Insurance Brokerage in The UK
Insurance broker became a regulated term under the Insurance Brokers (Registration) Act 1977 which was designed to thwart the bogus practices of firms holding themselves as brokers but in fact acting as representative of one or more favoured insurance companies. The term now has no legal definition following the repeal of the 1977 Act. The sale of general insurance has been regulated by the Financial Services Authority since 14 January 2005. Any person or firm authorised by the Financial Services Authority can now call themselves an insurance broker.
Insurance brokerage is largely associated with general insurance (car, house etc.) rather than life insurance, although some brokers continued to provide investment and life insurance brokerage until the onset of more onerous Financial Services Authority regulation in 2001. This drove a more transparent regime based predominantly on up front negotiation of a fee for the provision of advice and/or services. This saw the splitting of intermediaries into two groups: general insurance intermediaries/brokers and independent financial advisers (IFAs) for life insurance, investments and pensions.
General insurance brokering is carried out today by many types of authorised organisations including traditional high street brokers and telephone or web-based firms.
A Lloyd’s broker is a firm of brokers that has been approved by Lloyd's of London, and having met certain minimum standards, is able to place business directly with Lloyd's underwriters.
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