Insurance Law, Regulation and Compliance
Regulatory architecture
Candidates must understand the objectives of insurance regulation: policyholder protection, market confidence, financial stability, and fair treatment of customers. Know the roles of prudential regulation (solvency, capital, governance) and conduct regulation (fair treatment, disclosure, complaints, product governance). Understand licensing, approved persons, fit-and-proper tests, and the supervisory toolkit of rules, guidance, supervision, enforcement and sanctions.
Compliance themes
Key themes include anti-money-laundering and counter-terrorist financing (customer due diligence, beneficial ownership, suspicious activity reporting), sanctions screening, data protection and privacy, complaints handling, and treating customers fairly throughout the product lifecycle. Know the difference between rules (mandatory) and guidance (expected practice). Understand outsourcing and third-party risk, and the requirement for board-level accountability.
Traps in questions
A frequent trap is confusing prudential with conduct requirements, or treating guidance as legally binding. Another is assuming that compliance is solely the compliance function's responsibility; it is a board and senior management responsibility. Questions may also test whether a firm can contract out of regulatory obligations; it cannot.
Worked rule of thumb
When assessing a scenario, ask: (1) Which regulatory objective is engaged? (2) Which rule or guidance applies? (3) What is the firm's obligation? (4) What is the consequence of breach? This four-step framework structures answers and avoids vague generalities.
Exam technique
Name the regulator, the rule, the obligation and the sanction. Use precise terminology such as 'customer due diligence' rather than 'checking the customer'.
Practical note
Regulation is risk-based and proportionate; supervisors focus resources on the greatest risks to policyholders and markets.