Private medical insurance is to fall under a new self-regulatory body which may at some point also c...
Private medical insurance is to fall under a new self-regulatory body which may at some point also cover those protection products currently not regulated by the Financial Services Authority.
The body, called the General Insurance Standards Council (GISC), was commissioned by the Government 18 months ago when the then-Economic Secretary, Helen Liddell, recommended that insurance should be self-regulated under one unified body.
The organisation has a remit to cover all general insurances but will have a focus on consumer protection. While PMI will now fall under the remit of the GISC, it is yet to confirm whether certain insurances not covered by the FSA will be included.
Catherine Nicoll, communications manager at the GISC, said: "There is a grey area around products such as critical illness, income protection and mortgage payment protection insurance and there is a debate in the industry as to how the selling of these products should be most appropriately regulated, either by us or the FSA.
"While they are written on a long-term basis they do not have an investment element but they are usually sold by those selling life and pensions products."
Although the GISC is yet to make a decision, it appears the industry would rather see these products regulated under the FSA.
Nick Kirwan, product development manager at Pegasus, said: "All long-term insurances should be regulated under the FSA. These products are sold in the same way as regulated products, to the same people, by the same people and often in the same sales interview."
He added: "These products are often packaged alongside regulated products, so it is foolish to have them regulated by another body."
Ted York, senior partner at Berkeley Alexander, agrees that such products would be more appropriately regulated under the FSA, but believes that they cannot be left as they are. Leaving these products unregulated, he said, would open the industry up to a barrage of criticism and bad press.
He added: "Non-FSA products must now be regulated by GISC as no consumer organisation will find it acceptable and will push for further regulation."
The GISC was expected to put out its final code book at the end of January and start admitting members in February but both of these events have been delayed.
Nicoll said: "To continue being a responsible consultative organisation we need more time before we can do this. The feeling in the industry is that we should take our time and get it right."
