Regulations being introduced to govern the selling of general insurance will not limit competition in the marketplace or influence product pricing, says the independent body set up to monitor the industry.
The General Insurance Standards Council was established in July last year to regulate the sales advice and service standards of its members. It now has 4,500 members and another 1,500 membership applications are under consideration.
One of the most controversial elements of the new council is what is known as Rule 42, currently being considered by the Competition Commission which states that GISC members (either an insurer or an intermediary) may only deal with another organisation if it is also a member or is an appointed agent of a member.
At yesterday's joint Automotive Management/ Sewells Information and Research conference, 'Be prepared for dealer regulation', Catherine Nicoll, GISC head of communications, said: “Our aim is to introduce common behavioural standards, create a single and uniform system of regulation. The purpose is to protect customers, based on appropriate and proportionate regulation reflecting good business practice.
“We are not here to regulate price or insurance products – or interfere with business.”
Rule 42, however, is very specific about the dealings of members and non-members.
If an insurer doesn't join, it wouldn't stop a non-GISC dealer from working with that insurer, but their business would be an unregulated distribution chain.
But Mrs Nicoll confirmed that if all the top players in the insurance industry join the GISC and Rule 42 was upheld, then other companies further down the insurance chain would have to join.
Three of the leading motor insurers Capital Bank Motor, Black Horse and First National (co-sponsors of the AM/Sewells conference) have joined the GISC.
Anyone who does not wish to be a member, can confine themselves to being an introducer. They can receive commission by offering a range of insurance literature but they can't advise, fill in forms or take money. But they can receive money if they make an introduction that is agreed with the person whose literature they are handing arranged under a mutual agreement.
“We hope there are very few businesses that don't join,” she said. “All the top insurers are looking to the day when there is a growing customer awareness of regulatory bodies - they will know the GISC and want to buy through people who are regulated and will want to know why a business has not signed-up.”
She warned the industry that regulation is not an option, but believed that the voluntary code adopted by the GISC would be more responsive, evolutionary and flexible. She said the industry has got to buy into the idea to earn credibility from the Government.