I refer to Paul Hirst's interesting letter “Who polices the schemes” (August 12), and would make the following suggestions to try and alleviate Mr Hirst's concerns over sub-broking.
Before entering into an agreement with a scheme distributor, Mr Hirst should check the financial soundnesss of the insurer or underwriter of the scheme. After all, it is the underwriter, who is doing just that – underwriting – and securing the scheme, not the distributor. This can be done by either asking for a copy of the company accounts which the insurer/underwriter should be happy to provide, if they have nothing to hide. Alternatively, Mr Hirst can obtain a copy of the accounts from Companies House.
Secondly, Mr Hirst should satisfy himself regarding the protection of his client, by asking to see the terms of business under which the scheme distributor operates. Reasonable terms of business should include a protection clause guaranteeing there will be no direct contact between the scheme distributor and Mr Hirst's client. If he is not happy with the distributor's terms of business, then do not enter into a sub-broking agreement. My own company, Road Runner, happily includes this clause in its terms of business, which, together with the company accounts, are freely and willingly available to intermediaries and sub-brokers. Interestingly, since starting our specialist motor trade schemes in 1993, which incidentally are underwritten by Independent Insurance and The Norman, we have only been asked for our terms of business on two occasions.
In these days of take-overs and mergers, schemes do come and go, and what's in favour one minute can go out of favour the next. Take the example of when Norwich Union took over London and Edinburgh – successful schemes run by L&E did not continue, as they did not fit the NU strategy. The length of time that a scheme has been established is therefore not so important as the profitability and appropriateness of the scheme. Some brand new schemes can be excellent opportunities, whilst other “tried and tested” schemes can become stale and outmoded.
chairman and managing director,
Road Runner Group,