Regulation covers insurance companies and brokers plus other professions who get involved in the placing and handling of general insurance policies. This includes managing agents and multi-discipline property practices, therefore, potentially estate agents, letting agents and surveyors. The FCA sees property managers as selling cover to the property
whereas they often see themselves as buying on the property’s behalf. It’s a subtle difference, but often at the heart of confusion as to the need to be regulated.
WHAT
After understanding who is covered by regulation, we need to look at what insurance activities are being regulated. The directive covers:
Arranging Insurance: This includes seeking quotes on behalf of a client.
Advising: This covers recommending a particular product to your client.
Assisting in the Administration and Performance: This includes placing the insurance, paying the premium to the broker or insurer, assisting with an insurance claim and sending out documentation to solicitors and lenders for purchases/sales.
Consequently, property managers are firmly caught in the net and need to be authorised and regulated.
HOW
There are several options for property managers to be authorised and regulated.
1. Direct Authorisation – A number of managing agents have become directly authorised and regulated by the FCA. This option gives the property manager the widest scope but does incur extra cost in terms of time and money. Your broker should be fully assisting you with this.
2. Appointed Representative (AR) – The property manager becomes an AR of their insurance broker who takes responsibility for their regulation and compliance. However this
has limitations compared with direct authorisation that often tie you into dealing with the principal broker.
3. Designated Professional Bodies – Organisations including the RICS and Chartered Accountants have taken responsibility for the regulation of their members, therefore, surveying practices with management divisions can be regulated via their designated professional body.
4. Company secretaries for the properties they manage – Managers are deemed to be buying for themselves under guidance from the property. The FCA is keen to ensure
any conflicts of interest and identified and avoided or managed.
WHY
Consumer protection is a principle reason for regulation of general insurance in order to protect client money. Other reasons include the formalisation of best practices with regard to the provision of advice and treating customers fairly.
CONCLUSION
The regulation of general insurance has indirectly resulted in the necessity for property managers to become authorised. Therefore, you should check your regulatory status and consult with your insurance broker if you are unsure or the writer.
