I was encouraged to note from the General Insurance Standards Council consultation document that its objectives included "the establishment of high standards of integrity and fair dealing" as well as financial soundness and competence (para 1.1). It will also regulate insurers as well as intermediaries (para 1.2).

I must admit that, up to this point, I have had the perception that the GISC is just another "insurer-held" stick with which to beat intermediaries in order to drive us out of, at least the personal lines channel, – and that Andrew Paddick was the only individual out there to have given us anything other than copious amounts of hot air.

But if the GISC is serious about regulating insurers, will it be within its remit to address the following type of situation? CGU increased its motor rates significantly last year, citing poor claims experience. And, although we are supposed to have a "special deal", there was little room for negotiation, and we were instructed to try and carry the increases.

I was therefore appalled to find out the other day, when trying to buy a second-hand Vauxhall Corsa, that the same insurer is supplying comprehensive "free insurance" to Vauxhall, including 17-year-old drivers for £320 a year (for two years). CGU will not even provide a quote for us for a 17-year-old, and the cheapest we can access is Zurich at £3,309.

If my existing CGU clients ask why their increased premiums are being used to subsidise the sale of used Vauxhall's, what can I tell them?

Those of us who spend a lot of time trying to explain the insurance market to an already sceptical public are left speechless at such inconsistency.

If the GISC intends to promote the professional image of the industry, it must start with a clearly understood Code of Conduct for insurers. Otherwise, we will all continue to be a laughing stock.
--
Alan Tees, ACII
Chartered insurance practitioner
Dawson Whyte
Londonderry

Editor – Your frustration is understandable, and will be shared by many others. However, the GISC has made it clear from the outset that it will not interfere in "commercial decisions", such as this one by CGU.

Open letter to Chris Woodburn, GISC
GISC Second Consultation Document.

Thank you for providing us with copies of the above document, which have been circulated to our 1,200 member insurance broking firms.

The majority of insurance brokers have serious reservations regarding the GISC's proposals, not least the scale of the proposed operation and actual ability to bring a vast number of insurance outlets up to IBRC standards within a reasonable timescale. Furthermore, most insurance brokers, as members of an independent profession, do not, in principle, consider it appropriate for risk carriers – including direct writers – to be involved with their regulation, due to conflict of interest, which could stifle the very impartiality of the profession.

"Threats" being made by the risk carriers to force established insurance broking practices out of business unless they join the GISC are not helpful and could result in a legal challenge being mounted should such a policy be pursued against a community which can demonstrate adequate existing regulation and consumer protection.

Despite the above observations, the institute is not against the GISC per se. Indeed, we welcome any attempt to properly regulate all those which "advise upon/arrange contracts of insurance" in the consumer interest – although we are still of the opinion that the statutory licensing of both firms and principals/managers/advisers is the only true effective way to regulate the sector.

What we need to see in order to make any constructive comment is the actual GISC draft rules and application notes pertaining thereto, which we note from your first consultation document were due to be published in the second half of 1999, but still appear to be the subject of much debate and deliberation.

We are concerned about inferences in the GISC document, which seem to suggest that there may be "double" or even "treble" entry standards applying to different proposed membership groups.

It would also appear that the GISC may rush into operations before it has finalised all the essential preparatory work. No serious regulator can operate rules on a "negotiable", "suck it and see", "write them as we go along" basis. Rules must surely operate equally from Day One.

Our president and board take the view that insurance brokers should wait and see just how the GISC performs in practice before members of our profession even consider joining.

We are always receptive to sensible open discussion on the issues without preconditions and would recommend further dialogue with the appropriate representatives of the GISC.
--
Andrew Paddick
Director general
The Institute of Insurance Brokers
Higham Ferrers
Northamptonshire