After four long years the British International Freight Association (BIFA) has succeeded in its campaign to see freight forwarders once again given the ability to provide insurance to their customers.
Treasury officials confirmed this month that the Insurance Mediation Directive (IMD) Exemption is now in effect for freight forwarders meaning that they should be able to obtain an open cover freight forwarders insurance policy once again without the having to go through the lengthy and cumbersome Financial Services Authority (FSA) registration.
Introduced in January 2005, the Insurance Mediation Directive meant that many freight forwarding companies began to withdraw offers of provisions of insurance to their customers. With the recent exemption in place many of these are expected to now resume offering these services again.
Controversley however, those freight forwarders who have already gained there license from the FSA will continue to be authorised by the body and are still fully liable for fees unless they were able to cancel their authorisation via the FSA website in the six week timeframe that was given.
The exemption also initially only applies to the actual provision of insurance for existing commercial customers. In particular the exemption is not applicable where a freight forwarder or a storage company conducts business with a private individual. In this instance registration with the FSA is still required for the business to be legitimately authorised.
In relation to the success of the campaign, Colin Baumont, BIFA Director General was quoted as saying that he was “delighted that our campaign to secure an exemption from the requirements of the Insurance Mediation Directive for freight forwarders, which has involved a change in UK legislation, has been successful.”
“BIFA is the primary UK trade association providing effective representation and support for the UK international freight services industry. As such, we provide a conduit through which the views of our members are listened to in many quarters.
“Our success in gaining this exemption was due entirely to our persistence and conviction that we were right to protect the interests of our industry, in the name of freedom to trade and in the face of unfair competition. It is a testimony to the lobbying activities that we undertake on behalf of our members.
“Now, we are investigating the establishment of a Consumer Code of Practice, which, subject to the approval of Ministers, could extend the exemption to freight forwarders’ retail customers at a later date.”
With both major political parties discussing the need for change in the way our industry is regulated this latest withdrawal of powers must be seen as a heavy blow for the FSA. With suggestions in some quarters that the body is in need of a vast overhaul if not being abolished completely and replaced with a more industry specific organisation.
Against a changing face of European legislation and regulation the United Kingdom General Insurance industry is crying out for a lighter touch in terms of guidance and enforcement regarding Freight Insurance. This latest retreat within the sector could be seen as a final role of the dice by the treasury as they endeavour to make the FSA an organisation that can work in harmony with the industry.
However, by leaving a system in place that punishes those that had tried to work with them in the first place, the FSA has once again managed to cause the headlines for all the wrong reasons.
By Kris Oldland
Bespoke open cover Freight Forwarder Insurance is available from Premiercare Insurance Brokers (UK) Ltd.