Product governance has become a central pillar of regulatory expectations in the insurance market. For firms navigating product governance obligations for General Insurance Brokers, it is no longer enough to treat compliance as a box-ticking exercise. Instead, brokers must embed robust governance practices across the full product lifecycle to ensure they consistently deliver good customer outcomes and meet regulatory standards.
Understanding Product Governance in General Insurance
At its core, product governance obligations for General Insurance Brokers refer to the systems, controls, and processes that govern how insurance products are designed, distributed, monitored, and ultimately withdrawn from the market.
Regulation distinguishes between:
- Manufacturers – firms that design and develop insurance products
- Distributors – firms, including most brokers, that sell or arrange these products for customers
While manufacturers carry primary responsibility for product design and defining the target market, brokers as distributors must fully understand these parameters and ensure products are sold appropriately. In some cases, such as delegated authority or bespoke schemes, brokers may also take on manufacturer responsibilities, increasing their regulatory burden.
Key Product Governance Obligations for General Insurance Brokers
- Aligning Distribution with Target Markets
A fundamental aspect of product governance obligations for General Insurance Brokers is ensuring that products are sold only to customers who fall within the defined target market.
This requires brokers to, understand manufacturer product documentation in detail, avoid placing products outside their intended customer segment and train staff to identify suitable and unsuitable clients. Failure to align distribution with the target market can lead to poor customer outcomes and regulatory scrutiny.
- Developing a Clear Distribution Strategy
Brokers must implement a documented distribution strategy that supports appropriate product placement. This includes marketing approaches, sales processes and staff competency and training. Regulators expect this to be an active, regularly reviewed framework not a one-off exercise at product launch.
- Managing Delegated Authority Responsibilities
Where brokers operate under delegated authority (e.g., binding authority agreements), their role expands. In these scenarios, product governance obligations for General Insurance Brokers may include product design input, pricing and underwriting decisions and oversight of how products are sold. Clarity over responsibilities between broker and insurer is essential to avoid governance gaps.
Fair Value and Consumer Duty
A major regulatory focus within product governance obligations for General Insurance Brokers is the concept of fair value, reinforced by the Consumer Duty. Brokers must demonstrate that customers receive benefits proportionate to the price paid, fees, commissions, and remuneration structures are justified and charges are transparent and not excessive.
This requires brokers to assess their earnings within the product value chain, consider alternative products where value may be better and act where poor value is identified. Importantly, this goes beyond disclosure. It requires evidence-based analysis and decision-making.
Ongoing Monitoring and Product Reviews
Product governance obligations for General Insurance Brokers are continuous, not static. Brokers must actively monitor product performance and customer outcomes.
Key indicators to track include:
- Claims acceptance and rejection rates
- Customer complaints
- Claims frequency trends
- Feedback from claims handling
When issues arise, brokers must adjust their distribution approach, share insights with manufacturers and take corrective action promptly. Regular product reviews, at least annually, should be built into governance processes, with more frequent reviews for higher-risk products.
Governance Frameworks and Documentation
Strong documentation underpins effective compliance with product governance obligations for General Insurance Brokers. Firms should maintain records of target market information, distribution strategies, value assessments and product review outcomes.
In addition, senior managers must have clear accountability under SM&CR and boards and committees should receive regular governance reports. This ensures firms can demonstrate a clear audit trail if challenged by regulators.
Meeting product governance obligations for General Insurance Brokers requires a structured, proactive approach. Brokers must:
- Understand their products
- Identify the right customers
- Ensure fair value
- Continuously monitor outcomes
Firms that integrate product governance into everyday business practices, not just compliance frameworks, will be better positioned to meet regulatory expectations and build long-term customer trust.
This article is for informational purposes only and does not constitute legal or compliance advice. Brokers should consult their compliance function or a qualified regulatory adviser for guidance specific to their business.
Written by the Ecompli founder — With over 20 years in financial services and having founded Ecompli in 2006, these blogs are written by a specialist with hands-on expertise in FCA regulation across the mortgage, general insurance, equity release, and insurance claims handling sectors.
