Plan and Budget 2008-09
Sub-class B2 General Insurance - intermediation |
£2m 2008/09 estimated gross initial funding requirement |
Cost drivers |
Claims relating to insurance intermediary failures and a share of FSCS management expenses. |
Any credit or debit from previous contribution groups? |
YES - estimated £1.3m CREDIT, shared between firms in A19 according to their tariff data for 2007/08.* |
What will firms in this Sub-class pay? |
The net amount to be paid by individual firms is the difference between their share of the £2m funding requirement, according to 2008/09 tariff data, less their share (if any) of the £1.3m credit. |
Although actual compensation costs in this Sub-class are anticipated to continue to be relatively low, FSCS does undertake significant work relating to potential defaults and actual defaults in this area. The funding requirement reflects the management costs associated with activities such as facilitating risk transfer, which reduces compensation costs and benefits consumers.
The Financial Ombudsman Service (FOS) in its corporate plan & 2008/2009 budget is predicting a 10% increase in insurance complaints, largely relating to payment-protection insurance (PPI). It is not currently clear what claims might be made against broking firms that are no longer trading, or that go into default during 2008/09, in relation to this product. No provision has therefore been made in this forecast funding requirement for potential PPI claims.
* Firms will only receive credit or debit notes from previous contribution groups if they were a member of a previous contribution group from 1 April 2007. Details of the transition rules are available from the FSA (PS07/19, FSCS Funding Review - Feedback on CP07/5 and made text).
