Insurance Intermediaries Research Articles

The Regulation of Insurance Intermediaries in the United Kingdom

This article discusses the position of insurance intermediaries in the United Kingdom, and assesses recent developments and legislation. After examining the size and importance of the intermediary sector, some of the problems arising from the system are outlined. The paper points out and explains Government proposals for subjecting brokers to a regulatory system and for restricting significantly the operations of all other inter- mediaries. So far, only changes involving the former proposals have been implemented. Nevertheless, these changes undoubtedly will bring about significant improvements. Further progress depends on changes arising from the implementation of the latter proposals. In the United Kingdom the growth of the insurance industry has been accompanied by increasingly complex controls over insurers and greater protection for policyholders, in the form of successive Insurance Companies Acts and, more recently, the Policyholders Protection Act. However, until the Insurance Brokers (Registration) Act of 1977 became effective, insurance intermediaries were not subject to any significant regulation or control.' Insurance was, and still is, sold through a wide variety of channels with varying degrees of professionalism. Various shortcomings and abuses prompted calls for reform, and this reaction resulted in the passing of the 1977 Act.