Discussions are underway with the FSB and insurers on the proposed Long and Short term insurance quarterly conduct of business returns. The intention of these returns, to quote the FSB, is “..in line with the more pre-emptive and pro-active approach to conduct supervision contemplated in the TCF Roadmap and in the Twin Peaks implementation..”
The regulator is looking to these returns to enable them to carry out sufficiently detailed off-site analysis of insurers conduct of business and customer treatment practices. The proposal is that they be submitted within 1 month of each calendar quarter. These reports will be extensive and will include;
· Premium returns broken down into each class of business e.g. accident and health, motor and liability which in turn will be broken down into personal, commercial and corporate sub classes.
· Details of all new policies started in the quarter
· Information on business via aggregators and fees paid to them
· Information on business via lead generators and fees paid to them
· Details of referral fees paid
· Policies lapsed
· Policies not taken up
· Binder fees paid
· Outsourcing fees paid
· Selling expenses
· Commission payable to intermediaries
· Number of outstanding claims
· Complaints. This definition will be expanded from the current FAIS/Short or Long term Ombud matters to include all complaints where there has been “an expression of dissatisfaction submitted to an insurer. This section makes specific reference to the fact that all such complaints submitted to “another person with whom the insurer has an arrangement in relation to marketing, administration or provision of its products or services” So effectively meaning FSPs with binders and/or outsource agreements with an insurer.
So what is the likely impact on FSP’s who are not insurers?
In addition to the complaints handling already mentioned all those with binders and outsource agreements will need to be providing information to their insurers in such a manner that the insurer can collate the data to enable them to complete the returns. Where the insurer system is being used there should be no real problem, other than the insurer will need to be enhancing their own systems to enable data at the required detail to be captured. Those insurers relying on a data dumps via broker/UMA IT providers will have to get those dumps in with the prescribed format – thus enhancements by the IT providers is likely. Where insurers “view” data by having access to the brokers/UMA systems may well need to change their modus operandi so they can get data in the prescribed formats.
We stress that the discussions have only just started and no feedback has yet been provided to the FSB, in fact the deadline for that is 31 January 2014. We will continue to monitor this project and report back as and when appropriate.
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