The insurance buyers association wants guidance on what constitutes appropriate practice
AIRMIC is disappointed by the time it is taking to produce the guidance on broker remuneration transparency, which was originally due to be published this year.
The Financial Services Authority (FSA) published a statement on the main issues in broker transparency, but falled short of publishing guidance. The City watchdog said it would give a two year window of opportunity for insurance intermediaries to manage their conflicts of interest and improve transparency of remuneration. In 2010/11 the FSA will assess whether these conditions have been met.
But AIRMIC, the association of insurance buyers, thinks there is ‘a pressing need for clarity and a resolution of what constitutes acceptable practice’.
‘The FSA’s statement gives no indication as to when the proposed industry guidance will be made available,’ said AIRMIC. The FSA only said that the industry intended to submit parts of its guidance for endorsement 'at some point in the future'.
Two outcomes are especially critical, said AIRMIC. ‘There is a need for automatic, mandatory disclosure of the source and amount of any broker's remuneration…so that buyers can make their own assessment regarding any potential for conflicts of interest.’
‘There should also be total clarity as to whether the intermediary is acting as an agent of the buyer or the insurer.’
‘We believe that it is no longer acceptable for the intermediary to act on behalf of both parties during the same transaction, with the obvious potential for conflicts this implies.’
'Many small corporate buyers continue to purchase insurance without the information to which they are entitled. The time to confront any practice that distorts the marketplace in this way is long overdue.'