Check on the basics

The basic underpinning knowledge and understanding required at this level concerns the fundamentals of insurance. For example, at basic level an employee should know about:

The basis of insurance (risk and its historical basis)

Insurable interest

Proximate cause

The duty of disclosure

The basis of a contract

What constitutes an agency

Basic insurance law

Regulation and the law (what it is and how it works)

The insurance market and market practice

Basic law (data protection, health and safety, proceeds of crime)

In simple terms, a basic level knowledge should include those matters which relate to any level of practice irrespective of complexity. (This list is certainly not exhaustive).

The CII used to offer a course called "The elements of insurance" and that was the starting point of competence for all practitioners.

Only once you are happy that a member of staff (or director or partner) is reasonably competent in these areas should you focus on the next stage of knowledge and understanding which is job and product specific.

Within your firm you need to define what is a basic job and or product. For example: Advising on household or motor insurance, or motor insurance clerk, or junior claims handler.

Whatever you decide should be 'basic' so that person will have to demonstrate knowledge and understanding relating to the role or product. This knowledge should include:

Generic knowledge of the household market

The products you actually recommend and the differences between them

Regulation and compliance as it relates to that role

Specific law (insurance and otherwise)

Your firm's own procedures and rules.

This knowledge and understanding can then be applied to specific customer requirements, in order to demonstrate understanding of the knowledge and how to apply it in a working situation.

In fact, you will probably find that all this basic knowledge and understanding will represent the majority of the assessment of even the specialist practitioner.

What you do not need to include in the basic assessment is subjects such as this:

Knowledge and understanding of contracts that the individual or the role does not embrace

Legislation that the individual would not be expected to comply with or address in the role

Burdensome detail of all the regulator's requirements.

I would not expect the average broker employee to be able to explain, for example, the ramifications of the Carriage by Air Act 1961. In fact, I would not expect an employee at intermediate level in the average broker to know this. The likelihood is that only an employee in a firm specialising in aviation risks would know the importance of this Act and for that firm, it may be a basic level requirement.

However, and this is a most important point, you must understand that we are considering the requirements to satisfy reasonable competence benchmarks of a basic product or job. That does not mean that you as a firm should not develop your staff above this minimum level. Indeed there is great commercial advantage to running a development programme alongside your underlying assessment system so that those individuals who are willing and able to go beyond what is required for the job are in fact preparing themselves to be competent in other jobs and at other levels.

Sandy Scott publicly discussed the concept of continuing maintenance of competence earlier this year, and this phrase sagely defines the process of remaining competent to do the job in hand.

Continuing professional development is the process of taking you and your staff to a competence level beyond the job in hand.

For example, I worked with the claims manager of a first class provincial broker recently who, on the announcement that the FSA was taking over general business regulation, had been encouraged by a forward thinking managing director to learn about training, competence and HR matters as part of a CPD programme. This included membership of the Chartered Institute of Personnel Development, attendance at a variety of learning and networking sessions. In my view the person concerned had become sufficiently competent to manage the training and competence requirements of the firm part-time.

Exactly the same would apply if for example you decided that a basic knowledge of liability insurance was the right level for a household insurance clerk.

You can see the advantage of developing that person's knowledge and understanding of liability insurance beyond the job in hand.

So, the key guidelines are as follows:

Everyone should have a basic knowledge and understanding of the underpinning knowledge of the industry

This should be assessed on a regular basis.

You should check that everyone applies the underpinning knowledge and understanding in their day-to-day work by supervision, monitoring, and assessment

You should identify basic jobs and products and attach to them benchmarks standards of

basic, intermediate or advanced. There may be anomalies.

For example, you may feel that basic fire insurance knowledge is sufficient for advising on household insurance, but that you would prefer an intermediate knowledge of theft cover because many of your clients are more wealthy and own antiques and art.

As a guideline only, if the customers' needs are standard, then basic might apply, but for customers with special requirements or complicated needs you should be stepping up the standard.

You should also be stepping up the standard for those in a supervisory capacity, so that they can identify when a member of staff is moving beyond their proven competency

Try to identify those members of staff who can and want to go beyond the basic standards of their jobs and build CPD into their learning programmes. It is good for you and good for them, but try not to push people too far. In the broking world there are many people who are happy to do the same job year after year to a very high standard. That is good for the customer.

Next week I will look in more detail at benchmarking for intermediate and advanced knowledge and understanding.

Kate Foreman is a compliance and training specialist at RW Associates

Customer knowledge check

Can a customer insure his brother's house? If not, why not?

Who are you acting for - the insurer or the client? How can you identify this? Is it always the same?

Is it OK to tell a customer not to worry about disclosing his speeding fines? If not, why not?

What should you do when you receive insurance documents?

When does a member of the public go from being a proposer to a customer? What is the difference?

If a commercial customer tells you he doesn't need any cover other than his fire and theft cover, what would you be able to tell him?

What documents and information have to be sent to clients and why?

This page is edited by RW Associates, specialists in training, compliance and competence. Email,
ruy.lopez@broker-compliance.co.uk

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