Risk transfer to be in terms of business, but NU wants more security
Norwich Union (NU), AXA and Royal & SunAlliance (R&SA) have confirmed they will offer credit risk transfer to brokers in their new terms of business agreements.
But NU intermediary business director Ken Wallace said the insurer would require "additional protection" for brokers' complex or large schemes when it introduces risk transfer into its new agreements.
He said that in such instances, the insurer would ask that the scheme money be kept separate from other client money.
He said: "In principle, we will be offering risk transfer to our brokers. This reflects current market practice."
Blyth Morris, FSMA programme director at R&SA, said the insurer would accept a single trust account for all insurer monies
The FSA is due to publish a consultation paper on the co-mingling of client monies at the end of July.
ABI head of market regulation Chris Hannant said that if all insurers agreed to risk transfer, it would make the issue of co-mingling, which the FSA is currently consulting on, redundant as "all money will be insurer money".
But AXA head of broker development Colin Calder said: "The further period of consultation will ensure that the rules for brokers and insurers are aligned. The issues sitting behind the processes, such as how to hold client money, will need to be reviewed."
Wallace said that in the majority of cases, the insurer would expect brokers to keep premiums in a non-statutory trust account.
A trust account would, in the event of a collapse, ensure that insurers took precedence over other creditors.
Last month NIG announced that it would accept risk transfer in its new terms of business agreement.
The FSA is allowing brokers to keep client and insurer money in the same account until January 2006.