IIB on the road

The Institute of Insurance Brokers has been out on the road in a series of "one-day meetings" - a more down to earth replacement for the major annual national conference that it used to hold. I caught up with the roadshow at Meriden, near Coventry, last month.

I gather that, at some venues,

The Treasury consultation document on implementation of the EC mediation directive had just been published, and Mr Paddick took brokers through some of its more contentious issues, including the number one question - regulation (or not) of travel insurance sold as part of a package.

He believes that government is convinced that something needs to be done about travel insurance in packages. Mr Paddick's opinion is that it is better that people have some form of travel cover than none and, if the only way they will buy it is with the holiday package, then so be it. "It's up to brokers to sell 12-month travel insurance".

Mr Paddick contends that it is likely that finally the FSA will allow ABTA to be the regulator, with the Authority prescribing the compliance requirements for ABTA. There is no strong argument, he adds, for travel agents to have the same requirements for their insurance operations as insurance brokers. Interestingly enough, no-one at the Meriden meeting appeared to want to take issue with him on that.

On extended warranties - another bone of contention - Mr Paddick said that it appears that the government is keen to include car warranties within FSA compliance, but that on brown and white goods it will wait for an assessment from the Director General of Fair Trading.

On the question of activities to be regulated, Mr Paddick said that the important point in deciding whether a business was to be subject to FSA regulation was whether earnings were secured from giving insurance advice. For instance, the doctor, vet, etc putting insurance brochures on display (and no more) would not be "caught" but, if some commission were secured (e.g. by supermarkets and stores), they would be.

And what about commission disclosure? Andrew Paddick's view is that, as professionals, insurance brokers must expect greater overall disclosure requirements - for example on things like profit commissions - and, although acknowledging that there is a lot of debate still to go on, he seems to favour continuation of the old IBRC requirement of disclosure on request.

Some members wanted greater representation of their interests by the IIB on such things as professional indemnity cover. One said that the problem of rising PI costs should be referred by the Institute to government. But Mr Paddick says this is an industry matter, and not one for government.

The meeting considered where the insurance industry would be in two or three years, and IIB member Denis Cope (a large-scale provider of facilities for other brokers) put his view that new capacity would come from new players entering the market on the back of the rising trend of rates and profits. "Even the boys at 1 Lime Street couldn't get it wrong in the present market conditions".

And IIB board member Kedric Rhodes foresaw a bright future but only if brokers started now to get their compliance in order. Pointing out that there are facilities within the Institute to help, he rightly pointed out that "80% of compliance is no more than good business practice".