The news trickling out of Brussels suggesting that loss adjusters will not be captured by the second generation Insurance Mediation Directive is good news.
It was clear from the patchy, confused implementation of the first Insurance Mediation Directive (IMD) that most national governments and their regulators were unsure how they were meant to apply a set of rules primarily designed to deal with the intermediated sales process to outsourced claims handling. Add to that the huge divergence in the way claims are handled across the European Union and it is not surprsising that it was a mess.
The debate has been drfiting this way for some time. Last autumn the European Commission was talking about taking a light touch approach to regulating loss adjusters and others providing claims services: now that light touch looks like being no touch at all when it comes to the IMD. This means that the final draft of the IMD2 and the drive to get it properly implemented across Europe can properly concentrate on brokers and intermediaries freed of the distraction of trying to make it work for something it was never designed for in the first place.
This doesn't mean that regulation of the claims process should be dropped: far from it. There is a very good case to be made around consumer protection for a co-ordinated set of rules across Europe. The challenge in drawing up such a set of rules is coming up with clear definitions of outsourced claims handling and the firms involved. This will be tough as it is probably the area of insurance that has the greatest divergence across the EU's member states.
There is a danger as far as the genuinely independent professional firms – such as UK and Irish loss adjusters – are concerned that the Commission might throw it hands up in despair when faced with the challenge of establishing a common understanding and take the soft option of passing the repsonsibility to insurers. This was happening already in some countries under the existing IMD and is definitely not the right way to regulate the UK market. The only advantage I can see of doing it that way is that it limits the potential cost of regulation.
Some in the UK insurance market will be concerned if claims are excluded from IMD2 as they take the view that some Europe-wide regulation is better than none but, hopefully, they won't waste too much energy arguing this point and will focus instead on initiating a debate about a stand-alone regime.
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