Underwriters must bear burden of ICOB
MORTGAGE SOLUTIONS - 19TH NOVEMBER 2007
Despite the fact that changes are being introduced to the ICOB rules next month, it strikes me very little have been done to understand the proposed reforms, or make alterations to be compliant with them. After its usual round of consultation and discussion, the FSA will be pushing forward its move towards a more principles-based regime, although in the payment protection insurance, the rules are set to get tighter, reflecting the regulator’s concerns over the market.
For brokers working in this area, the big problem at the moment is the lack of support they are getting from underwriters. There will be an increased focus put on eligibility and it will be imperative for brokers to really understand the needs of their client and the ins and outs of each policy they sell.
Historically, underwriters have used a series of rating questions to band clients. It is still possible on numerous website to go though the online questionnaire and end up being sold a policy under which it is impossible to make a full claim.
However, in the meantime, many brokers who have relied on the underwriters questions to form the basis of their client interview will have to make significant changes, or they are likely to end up selling the wrong policy to clients.
It seems incredible that underwriters are not being more proactive in a bid not only to offer the best service and product to clients, but also to help their brokers sell their policies properly.
Instead it seems like too many are happy to sit back and allow brokers to bear the full brunt of regulation when it comes to selling the insurance and continue to make good out of clients that pay the premium, but do not have a chance of claiming on the policy.
The rule changes come into force in December and there is then a six month transferral period. Very few look set to be ready by December, and the worry is things will look the same come the summer.
Simon Burgess
Managing director
British Insurance
