FSA: Finalised guidance: Dear CEO letter: Adequacy of Year-end Reserving
The FSA have written to all general insurance firms with their concerns about how current market conditions are increasing the risks of inadequate reserving, and its potential effect on pricing, in the sector, and creating potential pressures within firms' reserving governance arrangements.
The purpose of the letter is to remind insurance firms of the FSA's relevant rules and guidance in the area and, in relation to these, of insurance firms' responsibilities for setting adequate claims reserves. The FSA asks firms to ensure that there is appropriate recognition of these risks within the reserve-setting process in their own firm as the 2010 year-end numbers are finalised, and also in future reserve setting monitoring exercises.