An irregular Intermediary

Once upon a time there was an experienced account executive who worked for Rabid Insurance Intermediaries in London's West End.

Andy was 45 and had joined Rabid 15 years ago, having spent five years as a manager with a high street department store.

Andy lived with Marissa, who was a senior consultant with Pond Life Insurance Company.

They had met, in the biblical sense, in room 307 of the Hogwash Hotel in Skegness during a trade association training course.

Rabid directors were very understanding about the pressures of commuting and as a result allowed Marissa and Andy to catch the 9:35 from Gomshall each weekday morning (when they did not have a riding or windsurfing lesson) so that they could take advantage of cheap day returns, and be sure of getting a seat .

Social schedule
So that he could complete file notes and meeting notes before an hour in the gym Andy used to do this task on the train home, generally heading for the 4:15 from Waterloo (when they were not drinking in town with friends or going to the theatre).

Rabid Intermediaries would provide him with at least three commercial leads per day (generally small to medium industrial businesses) and clients who would be willing to visit him only in the office, so that they could meet his tight social schedule. Rabid had devised a 20-question all embracing `fact find' to go through with clients, and this saved even more time.

In the evenings, having plugged his laptop into the company-provided fact-find completer and insurance report-generator, (this took as much as seven minutes on some evenings), Marissa would phone her mother, father (they were separated) two sisters and other various friends family and acquaintances. Andy welcomed this two- or three-hour break as it allowed him to fill in the partly-completed electronic proposals that had been hanging around for the last month or so. Andy was always so pleased that Rabid had a paperless office philosophy.

Rabid was delighted that Andy had a good deal going with a solicitor in Guildford, where big time property entrepreneurs were turning deals and Andy was making a fortune on charging the full annual commission on insurances, that were often only in place for a few weeks.

Wealthy clients
What was even better was that Rabid was able to hold the substantial premiums in its own bank account without even handing it on to the insurer, before the client cancelled and asked for a return less full commission.

Rabid also noted that the relationship with Marissa was a good one, as she had wealthy overseas clients who seemed to buy and sell high performance cars on a regular basis and Andy was able to place the motor cover.

Once a year, Andy would have to go on an accompanied visit with his supervisor, and this would generally entail a four-course meal (with wine) with a client, paid for by the company, during which time the supervisor would ask the client whether he was happy with the service he was getting.

Andy had three O-levels and an A-level in home economics, and had nearly gained a pass in a business studies NVQ intermediate.

When the annual competence assessment had arisen as a General Insurance Standards Council (GISC) requirement in 2000 he had written immediately to his MP in no uncertain terms explaining that, while with a bit of practice he could handle the occasional training course, he really felt that a formal training needs analysis or formal assessment was far too much for someone of his experience. Should he miss any of his riding lessons as a result of these courses, he would take legal action against all and sundry.

Competence certificates
Rabid was marvellous in its response and immediately resigned from the GISC. It also dropped the GISC rule and substituted a rule that said anyone with more than three years experience in insurance must naturally be competent.

It was a matter for some celebration therefore when the Rabid board decided to have glossy certificates of competence printed and framed. These were presented at the firm's conference in Bali in May 2002.

It was as he was driving to his aromatherapist in his company BMW that Andy heard on the radio the news that the Financial Services Authority (FSA) would be taking over regulation of the insurance industry in just over two years and that it would be compulsory.

Horrified he changed his course and headed immediately for the Rabid head office in Bromley. What, he demanded, was this all about?

Fortunately, the sales director of the company had great concerns about the well-being of his staff and, on hearing the news, had immediately halved sales targets, increased guaranteed salary by 50% and waived all company loans to compensate for the inconvenience. In addition, after talking with the board he had negotiated a half-day per week study release, a three-week pre-assessment study leave and a £5,000 per capita training allowance, with as much training leave as the account executive felt appropriate.

Compliance officer
Andy was not happy. He launched into the board with a venom rarely seen in the leafy Bromley head office. His threat that he might be obliged to resign his contract had the chairman on the verge of tears.

His demand was explicit: Rabid was to refuse to join the FSA.

David, the compliance officer, squirmed as the onslaught continued and through stinging eyes he turned his head away from Andy, who by now was clearly foaming at the mouth, and looked through the window at the calm of the park and lake that bordered the catering staff car park.

Over the tall oak trees flew a pig, followed by another, and another.

Question
Look at this case study and identify as many aspects of the story which present a commercial risk to Rabid.

Hint: to get the best out of this you should: read FSA updates (go to the FSA website); read the GISC commercial code; and link all with a study of your professional indemnity wording.

Part 2 and answers next week.

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