The focus for 2009, the third year of the Insurance Division's programme for the insurance intermediary sector, is on internal controls.
It should be noted that the consideration of AML / Financial Crime risk (with which the Board will be familiar including the requirement to generate and regularly review a business risk assessment) represents only one of the numerous risks that might be faced. It is incumbent on the Board to familiarise itself with the risks that the company faces and to institute appropriate policies, procedures and controls to mitigate those risks.
Having previously covered Compliance and Corporate Governance as part of the three-year programme, the seminar examined some of the typical risks that the sector may face, outlined how these could impact licensees and provided guidance on some of the possible means of controlling and mitigating those risks. The seminar focused on the need for ongoing assessment, management and control of risk in order for the Board to fulfil its corporate governance obligations. It is anticipated that appraisal of corporate risk will feature regularly in Board meetings.
Although the Insurance Division rolling on-site visit programme (conducted in conjunction with this programme) has not focused on internal controls to date, a number of deficiencies have been identified from the visits performed in terms of failure to identify, manage and / or control risk within certain companies. In addition, it was found that, even when appropriate control measures have been implemented, some companies take insufficient steps to ensure that evidence of the controls implemented appear on client and corporate records.
The Division stressed the need to consider the nature and scale of operations when formulating and implementing efficient, effective and appropriate internal controls. The implementation of effective controls in respect of the peer review was cited as one example where the control would depend on the business written and would require tailoring to the company concerned.
A copy of the slides of this seminar may be found here.