Management Clinic: Reviewing client money arrangements

A review of our insurer agency arrangements shows that we have risk transfer with all our insurer partners. Can we cancel our permission to hold client money?

This is a situation that we are now seeing with client brokers on a regular basis. When regulation came in five years ago, the widely held view was that insurers would not support broking firms if they went under and that there was a deficit in the client or insurance broking account. If you remember back then, insurers often tended to pick up the shortfall on an informal basis if a broker went under and a client could prove that they had paid the premium.

Financial Services Authority regulation