An American insurer operating in the UK has been fined more than GBP5 million by the FSA and Ireland’s Central Bank.
The Combined Insurance Company of America (CICO), was fined GBP2.8 million pounds by the FSA and EUR3.35 million (GBP2.82 million) by the Central Bank of Ireland for “putting its customers at risk of being treated unfairly”. It is the biggest fine the Central Bank of Ireland has ever given.
The CICA sold accident and sickness insurance products through brokers in the UK. After the FSA requested that the CICA undertake a skilled persons report to examine CICA’s governance and controls framework, the company completely ceased writing business in October 2010.
The FSA found that the CICA was in breach of two FSA principles by “failing to manage effectively its sales processes, claims handling and complaints handling to ensure the fair treatment of its customers”.
Tracey McDermott, acting director of enforcement and financial crime, said “CICA’s widespread failures reflect a culture which did not recognise the importance of treating customers fairly. This created a significant risk that customers would not get a fair deal.”
CICA settled early with the fine and managed to get a 30% discount. Without the early settlement they would have received a GBP4 million fine, and risk an increased Irish fine.
