FSA Issues Regulation Governing Insurance Loss Assessment Activities

The regulation forms part of the FSA’s efforts to regulate professions and activities supporting the insurance sector in accordance with clear professional and technical standards. It establishes an integrated regulatory framework for conducting insurance risk assessments prior to the conclusion of insurance contracts and estimating losses arising from insured risks. It sets out the technical and professional requirements to be met by licensed entities, as well as the rules governing their activities and obligations towards insurance companies and policyholders, ensuring that such activities are conducted efficiently, independently and impartially.

The regulation also sets out a range of requirements and controls governing the licensing of insurance loss assessment and estimation activities, requiring prior authorisation from the FSA before conducting such activities and prohibiting insurance companies from dealing with unlicensed entities. These requirements include legal, financial and professional conditions, as well as competency and experience requirements for personnel engaged in the activity, thereby enhancing the quality and reliability of assessment and estimation services. The regulation further governs the duration and renewal of licences and the obligations of licensed entities, while requiring compliance with professional standards and the principles of integrity, independence and impartiality, as well as the confidentiality of data and information.

It governs the mechanism for assessing risks and estimating insurance losses and sets out the professional duties of licensed entities throughout the various stages of assessment and estimation. These include preparing accurate and comprehensive technical reports based on clear professional standards, reviewing claims, and verifying the causes and extent of losses, thereby enhancing the accuracy and reliability of assessments and safeguarding the rights of all parties to the insurance relationship. This, in turn, strengthens the independence of assessment and loss estimation activities through controls designed to mitigate conflicts of interest and ensure objective and impartial assessments.