The Prudential Regulatory Authority will no longer require small UK insurers to have their annual Solvency and Financial Condition Report (SFCR) externally audited.
This exemption will benefit all members of the Association of Financial Mutuals, as well as around 120 other smaller insurance companies.
The AFM had lobbied the PRA on this issue, arguing that these external audits were costly and duplicated verification work elsewhere.
Evidence provided suggests that for mutual and not-for-profit organisation, this work more than doubled audit costs, without providing any clear benefit to readers of the SFCR.
AFM chief executive Martin Shaw says: “We are grateful to PRA for exempting our members from this requirement, which gold-plated the Solvency 2 rules, and has not been adopted by any other European country.
“Members of a mutual already receive a copy of the report and accounts of their insurer, and this gives a strong account of how the business is run in their best interests.
“The SFCR is a technical document which has added up to £50,000 to audit costs, and which our evidence demonstrated, is only read by industry professionals.”