Private medical insurance (PMI) intermediaries have five months to apply for membership of the General Insurance Standards Council (GISC).
From 1 September, members of the GISC and insurers will be permitted to deal only with those intermediaries who are already GISC members or who have submitted application for membership.
From 31 December, members of the GISC and insurers will be permitted to deal only with intermediaries accepted as members.
The aim is to ensure that the majority of insurance business in the UK is covered by a single regulatory body by January 2002.
GISC chief executive Chris Woodburn said the timing for implementation gives all potential members five months to submit their applications and a further four months for the GISC to process these prior to 31 December.
Firms are encouraged to submit applications well ahead of the deadline and those who have doubts whether or not they are fully compliant with the rules should contact the GISC for discussions to ensure they achieve full compliance with them at the earliest date.
This is the first time PMI intermediaries will be subject to regulation.
The GISC’s main objective, as the new self-regulatory body for general insurance, is to protect consumers. Standards will cover three main areas:
the way in which consumers are handled,
the type of information that should be received before a policy is bought,
the way in which the insurance works once purchased.
The GISC recently received clearance from the Office of Fair Trading (OFT) that its rules do not infringe competition law.
As there is no statutory requirement for membership of the regulator, GISC rule F42 ensures all members, including insurers, deal with intermediaries whose work adheres to the GISC code.
Self-regulation is expected to give customers confidence in buying general insurance products such as home, motor, travel and medical insurance.
However, most income protection, critical illness and long term care policies are not within the GISC’s remit.
The Association of Medical Insurance Intermediaries (AMII), is disappointed with the length of the transition period. It has been campaigning to persuade insurance providers to only deal with intermediaries who had signed up to the GISC from 1 April 2001, the date the Association of British Insurers (ABI) withdrew its code to regulate PMI.
AMII spokesman Roland Burnett said: “We want the consumer better protected and there is now a situation whereby intermediaries can still sell PMI unregulated.”
He accused medical insurers, with the exception of Western Provident Association (WPA), of seemingly not taking the view that consumer protection is paramount.
“It would appear that commercial interest has taken precedence over consumer interest,” he said.
However, Bupa’s director of sales, Steve Flanagan, denied that consumer protection was being ignored. He said: “Consumers would not be affected because we are already working to the GISC code.”
ABI spokesman Vic Rance assured the insurance industry that the ABI “will not be burying its head in the sand” because it recognises it would be better not to have a gap in regulation.
But he said there have been no decisions taken as yet over extending the ABI code.
Meanwhile, the Institute of Insurance Brokers is concerned that the GISC regulation of intermediaries will not be of a high standard and has appealed against the OFT’s decision to accept the GISC rules.
However, OFT spokeswoman Kathryn Hinchliffe said: “We have not told the GISC to put on ice Rule F42 before looking at the IIB appeal.”