GISC Rules not ok, and I am still waiting...
GISC Rules not ok, and I am still waiting...
Dear Mr Woodburn
I remain deeply concerned with the obvious inconsistencies and discriminations contained with the GISC Rules document, especially those relating to premium segregation, solvency margins and professional indemnity. Unfortunately my attempt to obtain both clarification and explanation on these aspects by way of a telephone conversation with your office proved wholly unsuccessful culminating in the suggestion that I raise the issues directly with yourself.
Although expressed in somewhat different terminology the Codes for both private and commercial clients promises protection of clients insurance premium in that such premiums will be held securely by a GISC member. The safeguards in this respect are clearly defined in section G, clauses 1-17 and would be commendable if they were consistently applied. Unfortunately, though, this is not the case and professional intermediaries whose principal business is that of insurance are discriminated against by the disapplications contained in clause 18.
With regards to clause 18.2, could you please confirm what is meant by the expression "general insurance activities is secondary to the main business activity". For example, does this mean general insurance activities are secondary in terms of revenue to that of the main business activity and, if so, would this be on a gross or net revenue basis. Alternatively, does this mean that general insurance activities are secondary to the main business activity in terms of work time spent. Your office advised that this aspect was purely at the GISC discretion, which is, at best, implausible.
Is it correct that the GISC's intention is to allow butchers, bakers and candlestick makers to sell insurance as a secondary activity and be allowed to integrate customers' insurance premiums within any bank account or investment they choose with no controls being required by the GISC? I wonder how many customers will find their insurance premiums invested in overseas timeshare accommodation. To compound the situation, according to the Rules, the GISC do not require such butchers, bakers and candlestick makers to meet any solvency margins. This beggars belief.
Not content in allowing such a dangerous consumer protection exposure, under clause 18.5, the GISC seems quite happy to let Tom, Dick or Harry take up to £50,000 insurance premiums per year from unsuspecting customers with a similar disregard for the security of those insurance premiums.
The GISC professes that its "primary aim is customer regulation" and their "role is to regulate the selling of insurance products and through this regulation to protect customers and establish a professional and consistent level playing field". I do not believe clauses 18.2 and 18.5 sit comfortably alongside those objectives.
Moving now to the question of professional indemnity and in this respect I refer to appendix 5, why is it not necessary for any PI cover to be in place when general insurance activities are secondary to the principal activity, and that the insurance is ancillary to the goods and services supplied merely protecting against loss or damage to the goods or services? It will also be interesting for your clarification as to exactly what activities you would classify as services in this regard.
Ablitt Insurance Management,
A fuel-proof idea?
I read with interest your editorial, page 4, entitled 'This Week', concerning the threatened activities of lawyers.
For some time I have been in correspondence with the Minister of Transport and other interested parties concerning the very important issue of unlicenced and uninsured motorists. The absence of revenue from both these sources impact upon a whole raft of beneficial users of the revenue, not least the National Health Service, who treat injured parties regardless of the existence of appropriate motor insurance.
The principle is simple; namely, employing the modern technology available to us through computers, and matching this with the essential of fuel, petrol or diesel, to run motor vehicles on the road. Fuel is purchased using a Smartcard or similar device at the point of sale. The computer is capable of deducting from the purchaser's bank account the price of the fuel, inclusive of tax, plus the cost of a proportion of the Road Fund Licence and a proportion for the insurance. It is within the capacity of modern technology to simply credit the appropriate insurer, the DVLA, the petrol company, and the Government tax, in one stroke of the card.
The discussions are capable of being taken forward to satisfactory conclusion once the appropriate interests are registered. We are talking about an estimated 400,000 vehicles, uninsured and unlicenced.
IT is in gear
I have just returned from a holiday in Austria cycling along the Danube. One of the essential items in my pannier bags was Insurance Times' technology supplement (May 18 ).
The extra weight was well worthwhile as I found the supplement absolutely excellent reading. The quality of the articles was first class and I gained many ideas and tips for our business.
Spam, java and crash have totally different meanings for me now! Keep up the good work.
Wilby Insurance Brokers,
The wrong claim
In reply to the letter of June 2 2000, it is clear that Mr Gaylor does not understand how Claims Direct operates or the needs and requirements of personal injury claimants.
Since the introduction of the Access to Justice Act, which came into force in April, the cost of an after-the-event insurance policy should be recoverable from the third party insurer in addition to the compensation recovered. As a result, Claims Direct can give the claimant the opportunity to purchase such an insurance scheme to cover any costs arising should the case be lost. The claimant can either purchase the policy himself or take out a loan to cover the cost of the policy, funded by First National Bank, part of the Abbey National Group. The solicitor's costs should be recovered separately and will not affect the amount of damages a claimant receives.
If the claimant uses the services of Claims Direct, he or she will be assured that should the claim be accepted, they will access the services of a solicitor specialising in PI claims who will have to comply with strict service standards. In addition, should the claim be rejected by one Claims Direct panel solicitor they will have at least two further chances of the case being accepted, thus saving time and inconvenience in locating and dealing with two completely new solicitors.
Many people find dealing with a solicitor is stressful. We believe they prefer dealing with their claims manager in their home on a more informal basis. Further, the claims manager is able to visit the claimant out of hours.
I hope that this clarifies matters and Mr Gaylor will appreciate the services we offer.
In these changing times I believe an unexpected opportunity has arisen. The importance of Stuart White's letter "Professionalism comes only after big changes" (IT 25/5) cannot be overemphasised, not only for its clarion call for change in an industry which is struggling in ethical crisis, but also because of his QED explanation of why the GISC must not be allowed to regulate insurance brokers – and the need to avoid conflict of interest. The means to correct the balance are the internet and sections 18 &72 of the Competition Act, 1998 – let's do it.
Therefore, in conjunction with Ian Holt of Colney Insurance Brokers, IAS invite all brokers who regard themselves as truly independent to join us in self-regulation of insurance brokers. It can be achieved quite simply by use of brand image or mutual trading name conditional on acceptance of self-regulation with accountability to the Chartered Insurance Institute who are required under their charter to exercise supervision and control the professional standards and conduct of its members. Those interested please send a stamped addressed envelope to 1 Byron Parade, Uxbridge Road, Middlesex, UB10 OLZ.
John Lynch ACII,
Insurance Advisory Service