Paul Hirst raises some interesting questions (“Who polices the schemesNULL” Insurance Times August 12), and I suspect there is no common answer to the points he raises. However, with the current trend of agency cancellations by the composite insurers, more brokers/intermediaries will deal with schemes providers and will, in general, find that the service they receive is far better than they experience from any insurer. Brokers must:
n Ensure that the scheme administrator is regulated by either IBRC, ABI or the forthcoming GISC, although, of course, the ABI code pays no attention to financial soundness. Conversely, most scheme distributors allow sub-agents credit terms and perhaps therefore this question should be redirected back to Mr Hirst. Once a scheme administrator has bound his insurer then that insurer is the financial guarantee behind the policy. The financial soundness of the administrator is then irrelevant.
n All schemes are new at some stage, but that does not detract from their effectiveness or competitiveness. Any reputable delegated authority will guarantee that if the administrator “folds”, all policies will run to their natural expiry backed by the issuing insurer.
n Underwriting authority – this, of course, varies and can only be answered by the specific scheme provider, but this company operates a number of delegated authorities, some of which are full authority and some limited in so much as we can work within pre-set limits/rating structures but need to refer where the agreed criteria are not met. We are happy to answer such questions at the time of providing quotations.
n Our insurers are aware that a proportion of our business is sub-broked, as are our professional indemnity insurers. The very nature of most schemes means that an element of sub-broking will exist, and I would be surprised if an insurer involved in such an agreement did not allow sub-broking.
n We would never approach a sub-broker's clients to procure further business.
If insurers which provide scheme facilities insist on their administrator subscribing to GISC, then a common standard will prevail, and to create another regulatory body would only confuse the insurance-buying public. Ensure that:
a) the administrator is regulated by a recognised body
b) the insurer backing the scheme is suitably authorised
c) the insurer details are disclosed to you at quotation stage. If not, why notNULL
d) documentation is issued promptly, clearly showing the details of the authorised insurer.
The above precautions should be sufficient protection against bogus schemes.
Paul Hudson Insurance Schemes