RFIB launches Financial Resources Policy
RFIB Group Limited (RFIB) today announces the launch of its Financial Resource Policy. The policy, which is led by an A-rated carrier, Ironshore Europe Limited, has been designed to provide FCA regulated organisations, such as (re)insurance brokers, with an innovative, secure and capital efficient method of ensuring that they meet the financial element of FCA’s Appropriate Resources Threshold Condition.
The regulator states that a financial institution must have sufficient capital reserves to manage its run-off should it become insolvent. The Financial Resource Policy allows the business to free up the capital which would otherwise need to be put aside to meet the threshold condition.
In the event of a broker’s insolvency, the policy will pay for the fees of a third party provider to service the run-off. At inception of the policy the preferred provider, RQ Insurance Services, will supplyan independent quote to administer the run-off to extinction. This quote is capped, meaning that RQ will take responsibility for the run-off from the liquidator at a price up to, but not exceeding, their quote. The policy limit can be set accordingly. This ensures that the run-off is conducted in an orderly manner by a specialist provider, while reducing or removing altogether the need for the broker to set capital aside. It also allows brokers to demonstrate a robust contingency plan for their clients’ and markets’ long term servicing requirements.
Jonathan Turnbull, Chief Executive Officer of RFIB said “The new regulatory environment has placed significant pressure on brokers to demonstrate that they have more than adequate capital resources. RFIB has developed and launched this product in response to the genuine need that brokers have for a secure and capital efficient alternative means of ensuring that they meet the FCA’s requirements.”