The British Insurance Brokers' Association (Biba) is urging its members to join the General Insurance Standards Council (GISC), following the resolution of a number of issues between the two bodies.

On Tuesday Biba announced that the GISC had agreed to change its stance on solvency, complaints and the cooling-off period.

The GISC was formed following the government's 1998 decision to repeal the Insurance Brokers Registration Act by April 2001. The GISC has agreed to accept Biba members from January 2001, but will not issue membership subscription invoices until April 1, so brokers registered with the Insurance Brokers Registration Council (IBRC) will not have to pay two subscriptions.

Brokers who have already joined will receive an adjustment to their renewal subscription.

Biba chairman George Nixon said joining the GISC would be a positive move for brokers and intermediaries, particularly now the GISC had agreed to the changes.

The changes are:

  • Solvency – premiums, which are the subject of a formal credit agreement, will be treated as assets. This will mean the solvency requirement will not affect brokers
  • Insurance Ombudsman Service – The GISC will not agree to any future transfer of responsibility for complaints from its complaint monitoring and handling service to the ombudsman scheme without the GISC members' acceptance. This will ensure brokers will not incur Insurance Ombudsman Bureau case fees
  • Cooling-off period – the GISC will review the 14-day cooling-off period in the Personal Lines Code, which brokers believe exposes them to extra costs by means of short period rates.

    Nixon said it was important for brokers and intermediaries to grasp this opportunity to show they were capable of self-regulation.

    “Many of the major insurers' direct operations have joined and we know that the Association of British Insurers (ABI) is strongly encouraging its eligible members to follow suit,” Nixon said.

    “Lloyd's has strongly supported the transfer of responsibility for regulating Lloyd's brokers to the new regulator.

    “Large numbers of retailers involved in selling general insurance are also on board, as are the general insurance subsidiaries of the banks and other financial institutions.”

    A GISC spokeswoman said it already had about 600 members, including the majority of the top 50 insurers and many intermediaries.

    However, she said membership numbers could soar following the Office of Fair Trading's decision next spring on whether the GISC's proposed rules contravened competition laws.

    The GISC has proposed that insurers deal only with GISC-registered brokers and intermediaries

    “We're talking to tens of thousands that would need to join to continue their business,” she said.

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