture following recent public reports about sexual harassment and bullying.

The Bank of England's regulator published a letter written by its acting director of insurance supervision, Gareth Truran and originally addressed to all chief executives of PRA regulated general insurance firms.

Truran said the recent revelations about sexual harassment and bullying were of “deep concern” and that some firms needed to do more to improve aspects of corporate culture and individual behaviour. He warned firms that instances of non‐financial misconduct could result in fines or bans of senior managers.

Boards were also reminded of their collective responsibility for “articulating and maintaining” a culture where staff could safely raise issues related to inappropriate conduct in the workplace.

The PRA also said it was “encouraged by some of the important initiatives that are now under way within the market” to address the issue. The regulator is working with the Financial Conduct Authority to assess instances where inappropriate behaviour may impact compliance with standards and regulations.

Lloyd’s of London unveiled the results of its culture survey in September, which illustrated the extent of the issue in the marketplace.

This topic was one of four priorities the PRA has identified for the sector over the coming year.

Another area of focus listed is the question of reserve adequacy and associated reserving governance and controls. Truran said there were increasing areas of emerging risk particularly in some US casualty lines such as financial and professional lines, medical malpractice and general liability classes.

The regulator expects firms to demonstrate discipline in underwriting strategies remediation activity and controls, notwithstanding recent rate rises in some specialty lines.

Truran also encouraged firms “to consider whether their historical information and models continue to represent current hazard and exposure trends”. The PRA believes there are many areas of improvement in exposure management.

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