LATEST NEWS
June 2004

The Big Bang? - 14/01/05
In January 2005 businesses involved in general insurance broking will become authorised by the Financial Services authority for the fist time. After this date, all brokers will need to comply with the relevant rules of the FSA. This will impact upon business records, capital adequacy, impose compulsory professional indemnity insurance and introduce new compliance checks, which will need to be made.

The rules have been written to comply with the EU Insurance Mediation Directive, which covers the regulation of insurance intermediaries. It aims to provide greater protection for the consumer. The directive must be implemented across the EU by January 14 2005. This is also the deadline for all UK insurers and insurance brokers to apply for FSA authorisation to do business.

With Brokers and providers of general insurance unable to comply with the new regulations many companies are selling, merging and even closing at the prospect of the FSA taking over after just 2 years of the GISC in control of regulating the industry.

From a customer prospective the new rulings will improve the service standards received and reassure customers of the quality of the broker and insurers they are dealing with. However, with hugely increased costs of complying we could see an increase in premiums to compensate intermediaries, insurers and re-insurers for there continuing outlay.

Motor Insurance Database
You will no doubt have heard of the important implications that the Fourth EU Motor Insurance Directive will have on policyholders, insurers and brokers alike. On the 20th January 2003 new Road Traffic Regulations (the Motor Vehicles (Compulsory Insurance)(Information Centre and Compensation Body) Regulations 2003) came into force to meet the requirements of the Directive.

In summary the key headlines are:

• All UK registered vehicles must be held on the Motor Insurance Database.
• Any temporary vehicle held for 15 days or more must be added to the database by the temporary keeper.
• Vehicles held temporarily for a period not exceeding 14 days do not have to be added to the database, however, records of temporary vehicles must be retained for a period of seven years.
• Failure to have such vehicle details on the database may in certain circumstances lead to criminal prosecution being taken against the policyholders and a fine of up to £5000 being imposed.

All insurers should have written to all affected policyholders. If you wish to discuss any of the issues raised please telephone your broker or contact the fleet department of your insurer.  

The UK has one of the worst records in Western Europe for this offence with an estimated one in every twenty cars on the road being driven without proper insurance cover. This results in every honest motorist in the UK paying £15 - £30 of their insurance premium to compensate the innocent victims of these cheats... and the problem is growing at a dramatic rate.

• MIIC web site

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