The facts for GISC speak for themselves
The facts for GISC speak for themselves
I was interested to read Mr Whicher's letter (January 5, 2001 “It's been a year of bias and scaremongering”). His assertions perpetuate the very misinformation and scaremongering he purports to criticise. As one of the GISC's many supporters, I would like to correct the inaccuracies in that letter and restate the facts about the GISC and Biba's reasons for supporting the new UK regulator of general insurance.
I am puzzled by the reference to those “who have their own vested interest in its success.” Biba recommends that our members should join the GISC, and we have given the reasons clearly and consistently over the past 18 months. The best interests of all concerned – our members, intermediaries who have never been subjected to any effective form of regulation and, crucially, the public who are buyers of insurance and on whom we all rely for a living – are best served by a single, strong regulatory organisation. This is our only “vested interest”.
Many colleagues and I have given freely of our time to assist in, and yes, for our members' benefit, to influence the development of the GISC and its rules. There has been no wish to marginalise Andrew Paddick and the IIB as Mr Whicher claims. Andrew received a number of invitations to participate in the industry's development of its own regulator, indeed, his participation was welcomed. However, he has always declined. Last week he reaffirmed his aim to set up his version of IBRC mark II. Where is the true “vested interest”?
The GISC is not dominated by banks, insurers, large brokers or other parties. The representative and balanced make up of the board nails this scaremongering myth. As for the suggestion that the GISC's supporters see no merit in IBRC-style regulation, again the facts confound the argument. The IBRC regime suffered years of diminishing support (check the membership numbers in the five years before the government's announcement in 1997). Readers will also recall the criticism heaped upon the council by many who felt that it was a “toothless, bureaucratic, unapproachable and ineffective” body.
It is time to put to rest the carping about the GISC. It is difficult to see how the industry might have started up its own regulator without guidance and support from its own leaders. The latest consultation paper makes sensible suggestions about long-term governance and I have no doubt that the new board will be particularly representative of the broking sector which has had a great deal of influence, and will continue to do so.
The IIB did not take over the IBRC, as Mr Whicher suggests. It was awarded a contract to administer elements of the IBRC's functions until the latter's demise. The IIB is threatening legal action against the council because much of its income will dry up following the IBRC's decision that it does not need to collect further membership subscriptions. This begs an important question about whose interests are best being served by whom?
The suggestion that a single regulator is the government's preferred option is irrefutable, as is the fact that if this industry cannot produce a truly effective, consumer-friendly system by itself, the FSA is the only real alternative. How could this happen if the GISC faces competition from another regulator? It is ridiculous to suggest one system for a group, which happened to be regulated by one means, and another for the huge variety of firms outside the IBRC. We all serve the same customers in the same marketplace. Customers have the right to be protected by one accessible and effective regulator.
Competition is almost always healthy, but not in the regulatory field. No one has made a convincing case for IBRC mark II because such a case does not stand up to examination. The GISC rules reflect the differences between brokers, independent intermediaries and the hitherto unregulated businesses, and creates the level ground sought by so many for so long. It is the job of trade associations to promote the interests of their members. How can this be reconciled with protecting the consumer whose interests will inevitably clash with those members at some time?
The case for the GISC does not need to be made via bias or scaremongering. The facts speak for themselves.
British Insurance Brokers' Association
Competition doesn't help
There is one fundamental problem with Bryan Whicher's letter (January 5, 2001). This is the assertion that Insurance Brokers' Registration Council (IBRC) -style regulation is a “proven system”, which has very successfully regulated “volunteer brokers for 23 years”. Without realising it, this takes us to the very nub of the problem. The IBRC has successfully regulated brokers that have chosen to be regulated, but it has not regulated the rest of the general insurance industry. As a result, despite all the best endeavours of the IBRC, and the expense incurred by those regulated, the IBR Act, and with it the IBRC, has been a failure. This is why the act is being repealed.
The purpose of regulation is, surely, to give confidence to the buyers of services that they are dealing with reputable people and are being sold reliable services and products. Its purpose is not for the benefit of the providers, except to the extent that regulation makes it impossible for those that fail to meet certain standards to trade. The IBR Act, and therefore the IBRC, did not give confidence to buyers because unregulated parties could continue to trade. Only a small minority of buyers would understand the relevance of a firm or person “being registered by the IBRC”.
The good news is that this unfortunate state of affairs should soon be behind us.
The act is to be repealed and the insurance industry has been given the opportunity to regulate itself. This is a terrific opportunity to get it right and it must be done in a manner that gives greatest confidence to the buyers of insurance services and products.
A single regulatory body, supported by the industry is undoubtedly, in my view, the most effective way to do this. We now hear from a few talk of monopolies and anti-competitiveness as though regulation is a commercial opportunity where the buyers' interests are best served by there being choice. Regulation is not such an opportunity. In the case of regulation the buyers' interests are best served by common industry standards and clarity about whether an organisation and its services and products meet these standards. A single regulatory body and agreement by insurers not to deal with the unregulated is the ideal way forward. All of the industry bodies other than the Institute of Insurance Brokers (IIB) see this. The latter sees it differently and sees IBRC mark II as a commercial opportunity.
As chairman of the British Insurance Brokers' Association (Biba) I am not remunerated by the organisation; my attitude towards this issue would be no different were Biba the administrators of the IBRC, (although presumably by raising this issue, Mr Whicher perceives that the IIB attitude is affected by its administration of IBRC).
I, and the company that I work for, have always been IBRC-registered since the act came into force. I take an objective view of what is good for the buyers of insurance services and products and what will give them confidence in the standards of the broking profession and the insurance industry. I strongly recommend support for the General Insurance Standards Council (GISC).
Chairman of Biba
I refer to the letter from G B Jones published January 5, 2001. With respect to Mr Jones, he has totally missed my point!
It would appear that he and I agree on one fundamental principle – that of voluntary regulation. That is why I have been so vociferous against the IBRC mark II since the IIB recommended a change in their rules to make the membership of IIB obligatory on regulation by IBRC mark II.
May I draw to your attention the notes that accompanied the notice of AGM dated October 16, 2000 from IIB HQ? These notes specifically state that “... members will in future be required to be regulated by this new authority [IBRC mark II] ...” Now if that is voluntary regulation I'm a monkey's uncle!
Let us consider further the obligation of Broker Direct shareholders to be members of IIB and one could consider that non-submittal to IBRC mark II could adversely affect these shares.
Of course I've heard from many people (not IIB board members) that this probably won't happen, but no one will actually confirm to me that my IIB membership will definitely not be affected if I chose not to join IBRC mark II. Perhaps this could be clarified, preferably through the pages of your paper?
May I assure Mr Jones that there has been no undue pressure or inducements for my firm to join the GISC. I have simply taken the time and effort to attend various meetings organised by various bodies, both local and national, where there have been representatives present from the GISC as well as broker bodies and where all have been able to express their views in open forum. Having considered the benefits to be had from membership, my firm has taken the voluntary action of applying for GISC membership.
In the meantime I retain my firm's voluntary membership to IIB.
Ian K Mantel
Manor Insurance Services
We've not been served
I read with great interest your lead story in the issue of 5 January 2001 regarding levels of service we are likely to expect from Axa and would point out that a third-rate service would actually be an improvement!
F H Armstrong Ltd
In nearly every insurance publication we read about the cost of uninsured drivers to insured drivers (at the last count I think I remember it was £30 of our average premium) and the problems that the police force faces in trying to determine if a driver is insured or not.
I read previously that a windscreen disc, similar to the tax disc, has been suggested but discounted because in this country it is the driver who is insured and not the vehicle. I can appreciate that Mr A's car may have a disc showing that he is insured to drive it, but he may lend it to Mr B, who is insured to drive it TPO under his own comprehensive insurance, but Mr B's name would not be on the disc shown on the windscreen. If he had to then produce his insurance certificate to prove that he was insured, then this would negate the whole “disc in the windscreen” solution.
One solution, crazy at it may seem, is to simply remove the benefit of driving any other vehicle not belonging to you under your own comprehensive insurance.
While this is actually something that the insurers allow comprehensively insured drivers to do for no extra charge (it seems amazing in these times that an insurer will actually provide a service free of charge) and we would all face the added hassle of arranging named drivers to be added to our own policies, it seems a small price to pay if our overall premiums were reduced because the problem of uninsured drivers was stamped out.
That way, whatever names are on the disc are the only drivers insured to drive that particular vehicle. Don't you think that the police would have a much easier task of establishing who is insured and who isn't, and would have more time to spend chasing the real criminals?
L C Scaife
Personal lines manager
Rickman Tooze Insurance Consultants
I am sure I am not alone among insurance intermediaries, whether Association of British Insurers (ABI) coders or registered brokers, in being completely appalled at the advert placed by Direct Line in the Daily Mail on Wednesday January 3 which states “Home Insurance – Direct Line said they could save me 30% and they did. That's because we don't rip you off with commission charges.”
At a time when considerable efforts are being made to convince consumers of the professionalism of insurance introducers, including perhaps a single regulator in the form of the GISC, surely an advert stating that introducers who receive commission are crooks, for that is what a rip-off merchant is, is a disgraceful libel on honest and hard working intermediaries, particularly from a company that is represented on the GISC Board (Christopher McKee).
Surely this is a case where the trade associations Biba, IIB, and Association of Insurance Intermediaries and Brokers (AIIB) could put aside their differences and lead their members in a joint action suit against Direct Line.
I for one would be willing to contribute to a fighting fund and would be happy to lead the way if our trade associations will not take up this issue on behalf of those who are legitimately remunerated by way of commission.
Whicher Boylan & James