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Generally speaking

  • 18/11/2002
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With general insurance due to fall under the FSA's remit, John Parker, head of general insurance at the Association of British Insurers, talks to Paul Robertson about the need for a proportionate regulator

What is the role of the Association of British Insurers (ABI)?

The ABI is the trade association representing the insurance company market. It formed in 1986 as a result of the integration of several trade groups representing different sectors of the insurance market. It was decided that one trade body representing the insurance company market would enable it to speak with greater authority than a number of smaller groups. This becomes particularly important when it is representing its members in discussions with the Government.

Overall the ABI’s main role is to work to ensure the best possible trading environment for its 440 insurance company members.

An important part of this is to represent its members in discussions and negotiations with the Government on any legislative proposals that would have an impact on the financial services industry. It also provides a range of statistical and technical services to its members as well as representing the industry to the media.

How is the ABI funded?

The ABI is funded solely through contributions made by its members. Members pay different amounts which is based on their income form premiums.

What are the current issues the ABI is dealing with that affect mortgage brokers?

One of the issues is flood insurance. It is an important issue for the ABI’s members, as well as the country’s flood vulnerable property owners. The ABI has been lobbying the Government to ensure adequate funding of flood defences, and an effective, more streamlined system of flood defence management.

Insurance companies remain committed to providing flood cover to as many property owners as possible, but at premiums that reflect the risk. In the face of increasing flood risks for some, adequate flood defences will help to keep flood premiums as competitive as possible.

On a different issue, the ABI’s members are in the process of writing to their endowment policyholders advising them if they need to think about taking any steps to tackle any potential shortfall on maturity. The ABI continues to stress that any policyholders facing potential shortfalls need to consider their options carefully and take advice.

Will European legislation, such as the General Insurance Mediation Directive, affect the general insurance market in the UK?

The ABI is playing a large role in implementing the Insurance Mediation Directive. This is going to affect the general insurance market, and comes into action when the Financial Services Authority (FSA) becoming responsible for statutory regulation in 2004. But the implementation of this directive does offer the industry as a whole a golden opportunity to achieve a uniformly high standard across the general insurance sector.

What is the ABI’s relationship with the General Insurance Standards Council (GISC)?

The ABI supported the formation of the GISC when it was set up to oversee general insurance selling standards. It supported the self-regulation of the general insurance sector. But with the Treasury announcing last December that the FSA will be responsible for the regulation of general insurance from 2004, the ABI has also stated its commitment to working with both the Government and the FSA. The ABI wants to ensure, whatever the future regulatory regime, it is both proportionate and provides an adequate level of consumer protection.

At the moment, insurance claims are subject to the General Insurance Claims Code. How does this work?

The ABI Claims Code lays out a set of standards by which its members deal with complaints from policyholders and third parties. In practice many companies’ own standards will exceed those of the Code. This reflects a recognition that the public usually judge insurers by how they deal with policyholder’s claims.

The Code simply acts as an insurance so that minimum standards apply across all ABI members. For example, members are bound to reply to letters within 10 working days and have five working days to respond when a claim is first made. These standards are exacting, and some companies have worked hard to achieve them.

Do you get involved in complaints against your members?

No. The ABI’s role is not to intercede in complaints against its members, unless the complaint is specifically in reference to its codes of practice.

Which bodies within the mortgage industry is the ABI working with?

Well, the ABI would obviously seek to maintain a close working relationship with the FSA. The ABI wants to see future general insurance regulation providing consistent and proportionate consumer protection, while enabling insurers to continue to innovate and provide the products its customers want. The ABI is continuing to work with the Council of Mortgage Lenders and is trying to find ways of encouraging a greater take up of take-up of mortgage payment protection insurance, which is all part of the Sustainable Home Ownership initiative.

Paul Robertson is a staff writer


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