Regulation of Insurers

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cindy rosengarten

Dear The Financial Conduct Authority,

I would like to know which governmental body regulates insurers, specifically policies terms and exclusions offered by property and life insurers product offerings. I am referring to all insureres contained in this list (or whichever list is most up to date):

I would like to know, as of today 18 March 2016, whether:

1) Insurers are/will be permitted to exclude the risks of subsidence / earthquake and contaminated water from perils caused by energy exploration

2) Insurers will be permitted to refuse to offer insurance policies to those deemed at risk

3) Whether insurers will be permitted to limit coverage of products offered

4) Whether insurers can refuse coverage to people subject to the risk of perils caused by
energy exploration

5) Whether individual homeowners will be subject to a higher policy cost than other homeowners not subject to energy exploration perils if such policies are offered or required to be offered

6) Who will be responsible for placing a homeowner back into a whole position if the only way for them to get clean water is to install a new pipeline from another town or if clean water delivery is not feasible?

Yours faithfully,

Cindy Rosengarten

The Financial Conduct Authority

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Customer Contact Centre, The Financial Conduct Authority

Dear Cindy,


Thanks for your recent email to our Freedom of Information team in which
you’ve raised 6 questions in relation to insurance and energy exploration.
I’d like to confirm that your request is being dealt with as 'business as
usual' under case reference number 204035083 as opposed to a Freedom of
Information request. Your email has been passed to me as the most
appropriate person to respond to the queries you’ve raised.


The regulation of insurers


In respect of your query about which governmental body regulates insurers,
I should explain that the Prudential Regulatory Authority (PRA) regulates
key aspects of the financial strength of insurers. We regulate how these
firms behave. As part of our [1]regulatory role we set out rules, guidance
and principles for business for authorised firms to follow, and we can
take regulatory action if (amongst other things) we find that firms are
not following our rules or are behaving in a way which may cause consumer

The 6 questions you have raised


Turning to your questions about whether insurers can refuse to offer
policies to those who may be at risk due to energy exploration, exclusions
that may apply and the cost of cover, these are commercial decisions made
on behalf of the insurers themselves. Different insurers will assess risk
differently and may refuse to offer cover based on their underwriting
criteria, so it would be the decision of an insurer themselves if they
charge an increase in premium due to risks caused by energy exploration.


What perils are excluded from the cover in a policy (such as earthquakes
or subsidence) is also a commercial decision on behalf of the insurer,
however we do expect firms to communicate with consumers in a way which is
clear, fair and not misleading. When a quotation or policy is provided by
an insurer, consumers should be made aware of any exclusions or
limitations in the policy and consumers can and should review the terms
and conditions for information on this. If the policy doesn’t meet a
particular insurers needs then they can seek alternative insurance.


In respect of who would be responsible for placing a homeowner back into a
whole position if they can’t  get clean water through a new pipeline being
installed or clean water delivery is not feasible, I should clarify this
wouldn’t be something that we have any rules on or can advise on. An
agreement may be in place between the organisation conducting the energy
exploration and the local water suppliers but the local water supplier
would be best placed to confirm this.


Contacting the Association of British Insurers


Finally Cindy, you may also wish to consider contacting the [2]Association
of British Insurers (ABI) with your queries. The ABI is an Industry Body
that represents UK insurers. They provide consumers with general
information on insurance products and services and promote best practice,
transparency and high standards within the industry. If you would like to
contact the ABI they can be reached on 0207 600 3333.


Thank you once again for contacting us and I hope that this information is


Yours sincerely,                                                          


John Bradwell (Mr)

Associate | Customer Contact Centre

Financial Conduct Authority |

Consumer Helpline: 0800 111 6768

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