Insurers warned of lax risk controls
Friday 07 November 2008
The Financial Services Authority has criticised life insurers for slack risk controls and warned management to plan for events that could cause their companies to implode. Sara Wilson, the regulator's insurance chief, said the FSA had found poor checks for data security and fraud as well as financial risks.
"In our discussions with firms it is clear that in at least some cases they have more to do," she said. Ms Wilson also attacked weak processes and controls at some insurers where staff did not have enough market knowledge to value illiquid assets. She warned that insurers should step up "stress tests" for market and credit risk and unusual knock-on effects. Companies need to identify "scenarios that would give senior management a clear understanding of events that would lead their firm to financial failure".
The FSA is to publish a consultation paper on testing for financial failure.
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