The IIB has reported the outcome of several meetings it held to discuss a number of ‘hot industry topics'.
The IIB reported most brokers have found regulation by the FSA to be extremely bureaucratic, substantially increasing their operating costs and besieging clients with unnececessary paperwork.
Brokers also felt that the charging of VAT (following the European Court of Justice ruling) on insurance related services, was an illogical injustice, which would have the effect of deterring underwriting start-ups in the UK and forcing existing support services offshore.
There was general concern about insurers passporting into the UK from the increasing number of EU Member States where prudential supervision may not be as robust as it is here in the UK.
The IIB said that apparently certain EU insurers are engaged in dramatic rate cutting to secure UK business, which could have the effect of de-stabilising the UK market. Furthermore, it added, policyholders are not always made aware if these insurers do not have a rating issued by a recognised agency, such as Standard & Poor's.
FSA client money rules are still causing some confusion, especially where there is an ‘intermediary chain' and individual premiums have to be tracked all the way to the actual insurer or his primary risk transfer agent, which is not always possible.
It was generally agreed that insurers had not been consistent about their premium handling requirements.
Brokers were also concerned about rumours that as a result of the MID, some insurers were under pressure to remove Driving other Cars (DOC) or Driving other Vehicles (DOV) – and there is a difference in class of vehicle which may be driven – under private car policies, which is an important emergency situation benefit for policyholders generally.
However, it was suggested that Norwich Union who seemed to be leading this movement, appeared to have ‘backed off' for the time being.
