The Financial Conduct Authority plans to strip back its insurance rulebook to make its guidance “simpler and more straightforward”.

It adds that its “changes could support lower costs and wider access for the businesses and consumers who rely on insurance to manage risk, while maintaining appropriate levels of protection”.

The watchdog also proposes to create a new definition to identify large commercial insurance customers who should not be captured by its conduct rules.

It adds: “This would ease the burden on firms insuring larger businesses that can manage risks independently, while protecting smaller commercial customers.”

The regulator’s other proposals include:

• Broadening the scope of bespoke contract exclusions and making them easier for all insurers and brokers to use. Bespoke contracts are built to suit one customer upon that customer’s request, which means they automatically have the protections product governance rules provide
• No longer requiring firms to review the value of their product at least every 12 months. Instead, firms would use the risks and characteristics of each product to decide how often they review them
• Giving firms flexibility to appoint one lead insurer to comply with its rules in instances where more than one party is involved in designing the insurance product
• Getting rid of duplicative annual reporting and employer’s liability notification requirements
• Removing the specified minimum hours of training and development required for insurance and funeral plan employees

Financial Conduct Authority director of insurance Matt Brewis says: “We are stripping back our insurance rulebook by removing ineffective, outdated or duplicated regulation, as part of our drive to become a smarter regulator and support growth.

“We have listened to industry and we are taking action – in doing so we will reduce regulatory costs and increase the competitiveness of the already world-leading UK insurance sector, while maintaining vital protections for smaller customers.”

The watchdog will accept comments on these proposals up to 2 July.

The body has made several changes and launched a series of consultations since, Prime Minister Keir Starmer and Chancellor Rachel Reeves wrote to a range of regulators last November, asking them to loosen rules that will allow economic growth, particularly for the UK’s leading financial sector.