Product Governance

FCA PROD 4 rules mandate that insurers and intermediaries implement robust, end-to-end governance for product design, approval, and distribution, to ensure fair value for customers.

The information on this page summarises how First Underwriting Limited (FUL) demonstrate compliance with key sections of those PROD 4 rules.

First Underwriting Ltd.

Product Oversight & Governance (POG) Policy

First Underwriting Limited (FUL) have a comprehensive Product Oversight & Governance Policy in place to ensure we meet our legal and regulatory requirements.

Our policy demonstrates how we design, distribute, review, and monitor our products.

Product approval process

FUL has an established product approval process for newly developed insurance products and significant adaptations. In line with the FCA rules, FUL’s product approval process will ensure that the design:

  • Considers the objectives, interests, and characteristics of customers.
  • Does not adversely affect customers and prevents or mitigates customer detriment.
  • Supports a proper management of conflicts of interest.
  • Identifies whether the product provides fair value to customers in the specified target market.
  • Considers the distribution strategy appropriate to the identified target market.

Fair Value Assessments (FVA)

Our Fair Value Assessment process examines a range of carefully selected measures to ensure that every insurance product we manufacture provides ongoing fair value to its intended target market. The outcome of the assessment, together with the measures that are analysed is confirmed within the Distributor Product Guide.

Product Risk Assessment and FVA Frequency Determination

Following the release of FCA Policy Statement PS25/21 “simplifying the insurance rules”, FUL have implemented a risk-based methodology to determine the frequency of product FVA’s. The methodology comprises carefully selected quantitative and qualitative measures that assess the greatest risk that could potentially cause poor customer outcomes. The outcome from the assessment determines whether the product FVA is conducted annually, every two years or every three years.

To ensure the continued robustness, the risk assessment is revisited annually to identify any change in the product risk that would adjust the product FVA frequency.

Target Market

For the products we distribute we are required to supply information on the intended target market and distribution strategy. All our Distributor product guides include a description of the product, the identified target market and any type of customer whom the product may not be suitable for. Information containing the distribution strategy and responsibilities of the distributor have also been included. More information on this has been provided below.

Distribution arrangements and Division of Responsibilities

As the product manufacturer, FUL is responsible for ensuring that the core product and price offers fair value to the identified target market. However, we recognise that our distribution partners play a critical role in the final “value outcome” experienced by the customer. To ensure clarity and compliance, we set out the following division of responsibilities, which highlight the fair value requirements we expect our broking partners to comply with:

Commission levels

FUL will agree commission arrangements during the onboarding process and continue to monitor the reasonableness and proportionality according to the product and service that’s being provided. No additional remuneration should be applied within the distribution chain.

Administration or arrangement fees

FUL do not apply service/administration fees, but will request information on fees that may be applied from its broking partners during the onboarding process and periodically. Any fees applied within the distribution chain must be proportionate to the service provided and do not result in the core product ceasing to offer fair value.

Ancillary Products and “Add-ons”

While we do not manufacture add-on products (ancillary covers), we recognise that these are often sold by distributors alongside our core policies. Where these are attached by a distributor, the distributor is the firm responsible for the fair value assessment of that specific ancillary product and the package as a whole. We may request this information from you on a periodic basis to ensure that distribution arrangements or the layering of the add-ons does not create a risk of poor outcomes, or adverse impact on the overall price.

Distributors must ensure that add-ons do not duplicate cover already provided within our core policy.

Distributor Product Guides

Product specific target market information, and the outcome of our fair value assessments have been provided within the Distributor Product Guides below. Where we have an exclusive arrangement with a Broking partner, the guides will be shared separately.

If you have any information or feedback about our products, please contact us.

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