Industry not shocked by new ICOB rules but some classification issues raised
By Peter Carvill
The publication of the Insurance Conduct of Business (ICOB) sourcebook has not revealed any nasty or unexpected developments for the industry.
After keeping the industry waiting, the Financial Services Authority (FSA) finally launched the document on 18 December.
Major changes to the rules are that term assurance is now placed alongside income protection (IP) and critical illness (CI); payment protection insurance (PPI) will be scrutinised under new standards and private medical insurance (PMI) will be placed in the 'lighter touch' bracket as general insurance.
Originally, the FSA planned to publish on 6 December but were forced to delay in order to resolve a last minute issue.
Robin Gordon-Walker, spokesperson for the FSA, said: "The board decided that it needed more time. There was a point that needed to be resolved, and that was done. We can't say what it was, but it's been resolved so we've now published the ICOB sourcebook."
The most surprising development has been the placing of PMI into the same bracket as general insurance. According to Gordon-Walker, this was the choice of the FSA's consumer panel. "In our consumer research, we found that people engaged much more with PMI than other more commoditised general insurance products so they did consider PMI purchases more carefully. We asked a specific question on this in the consumer panel, and most respondents agreed it should go in the other group," he said.
Phil Taylor, chairman for the Association of Medical Insurance Intermediaries, agreed with the FSA's approach, saying that he personally thought PMI had never been 'high-risk'. He said: "There's been some discussion for a few years as to whether it's a high or low-risk product. If anything goes wrong with PMI cover, there's always the NHS to fall back on. That's why I've always said it's a low-risk product."
Speaking of the possible effects of the ICOB sourcebook, Kevin Carr, head of protection strategy at LifeSearch, said: "While we are taking time to fully digest the new rules, we welcome the FSA's decision to regulate protection products, including life cover, as a suite of products rather than separating them, which would have been to the detriment of consumers."
n If you want to discuss the issues raised by the ICOB sourcebook, please visit www.covermagazine.co.uk.
