Docstoc

The Future for Flood Insurance in the UK

Document Sample
The Future for Flood Insurance in the UK Powered By Docstoc
					British Insurance Brokers‟ Association




                                            BRITISH
                                          INSURANCE
                                           BROKERS‟
                                         ASSOCIATION
 INSURANCE MEDIATION
      DIRECTIVE


( DON‟T FORGET THE DISTANCE MARKETING &
         E- COMMERCE DIRECTIVES )
 INSURANCE MEDIATION
       DIRECTIVE

UK GOVERNMENT (TREASURY)

   - SETS SCOPE – MINIMUM
     REQUIREMENTS.
   - ENACTS LEGISLATION.
  INSURANCE MEDIATION DIRECTIVE

   UK GOVERNMENT (TREASURY)

  - SETS SCOPE – MINIMUM REQUIREMENTS
  - ENACTS LEGISLATION

FINANCIAL SERVICES AUTHORITY (FSA)

 - AUTHORISE FIRMS AND INDIVIDUALS
 - SET RULES FOR CONDUCT
 - MONITOR COMPLIANCE AND ENFORCE
TREASURY CONSULTATION
   ENDED JANUARY
TREASURY CONSULTATION
        ENDED JANUARY


 WHICH INSURANCE CONTRACTS?

        EXEMPTIONS ?
    TREASURY CONSULTATION
          ENDED JANUARY




    WHICH ACTIVITIES WILL BE REGULATED

-   Introducing, proposing, carrying out work preparatory
      to contract

-   Concluding contracts

-   Assisting in the administration and performance of
      such contracts, in particular in event of claim.

- Advising/arranging deals.
WHO WILL BE REGULATED?
WHO WILL BE REGULATED?


INTERMEDIARIES, INCLUDES EMPLOYEES OF
INSURERS FOR “RETAIL RISKS”


APPOINTED REPRESENTATIVE REGIME TO APPLY


DESIGNATED PROFESSIONAL BODY REGIME
“PROPORTIONATE” REGULATION
FSA OBJECTIVES.

CONSUMER PROTECTION

MARKET CONFIDENCE

CONSUMER EDUCATION

FINANCIAL CRIME
         FSA CONSULTATION PAPERS (C.P.‟s)


CP160     SELLING & ADMINISTRATION
           CLOSED 11/3

CP159     APPOINTED REPS (AR)
           CLOSED 31/3

CP174     PRUDENTIAL REQUIREMENTS
           CLOSED 13/6

CP180     FEES ( Also CP192 closes 28/10 )
           CLOSED 24/6

CP 187    SELLING & ADMINISTRATION & MISC
          AMENDMENTS
            Closes 30/9
                  TIMETABLE
DRAFT REPORTING REQUIREMENTS SEPT 2003

FINAL AR RULES SEPTEMBER 2003

DRAFT CONDUCT OF BUSINESS RULES SEPT 2003

APPLICATION PACKS AVAILABLE “FINAL QUARTER”

FINAL CONDUCT OF BUSINESS RULES JAN 2004

FEEDBACK APPLN FEES ( CP180 ) SEPT 03

CP ANNUAL FEES /FOS JAN2004
FSA CONSULTATION 160/187
FSA CONSULTATION 160/187

 CUSTOMER CLASSIFICATION

 - RETAIL


 - COMMERCIAL
FSA CONSULTATION 160/187

     CUSTOMER CLASSIFICATION

  -   RETAIL

 - COMMERCIAL


 -    STATUS DISCLOSURE

 - COMPLAINTS
         CP 160/187

FAIR TREATMENT OF CONSUMERS
         CP 160/187
    FAIR TREATMENT OF CONSUMERS

-     COMMISSION DISCLOSURE
      (COMMERCIAL)

-     UNFAIR INDUCEMENTS

-     EXCESSIVE CHARGES (RETAIL)

-     CANCELLATION RIGHTS (RETAIL)
      14 DAYS
             CP 160/187

       FAIR TREATMENT OF CONSUMERS

          - COMMISSION DISCLOSURE
           - UNFAIR INDUCEMENTS.
             -   CLAIMS HANDLING


  CLAIMS
- FAIR AND PROMPTLY
- PROMPT PAYMENT WHEN SETTLEMENT AGREED.
- DISCLOSE ANY POTENTIAL CONFLICT OF
  INTEREST
            CP 160/187

       STATUS DISCLOSURE
RETAIL CUSTOMERS ( BEFORE CONCLUSION OF
         POLICY OR INCURRING FEES)

 a) STATUTORY STATUS & HOW TO CHECK FSA
                   REGISTER
 b) CAPITAL OR VOTING RIGHTS HELD IN OR BY
     OTHER INSURANCE UNDERTAKINGS (10%)
      c) HOW TO COMPLAIN TO THE FIRM &
              AVAILABILITY OF FOS
  d) ANY FEES FOR ADVICE ( AS OPPOSED TO

        PRODUCT RELATED CHARGES )
             CP160/187 PRODUCT
               DISCLOSURE
  GIVE RETAIL CLIENTS ON DURABLE MEDIUM PRE COVER

        FACE TO FACE   DISTANCE YES   DISTANCE NO
                        (POST/NET)      („ PHONE)
POL SUMMARY     *         *             x

PRICE INFO      *          *            x

HOW TO CLAIM               *

POL DOCUM‟T                *

  x CAN BE ORAL BUT MUST GIVE ALL INFO IMMEDIATELY
                     AFTERWARDS
    CP160/187 PRODUCT
       DISCLOSURE
             RETAIL CUSTOMERS


- KEY INFO: BENEFITS/EXCLUSIONS
  UNBUNDLE PREMIUMS / ADVISE IF INSURANCE OPTIONAL?

- POLICY SUMMARY / “SIGN POSTING”

- RENEWALS MUST BE PROVIDED TO THE CUSTOMER ON
 “DURABLE MEDIUM” 21 DAYS BEFORE POLICY EXPIRES
    CP 159 APPOINTED
  REPRESENTATIVES (AR)

“AR ACTS AS AGENT FOR AUTHORISED
FIRMS WHICH ACCEPT CONTRACTUAL
RESPONSIBLE (IN WRITING) FOR
CERTAIN ACTIVITIES”
              CP 159

- AN AR IS EXEMPT FROM AUTHORISATION
                CP 159

-   AN AR IS EXEMPT FROM AUTHORISATION

-   REGISTER FOR AR

-   CANNOT BE EXEMPT AND AUTHORISED
                   CP 159



-   SUBSTITUTABLE PRODUCT CATEGORIES

-   SINGLE/MULTI PRINCIPAL REGIME.

-   INTER PRINCIPAL AGREEMENTS
            CP 159
         AR ACTIVITIES

- CAN INTRODUCE, ARRANGE, ADVISE
              CP 159
           AR ACTIVITIES

-   CAN INTRODUCE, ARRANGE, ADVISE

-   MONEY RESTRICTIONS
              CP 159
           AR ACTIVITIES

-   CAN INTRODUCE, ARRANGE, ADVISE

-   MONEY RESTRICTIONS

-   NO CLAIMS INVOLVEMENT

-   ? CONCLUDE
               CP 159
            AR ACTIVITIES

-   CAN INTRODUCE, ARRANGE, ADVISE

-   MONEY RESTRICTIONS

-   NO CLAIMS INVOLVEMENT


            INTRODUCER AR
                   CP 174
      PRUDENTIAL AND OTHER REQUIREMENTS



-   PERIMETER GUIDANCE

-   HIGH LEVEL STANDARDS SYSTEMS AND
    CONTROLS.

-   FINANCIAL RESOURCE

-   COMPENSATION

-   LLOYDS
                CP 174

INTERMEDIARIES
FINANCIAL RESOURCE SECURITY




                              COMPENSATION
P.I.   SEGREGATED
                    CAPITAL   SCHEME
          A/C
             CP 174
     PROFESSIONAL INDEMNITY



- LIMITS £1M OR 3 X INCOME
  MAX £10M.

- ALTERNATIVE GROUP G’TEES.
                CP 174

        SEGREGATED ACCOUNTS



- COMPULSORY, UNLESS RISK TRANSFERRED
                   CP 174

           SEGREGATED ACCOUNTS



-   COMPULSORY UNLESS RISK TRANSFERRED

-   STATUTORY TRUST FOR “PRIVATE”
                   CP 174

            SEGREGATED ACCOUNTS



-   COMPULSORY UNLESS RISK TRANSFERRED

-   STATUTORY TRUST FOR “PRIVATE”

-   VOLUNTARY TRUST “NON-PRIVATE”

-   AUDIT
                   CP 174
                  CAPITAL.
NOT HOLDING CLIENT MONEY

-   MIN 5K OR 5% OF INCOME


HOLDING CLIENT MONEY

-   MIN 10k OR 5% OF INCOME OR 5% OF CLIENT
    MONEY BALANCES.

-   INTANGIBLES
               CP 174

          COMPENSATION
-   EXTEND FSCS

-   LEVELS 90%, 100% COMPULSTORY

-   ALREADY INCLUDES “NON PRIVATE”
    TO £1M TURNOVER
     CP 174
APPROVED PERSONS
           CP 174
      APPROVED PERSONS
-   NUMBERS LINKED TO EXECUTIVE
    BOARD

-   SMALLER FIRMS ANTICIPATED ONE
    PERSON WILL MEET CRITERIA
     CP 180 APPLICATION
            FEES
       •          < 31/5                 > 31/5
   INCOME e - mail     paper   e-mail      paper


   0 - 1m    500      600       1,100     1,200



   1 - 25m 8,750      8,750    10,750    11,000

   >25 m 22,500      23,000    24,500    25,000
              CP 180
FINANCIAL SERVICES COMPENSATION
             SCHEME


-   COMPENSATION FUND LEVY
    “Pay as you go”

   - MANAGEMENT EXPENSES LEVY

    Consultation rules & funding in CP Jan 04
               CP180
       FINANCIAL OMBUDSMAN
-  GENERAL LEVY
 - ( IFA 2003/4 £20 per Approved Person
     Subject to Minimum £75 per firm )
-  CASE FEE
 - £360 per case or £600 per “special”
  case
             CP192 FEES
             ( SUPPLEMENT 180 )


 SUGGESTS THAT DIRECT INSURERS
    SHOULD HAVE “WEIGHTING” OF 10% ON
    PREMIUMS TO ARRIVE AT FIGURE ON
    WHICH THEIR FEES WILL BE CALCULATED

   EQUATES TO 9.O9% ? IS THIS ENOUGH ?
      EXTERNAL COSTS

 APPLICATION   FEE

 PERIODIC    FEES

 FINANCIAL   SERVICES COMPENSATION

 FINANCIAL   OMBUDSMAN SERVICE
       BROKER COSTS

 PROFESSIONAL       INDEMNITY INSCE

 CAPITAL   REQUIREMENTS

 TRAINING   & COMPETENCE

 SYSTEMS    ( ? I/T )
     BROKER BENEFITS

 LEVEL   PLAYING FIELD

     COMPETITION FOR BROKER
 LESS
 SECTOR

 MORE    ROBUST BUSINESSES

 MORE    VIBRANT BROKER SECTOR
            NEXT STEPS

 BE   PREPARED - DON’T BE SCARED

 BUSINESS   & COMPLIANCE PLAN

 GAP   ANALYSIS & PROJECT PLAN

 BE   AWARE - HAVE YOUR SAY
British Insurance Brokers‟ Association




                                            BRITISH
                                          INSURANCE
                                           BROKERS‟
                                         ASSOCIATION