Group PMI providers that refuse to disclose claims history on SME business are stopping brokers fulfilling their obligations under European law and may be breaching their own Treating Customers Fairly obligations says a leading compliance consultant.
The practice of refusing to disclose claims history for smaller company schemes means brokers are unable to fulfill their obligations under ICOB, which requires them to search the market to find the best deal for their clients says Richard Hobbs, board director at Lansons Communications.
Insurers could also be potentially breaching competition law by creating obstacles to a freely operating markets, although this would be less easy to prove says Hobbs, who has formerly worked in the insurance directorate of the Department of Trade and Industry and was previously head of life and pensions at the Association of British Insurers.
Most group PMI insurers, with the exception of Groupama, refuse to disclose claims history for SME business on non community rated business.
Some providers argue that disclosing claims history is in breach of client confidentiality, while others argue the information is commercially sensitive.
Critics of the practice say that a properly constituted letter of authority from the employer client should be sufficient to overcome any client confidentiality issues.
Hobbs says: “Underwriters are on dodgy ground if they refuse to hand this information over. This practice could be a breach of Treating Customers Fairly, and could also potentially involve competition law. What private medical insurers are doing is potentially anti-competitive because they are jamming the market.
“European directive law requires an insurance intermediary to effectively scour the market for the best deal for their client. A broker cannot fulfil his obligations under European law because he is being frustrated by the behaviour of the underwriters.”
Mike Izzard, managing director of Premier Choice Group says: “The only person who can do anything about this is the regulator. AMII and BIBA have tried to have a go, but as soon as you get mention the subject, insurers just get up and leave the table. We’ve got more chance of solving the Libyan crisis or the Missing Link than sorting this one out.”