Insurance mediation

Under the Financial Services and Markets Act 2000, registered professional bodies with designated professional body (DPB) status are permitted to regulate their members who wished to conduct  certain activities regulated by the FSA (FSMA part XX, s326).

CIMA does not hold DPB status with the FSA and so those activities requiring FSA authorisation are not generally open to CIMA members.

Such activities include insurance business ('insurance mediation'). Some aspects of this area require a licence, some require FSA authorisation, and some require no permission.

FSA handbook

The FSA handbook includes regulatory guides, with PERG 5 outlining guidance on insurance mediation.

It is recommended you review this if you feel you may be offering any kind of insurance mediation service. Also see the FSA flowchart to check if you need authorisation to carry out insurance mediation activities.

The following activities require NO licence and are NOT regulated (and may therefore be undertaken by CIMA members in practice):

1. Discussing with clients about the need for insurance generally, including:

  • the need to take out a particular type of insurance e.g. life insurance, medical cover, etc.
  • which particular broker/insurer to use (but not the particular insurance contract)
  • advising on the level of cover needed
  • explaining the terms of a contract recommended by an independent financial adviser or insurer
  • providing information (other than that proscribed by the Act/FSA) to the client who fills in the proposal form
  • recommending to a client that he or she contact a named broker/insurer. You can provide the client with contact details, and commission may be received, but no direct contact is made between your firm and the broker/insurer in respect of introducing the individual client; the insurance in question must be incidental to the firm's business
  • Handing over a particular broker's/insurer's leaflets in the office ' the leaflet may contain a proposal form and your firm's details, and your firm may receive commission from the insurance broker/insurer (but the insurance in question must be incidental to the firm's business). The firm does not recommend a particular policy.
  • Sending out a mail shot to clients enclosing an insurance broker's/insurer's leaflet on a particular policy, but the firm does not endorse or recommend the policy. The leaflet may contain a proposal form and the firm may receive a commission from the broker/insurer (the insurance in question must be incidental to the firm's business).

2. Paying the premium as part of a payroll service after the policy is set up:

  • Acting as a 'post box' for the receipt of policy documentation for passing on to the client.
  • Providing information for a client to complete a claim form, including assisting the client with supporting arguments over the quantum of a claim ' where your firm has provided the quantum (eg loss of profits claim).
  • Acting as an expert witness for a client or insurer, but not providing any other service which may amount to the performance or administration of a contract of insurance.

CIMA members may not (also see PERG 5.4, The business test, FSA handbook)

  • Introduce a client to a broker/insurer where you or your firm contacts the broker/insurer; this is regulated if it is conducted 'by way of business', though not if for example, no remuneration is received
  • Introduce a client to a broker/insurer for insurance advice where your firm contacts the broker/insurer and commission or remuneration is received.
  • Comment on, agreeing or disagreeing with, the specific advice given by an independent financial adviser or insurer.
  • Complete a proposal form for a client.
  • Send the proposal form to an insurance broker/insurer.
  • Pay the initial premium on behalf of a client (whether through your firm's bank account or where the client's cheque is forwarded to the insurer/broker directly).
  • Assist a client with claims by notifying the claim to an insurer, or completing a claim form.
  • Assist a client with claims by completing a claim form.
  • Negotiate the settlement of a claim with the insurer on behalf of a client.
  • Arrange or manage contracts of insurance under a Power of Attorney and commission retained by your firm from the insurer.