Firms given insurance deadline

The hundreds of law firms which sell insurance products, or advise clients on them, have been given until 1 September to apply for membership with the new independent regulator, the General Insurance Standards Council (GISC).After that date, only those insurers and intermediaries which have either registered with the GISC or applied for membership will be able to deal with other members.

Most of the major insurance companies have signed up to it.The requirement is likely to catch many high street firms and personal injury specialists selling after-the-event insurance among other products.According to an explanatory note issued by the GISC last week, solicitors who provide specific services such as buildings and contents insurance, or other products sold as benefits bundled into an insurance contract such as uninsured loss recovery service or a legal help desk need to be GISC members or regulated through an appointed agent agreement.However, concerns over double regulation and client confidentiality issues surrounding monitoring visits that the GISC can conduct have led the Law Society to seek an exemption from regulation for solicitors.Alison Crawley, the Societys head of professional ethics, said no conclusion has yet been reached in the negotiations.One alternative to registration is for law firms to become appointed agents of a GISC-registered company.

The Society is considering a rule change allowing firms to be tied to independent brokers but not, because of independence issues, to particular insurers.Solicitors providing general legal services to GISC members are considered service providers and are not caught by the regime, so long as they do not engage in general insurance activities on behalf of members.The GISC note states that if asolicitor carries out aspects of claims handling which form part of, or impact on, the service commitments to a members customers, the solicitor will be acting as an outsourcing provider and the member will be responsible for the solicitors compliance with the GISC rules.In a separate move, the GISC has exempted solicitors from its rules on insurance money segregation or solvency, and on professional indemnity insurance.Neil Rose