§ Mr. McCrindleTo ask the Chancellor of the Duchy of Lancaster if he will make a statement on the regulation of general insurance intermediaries.
§ Mr. MaudeIn March 1986, my predecessor undertook to promote talks among interested parties aimed at improving self-regulation of the sale of general (non-life) insurance. I am grateful to the various interested parties who participated in the talks.
The Association of British Insurers (ABI) has today outlined proposed improvements in both its code of practice for the selling of general insurance by intermediaries other than registered brokers and in its procedures for monitoring enforcement of the code. The improvements involve, among other things, the disclosure to the consumer of an intermediary's status as the agent of the insurance companies or as the agent of the consumer; a requirement that independent intermediaries take out adequate professional indemnity insurance; and the provision to policyholders of information on the procedures for making complaints. The ABI will also establish two committees to monitor the self-regulating system, one an ABI committee to deal with day-to-day enforcement and the other a wider committee with an independent chairman and four other independent members to report annually on the system and to review its operation after three years.
I warmly welcome these proposals. There are details still to be filled in, but when the system is in operation, I believe it will offer a substantial improvement in consumer protection. It will also bring the requirements placed on non-registered intermediaries closer to the existing requirements on registered brokers.
It is up to the ABI to enforce its code effectively. It will need to show that, as well as being tough on paper, it is tough in practice. I shall be keeping the effectiveness of the system under close review. When the monitoring committee makes its report after three years, I shall be looking again at how the regulation of the selling of general insurance is operating.