Regarding the transfer of residual funds from the Insurance Brokers Registration Council (IBRC) to the Treasury, the prime facts on this matter are that monies held by a statutory body are public funds and are not owned by the subscribing source, plus the critical point that the Treasury has accepted all liabilities for past and future events. This creates a free break against any future action against the broking community.
The following additional details may be helpful in understanding the circumstances and the consequent series of events.
After the announcement by the government in July 1998 that it intended the repeal of the Insurance Brokers Registration Act (IBRA), the continuing financial support of the IBRC was uncertain. Fortunately, the broking community continued to provide support and it became apparent, following the re-registration of corporate bodies in May 2000, that there would be sufficient funds to enable an orderly run-off.
It was therefore decided to waive all fees due from individuals in January 2001, which had the effect of significantly reducing income in the first four months of 2001.
It is worth remembering that at that time many informed sources were forecasting that due to an anticipated early election and the resultant pressure on parliamentary time, the act would remain on the statute books well into 2001.
IBRC accepted the risk that there could be an over-run, but would still waive the January re-registration fees. If that judgment had proved incorrect (and but for the intervention of foot-and-mouth disease, who knows) the residual funds would have dramatically reduced.
The elected members of the council are all practising insurance brokers and you can be assured that every avenue was explored to see whether collected funds could be returned to the broking or insurance industry.
However, the Treasury has assumed all the responsibilties and the liabilities of
IBRC and these are not insignificant.
It is, of course, unlikely that all these liabilities will be incurred, but it would be frivilous to assume that the repeal of the act immediately cut off all legal exposures.
Former chairman of the IBRC
Nothing beats evidence
I read with interest the article on Mr Jackson's Core screening system (Insurance Times, May 10).
Nobody would disagree that we must combat the ever-present threat of fraud by using every reasonable tool available. In
particular, I agree with the premise that the insurance industry cannot simply pass the increased fraud cost onto customers. However, a psychological screening technique, while it may identify some potential fraudsters, may equally put off many genuine claimants.
I agree entirely that, generally speaking, a genuine claimant has no difficulty recalling events or details, but not always. There are many reasons why people's memories are not up to scratch, not just fraud. Mr Jackson's system is undoubtedly useful but, before it can be properly assessed, one would need to know the number of genuine claimants it has in fact put off – a statistic that will never be available.
I would also be very reluctant to play down the importance of prosecutions. Another statistic which would be practically impossible to obtain is the number of fraudulent claims a particular prosecution has prevented – nonetheless, that statistic is certainly there.
While there is unquestionably some value in what is said regarding psychological profiling, whether in a civil or a criminal sense, when it comes to fraud, there is no substitute for evidence.
Head of fraud investigations,
Code of practice intact
Your article “ABI bows under gene test lobby pressure” (May 10) is wrong to suggest that Norwich Union, or any other company, has broken the Association of British Insurers' (ABI) code of practice on genetic tests.
The issue – companies taking account of the results of tests submitted to the government's Genetics and Insurance Committee (GAIC) for assessment but not yet approved – was specifically allowed for under the code. The code also made clear that if the GAIC subsequently ruled against a particular test, companies would re-underwrite any policies that relied on it.
As part of our recent announcement of a moratorium on all policies up to £300,000, we made clear that insurers would from now on not use test results submitted to GAIC, but not yet approved. This will be incorporated in the next revision of the code. But it is very important not to give the misleading impression that the industry was somehow in breach of the code in the past, because it was not.
We hope that the industry's recent announcement will help to allay public concerns and give all the interested parties time to agree a longer-term solution to these sensitive issues.
Deputy director general, ABI
Having read the story regarding MMA's purchase of Swinton, I am absolutely gutted that another “broker-friendly” insurer has decided to go down the “direct” route.
Garry Fearn says: “We are firmly committed to distribution by independent brokers and intermediaries, and this purchase does not signify any change to our policy.”
But it must make a change. How can a “broker-only” insurer purchase a leading national broker, and not be tempted to sell their products through that national broker at a much more competitive rate than all of their other brokers? Will they offer schemes to Swinton's that other brokers do not have access to? Will they start pushing their commercial package policies to the local area where offices are based?
I think these questions need to be answered to enable brokers to make their own decisions on whether to continue supporting MMA that was an “independent-broker-only insurer”
Director, Warman & Co (Yeovil)