Kenneth Underhill, compliance, risk & corporate governance specialist & director, ICSR
Many companies find it difficult to deal with regulation at times.
In the midst of a pandemic and with a wave of changes ranging from the UK’s departure from the EU to new Financial Conduct Authority (FCA) directives, it becomes even more difficult, particularly as business and governments place an ever-higher value on environmental, social and corporate governance concerns.
Kenneth Underhill, compliance risk and corporate governance specialist, is the director of risk management and compliance consulting firm ICSR. He has more 30 years of experience in regulatory work with both industry companies and law firms.
He spoke to the Re/insurance Lounge, Intelligent Insurer’s online, on-demand platform for interviews and panel discussions with industry leaders, to discuss the changing face of regulation and the idea behind launching his own company.
Underhill started his career as a lawyer in Australia. After completing his training, he moved to the UK and worked for a number large City legal and brokerage firms before becoming a partner with Reynolds Porter Chamberlain.
After that, he moved to the re/insurance sector with ACE. He was a director in the UK, Europe and the Middle East, and was responsible for corporate governance and risk management.
ICSR was launched in 2017 following a series of discussions with other market participants about the idea of setting up a consultancy “only with people from the market”.
“There are no career consultants here. Everybody has worked for brokers or insurers or managing general agents or whatever the case may have been. They all have a good reputation, and they’re all well respected,” Underhill said.
“If the regulators are changing the rules, there’s normally a need to change the controls within the business environment of a regulated firm.” Kenneth Underhill, ICSR
“When somebody says we need some help, what they’re getting is somebody who has been in the market and knows what they’re doing.
“That was the idea, to have people who are pragmatic and can get on and provide the sort of advice that people need without having to be taught what the business model of the client is.”
ICSR has been involved in every major issue involving FCA over the past five years. They advised businesses on everything, from due diligence for M&A and Brexit, to vulnerable customers, General Insurance pricing Practices (PROD), and value in distribution chain. Significant growth occurred during the COVID-19 pandemic, before we are now recovering.
Underhill says his motivation to start the firm came from his enjoyment of “fixing things”, with the time right in his career to take the step of launching his own firm.
“It was the right time for me to try something else. If I left it any longer I think I would have been too old,” he recalled.
“Some probably think that I am already too old to be starting a new business, but I do enjoy fixing things, rolling up the sleeves and getting stuff done. This is how I can help people and do it well. “
There are many issues to be addressed in the regulatory environment for 2021.
Clients have many issues to address, from implementing the EU Insurance Distribution Directive of 2018 through to dealing with the fallout of Brexit. Things have become more complicated due to the uncertainty and confusion surrounding the pandemic.
“The general insurance pricing practices are quite intrusive in terms of what they require.”
Under scrutiny
Underhill states that the FCA is monitoring firms more closely than ever before, with a focus to be proactive and speedy in dealing with potential breaches.
He notes that firms are now more willing to cooperate with regulation than they were previously. This is because they recognize that it is beneficial for everyone and improves standards across the entire industry.
ICSR focuses on the control environment of companies in order to deal with complex changes such as Brexit.
“We focus on the control environment. We focus on compliance controls, risk control, and the processes that surround them. If the regulators are changing the rules, there’s normally a need to change the controls within the business environment of a regulated firm. And that’s what we do,” he explained.
“One of the biggest changes has been the UK’s leaving the EU. You could trade in Europe from London with a very basic licence. Everyone had to go through a lot of changes, including the need to create new companies and new control environments. That was a very exciting time for us.
“We get engaged in looking at what I call the plumbing of the organisation and what they need to do, to make sure they’re meeting their risk management and compliance requirements. We also do a lot of work on the governance side.”
Underhill, a veteran of three decades, has witnessed an increase in the number regulations that companies operating in 2021 must comply with.
Although the story may focus on the difficulties this dynamic presents to smaller companies, who may not have the resources to manage a stream of new rules, larger businesses are also at risk because of the effort required to adapt to a new system.
“There are certainly more regulations. Are they more complicated? I guess they’re getting deeper into the organisation than perhaps they might have in the past. The general insurance pricing practices are quite intrusive in terms of what they require,” he said.
“They’re not getting more complex but they are becoming more integrated. You can see a pattern in which regulators are interconnecting more things. Firms that are able see those connections faster and can connect the dots more quickly are the ones who can deal with these matters more easily.
“Firms that have less complex IT systems find it easier as well. A large change in regulation can cause more disruption for large companies. It’s a lot easier for small firms, it’s often very simple.
“It’s much more complex the larger you are, and it therefore costs more and takes more time to do,” he concluded.
Kenneth Underhill is a director of ICSR and a specialist in compliance, risk, and corporate governance. He can be contacted at: [email protected]
ICSR, Brexit, Compliance, Risk & Governance, Environmental, Social & Corporate Governance, Kenneth Underhill, UK