Matt Dyer answers a question on risk transfer

Question: "As a predominantly motor/home broker we issue cover on behalf of insurers - not only cover notes but also policies via EDI. Does this in itself constitute risk transfer?"

Answer: "In a recent publication the FSA sought to clarify the position over risk transfer. From what you have said the answer is yes, it would constitute risk transfer, and therefore for monetary segregation purposes you would be holding insurer money and not client money."

Matt Dyer is managing director of the Insurance Training Consortium