New RICS rules for Insurance Distribution in force on 1 October

The EU Insurance Distribution Directive was transposed into UK law on 1 July 2018. Insurance Distribution or Mediation has been a regulated activity since December 2002, which in the UK has prima facie required authorisation by the FCA. For RICS members, this means that insurance related general property management activities including:

  • recommending a particular property insurance policy;
  • arranging a property insurance policy that any client have chosen themselves; and
  • negotiating a claim on a client’s behalf or even just completing a claim form

are all “regulated activities”.

If any of these activities are being carried on “by way of a business”, then the person carrying on those activities will need to be regulated. As a rule of thumb, Property managers who deal with insurance as part of an overall management service will require to be regulated.

To enable a proportionate streamlined process, the RICS has been authorised by law as a Designated Professional Body, enabling it to grant members authorisation to conduct these regulated activities where any general insurance distribution work it carries out is “incidental” to the provision of surveying services to individual clients. Because of this restriction to “incidental services”, the regime can be kept light touch and rely to a large extent on existing RICS Rules of Conduct. The RICS DPB scheme is therefore able to be both less costly and lighter, both in terms of fees and compliance costs and also rules and requirements. Affected persons need to note the minimum PII levels for these activities of €1.25m for each and every claim and €1.85m for an annual aggregate.

The RICS has published detailed guidance on its website on fees for licensing, disclosure of key product information, management responsibility, competence and fees which are effective from 1 October.

Published on September 25, 2018