UK Law and Practice Contributed by: James Burnie, Kathryn Dodds, Olga Antonova and Holly Joseph, gunnercooke llp
8.2 Treatment of Different Types of Insurance Insurance is regulated differently depending on the nature and function of the insurance contract, for example the FCA differentiates between investment and non-investment insur- ance contracts. The regulation of each depends on its specific characteristics and risks. 9. Regtech 9.1 Regulation of Regtech Providers Regtech providers are not regulated unless they are also undertaking a regulated activity in con - junction with their business. In the experience of the authors, regtech providers are generally set up as an adjunct to a regulated business, meaning that the provider is not regulated, but its clientele is. 9.2 Contractual Terms to Assure Performance and Accuracy This often depends on the nature of the regtech provider and the solution being provided. For example, in fund management, there are regtech providers which facilitate fund distribution, and in such a case there are often stringent obliga - tions to ensure performance and accuracy, as well as sample testing to ensure that all the requirements are being met. On the other hand, there are some AI prediction tools which only have a percentage accuracy and are used for helping firms model products. In this case the limitations are recognised and accepted. The overall picture is that clients have an obligation to meet their regulatory obligations, and the con - tractual terms will depend on the latitude the cli - ents have in this respect.
fact that such firms have a higher solvency con - tagion risk. 7.3 Regulatory Distinction Between Funds and Dealers Funds and dealers are subject to very different regulatory regimes, reflecting the different nature of the activities undertaken. The activities of fund managers involve exercising discretion on behalf of investors, and so there are specific require - ments in terms of ensuring that that discretion is properly defined and monitored, for example by fund administrators, custodians, account - ants, etc. Dealers do not exercise discretion – they sim - ply execute – and the risks here are different. Considerations are more limited and focussed on matters such as disclosure, best execution and avoiding conflicts of interest. 7.4 Regulation of Programmers and Programming Programmers who develop and create trading algorithms and other electronic trading tools are not regulated. However, those that use such in connection with undertaking a regulated activity will be regulated, and will therefore have respon - sibilities in monitoring and overseeing the trad - ing algorithms and other electronic trading tools they use.
8. Insurtech 8.1 Underwriting Processes
The insurance industry in the UK is highly regu - lated, and those advising on contracts of insur - ance, including the underwriting thereof, need to be regulated. As such, there are specific require - ments that they need to satisfy in order to com - ply with their regulatory obligations.
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