A letter from the Institute of Insurance Brokers (IIB) is to be sent to brokers tomorrow, warning them of a potentially 'crippling' situation...
A letter from the Institute of Insurance Brokers (IIB) is to be sent to brokers, warning them of a potentially 'crippling' situation arising from being exposed to unlimited individual awards under the Financial Services Compensation Scheme (FSCS).
The letter reminds brokers that the FSCS exists to prove compensation to the customers of UK financial services firms when those businesses have failed, leaving unpaid debts or liabilities behind them.
It says that the problem for brokers is that they cannot pass on the cost of levies to the point of sale, unlike the product providers who factor the costs into premium pricing.
As a result the IIB said it "strongly advocates that the costs of all such consumer protection, should in future, be incorporated into product pricing as a paid for type of long-stop insurance."
The letter adds: "The IIB is most concerned that insurance brokers are exposed to unlimited individual awards under the FSCS which could very well be a very serious multiple loss aggregate situation, the impact of which for brokers would be crippling."
