This report sets out the findings from our thematic review of principal firms and their appointed representatives in the general insurance sector. The review focused on principal firms’ understanding of their responsibilities for their appointed representatives and oversight of their activities.
August 2025 update: This review is historical. See our what we publish[1] page for more information and current views.
Why are we publishing this report?
The UK general insurance sector provides a diverse range of products to customers using a variety of distribution methods, with appointed representatives widely used within the sector. There are approximately 400 insurers and 5,100 intermediaries who are directly authorised and some of these firms have appointed and accepted responsibility for over 20,000 appointed representatives. These authorised firms act as ‘principal’ for their appointed representatives and have regulatory responsibility for their actions.
We wanted to understand the impact of these arrangements on customers, and understand whether principals had assessed the risks associated with using appointed representatives and had put in place robust systems and controls to oversee their appointed representatives effectively, particularly their sales activities.
TR16/6: Principals and their appointed representatives in the general insurance sector[2] (PDF)
Who should read this?
This report is aimed primarily at general insurers and intermediaries who have appointed and accepted responsibility for appointed representatives distributing general insurance products to their customers, as well as appointed representatives themselves. However, the findings may also be applicable to principals and appointed representatives operating in other sectors of the UK financial services industry.
What was the scope of the review?
The focus of this review was on general insurance products and services provided primarily to UK retail and SME customers. The initial stage of the review included a survey of 190 principals in the general insurance sector with a diverse range of business models operating a network of appointed representatives. The appointed representatives of these principal firms sold a wide range of products (including home, motor, travel, guaranteed asset protection (GAP) and warranty, as well as products for the SME sector) via a range of methods.
We then selected 15 of these principal firms for more detailed work and requested and reviewed further information from these firms. Finally, we visited 14 principals and 25 of their ARs; meeting with and interviewing senior management and staff, reviewing policies, procedures, contractual documentation, customer facing documentation and customer files, and listening to sales calls.
What did we find?
Our work identified significant shortcomings in relation to principal firms’ understanding of their regulatory obligations for their appointed representatives and their control and oversight of their appointed representatives’ activities. Over half of the 15 principal firms in the sample could not consistently demonstrate that they had effective risk management and control frameworks to identify and manage the risks arising from their appointed representatives’ activities.
We found examples of potential mis-selling and customer detriment as a result of appointed representatives’ actions at a third of the principal firms included in the review, with most of these issues not previously identified by the principal.
What are the next steps?
We have already taken action to intervene with five of the firms in the sample, agreeing the imposition of requirements which stop these firms from taking on new appointed representatives, asking two firms to cease or limit the sales activities of existing appointed representatives and commissioning two section 166 skilled person reviews.
We are sharing our findings with the general insurance sector via this report, and also by sending a Dear CEO letter to the chief executive officers of principal firms with appointed representatives in the sector setting out our expectations.
We will continue to work with the principal firms included in our detailed review to address the issues identified and will perform additional work with some of the firms in the wider survey sample not previously included in our detailed work.
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