Clifford Chance

Rethinking financial protections: PRA's discussion paper on FSCS limits for general insurance

13 December 2023

The PRA has recently published a Discussion Paper (DP2/23) which seeks feedback on Financial Services Compensation Scheme (FSCS) limits for General Insurance (GI) products. Currently, the FSCS provides 90% or 100% coverage of valid claims under insurance policies, with the level of protection depending on the type of insurance. The PRA is now exploring the possibility of increasing FSCS coverage for certain GI products to align with its objective of ensuring an appropriate degree of policyholder protection and is seeking feedback on potential changes.

The paper is relevant to UK insurers, including UK branches and those in run-off, EEA insurers in the Supervised Run-off or Contractual Run-off regimes, policyholders, as well as the FSCS as the scheme administrator. It is particularly relevant for EEA insurers with UK branches, most notably those who may be currently close to the £500m FSCS liability limit for subsidiarisation.

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