This below information summarises our approach to product governance and fair value assessments in light of the revised product governance rules within the FCA’s General Insurance Pricing Principles (GIPP) market study.
Thames Underwriting Limited is a Managing General Agent (MGA) and predominantly a distributor of the products that it offers. Thames Underwriting Limited acts at all times as agent of the Insurer in accordance with the terms of our delegated underwriting authority agreements.
Our Product & Distribution Strategy, approved by its Executive Committee & Board, is to distribute products on a wholesale basis through regulated insurance brokers, intermediaries, affinity panels, aggregators, online broker platforms and sub-delegated authority arrangements. All intermediaries who transact business with us must meet a minimum level of due diligence and financial checks to maintain an ongoing terms of business agreement (TOBA).
Thames Underwriting Limited receives its remuneration through commission, administration fees & insurer profit shares and may offer premium finance and ancillary products where appropriate. Our remuneration is assessed for each product during the product review and fair value assessment process as outlined below, is commensurate with the services provided and does not negatively impact the overall product value. Remuneration through the distribution chain is also assessed periodically and must be commensurate with the intermediary services provided.
From 1st October 2021, the FCA enhanced its product governance requirements through its General Insurance Pricing Principles (GIPP) market study PS21/5. One of the changes included the requirement for Fair Value Assessments (FVAs) to be carried out on all general insurance products, other than those of large risk or reinsurance, on an annual basis, or when there has been a significant product amendment.
Firms must be able to clearly demonstrate how any non-investment insurance product, additional product (including retail Premium Finance) or package provides and will provide for a reasonable period fair value.
Where a firm is unable to both identify and clearly demonstrate that the insurance product and, where relevant, the package will provide fair value, the firm must not market the product or permit the product to be distributed or must have ensured appropriate changes have been made so that fair value will be provided.
Product oversight and governance controls are in place for the design, approval, distribution, and ongoing management of products throughout their lifecycle. Our approach to manufacturing, co-manufacturing, and distributing insurance products are underpinned by a set of internal frameworks and controls to ensure we are;
We maintain and operate an approval process for each of our insurance products and significant changes to an existing insurance product prior to it being distributed to customers. This process is proportionate and appropriate to the nature of the insurance product, its complexities, value, and associated conduct risks.
Product reviews undertaken take into consideration a wide range of factors which include, but not limited to, the following.
Product Reviews and FVAs are documented and maintained to demonstrate how any non-investment insurance product, additional product or package provides fair value and will provide value for a reasonably foreseeable period.
The product development and maintenance processes require that the conduct risks associated with each product are assessed and scored, and are then categorised as High, Medium, or Low risk. Risk Assessment is carried out as part of our Product Approval Process and will be marked for review for the following frequencies:
For products where we act as a Distributor, we are not required to undertake an FVA. For products in scope, it will be the responsibility of the Manufacturer to complete and provide an output to their distributors.
However, product oversight and governance requirements apply to all insurance products excluding contracts of large risks and reinsurance. Product reviews will be undertaken to ensure products offers value to the
Target Market and this will include an assessment of the manufacturers own FVA. Should a Manufacturer not provide an appropriate FVA in line with regulatory requirements Thames Underwriting Limited reserves its rights to withdraw from distributing the product and to notify Insurers and/ or the FCA.
PROD 4.2.14 P outlines the level of Information to be exchanged between manufacturers and their distributors in order to assist both parties to meet their regulatory responsibilities.
Value refers to the relationship between the overall price to the customer and the quality of the product(s) and/or services provided. In order for us to conduct an FVA, information on remuneration and services provided in the chain will need to be provided by our distributors on request.
This will include as a minimum;
All of our products receive an appropriate level of sign-off. All product reviews require sign off from a designated Product Owner before submission to our Underwriting Governance and Risk & Compliance departments for independent review and challenge. High rated products and those requiring escalation are submitted to our Product Governance Committee (a formal sub-committee of the Executive Committee) for final approval.
The FVA output from our Insurers will be shared regularly with our distributors and will encompass sufficient information for distributors to understand the outcome of the Fair Value Assessment which includes;
For more information on each product please refer to the relevant IPID / summary of cover and for full terms and conditions refer to the relevant Policy Wording.
The introduction of the new Consumer Duty (Policy statement PS22/9) which centres on a new FCA Principle (PRIN12) will come into force on 31st July 2023. More details information on our Consumer Duty Plan can be found here:
On 29th September 2023 the FCA published its multi-occupancy building insurance Policy Statement (PS23/14) which introduces new rules effective from the 31st December 2023 with the aim of ensuring good customer outcomes for Residential Leaseholders and other policy stakeholders. More details on our response to the new multi-occupancy building insurance rules can be found here:
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