Insurance Regulations

11 August 2023

The FCA and Insurance

Since 14 January 2005, the FCA (previously the FSA) has regulated activities relating to general insurance. Letting agents must be authorised to carry out certain activities relating to insurance. The Regulations apply to the following insurances:

• Landlords’ building and contents insurance
• Tenants’ contents insurance
• Rental protection insurance
• Legal expenses insurance
• Round-the-clock emergency repair cover.

Regulated Activities

Providing Insurance Advice

Agents must be authorised to give insurance advice. Giving advice includes suggesting or recommending a certain insurance product, discussing the advantages or disadvantages of a particular product, comparing a product with the consumer’s existing product and commenting on the cost of the insurance, be it high or low.

Generally, the recommending of insurance itself – without mentioning or recommending a specific product, is not considered to be a regulated activity.

Arranging for Someone to Take out Insurance

An agent may act as a go-between for the potential policyholder and the insurer/ broker or give details about the potential policyholder to the insurer/ broker.

Entering into an Insurance Contract on Behalf of Someone Else

An agent can enter into an insurance contract on someone’s behalf (either the insurer or the potential policyholder) by completing and signing the proposal form.

Administration of an Insurance Contract

Helping with administering a contract e.g. negotiating a settlement or handling claims.

Level of Service

Agents can choose which level of service they offer their customers and that may be as one of the following:

• Principal firm: directly regulated by the FCA and able to offer a range of insurance products from a range of insurance providers
• Appointed representative: regulated and monitored by a chosen principal firm and offering a certain product. Once authorised, the agency can recommend, negotiate and sell the principal firm’s products as well as administer claims
• Introducer appointed representative: able to give information about insurance products available from their principal. Unable to give advice, sell or handle claims or take money for insurance activities
• Non-regulated introducer: provides leaflets on insurance for customers to take away. Not involved in the introduction, negotiation, selling or administration or insurance.

What Agents Can and Cannot Do

All agents are able to recommend that a landlord or tenant takes out insurance. Only agents authorised as principal firms or appointed representatives can recommend a specific insurance company or product.

Agents must be suitably authorised to do the following:

• Compare or recommend an insurance product
• Provide rent guarantee insurance as part of a referencing package, even if the insurance is ‘free’
• Process insurance claims on behalf of a landlord as part of their management services.

All agents may, if requested, do the following:

• Pay an initial premium on an insurance policy if they were not involved in the introduction or arrangement of the policy
• Pay a renewal premium on an insurance policy as long as they do not give renewal instructions to the insurer and pay only the amount demanded.

In emergency situations when a landlord is not contactable, an agent can carry out certain insurance activities that are not regulated e.g. asking contractors to give quotes for repair work or instructing a contractor on the landlord’s behalf.