There should be full and automatic disclosure of total broker remuneration, said the association
The Association of Insurance and Risk Managers (AIRMIC) said there should be full and automatic disclosure of total broker remuneration. It made the announcement in response to a regulatory probe into conflicts of interest in the commercial insurance market.
The FSA invited AIRMIC to comment on Discussion Paper 08/2 entitled “Transparency, disclosure and conflicts of interest in the commercial insurance market”, issued by the Financial Services Authority in March 2008.
AIRMIC said: ‘In general, AIRMIC members enjoy high levels transparency with respect to broker remuneration. 71% of members report that brokers have a good or excellent willingness to disclose total remuneration. 67% of the membership enjoys automatic disclosure of information on broker remuneration.’
In summary, the AIRMIC position on broker transparency, disclosure and conflicts of interest is that:
? there should be full and automatic disclosure of total broker remuneration, together with the other disclosure requirements
? the remuneration information should be calculated to a standard formula and presented in a way that enables easy comparison between brokers
? this full disclosure of total remuneration and the other disclosure requirements should be a mandatory requirement of the FSA
? AIRMIC believes that it is vital that an insurance intermediary clearly defines their status as agent of the insurer where this is the case
? AIRMIC suggests that the best way to proceed is to see a market-led solution to the issues discussed in Discussion Paper 08/2
? this market-led solution should be developed by setting up a market initiative similar to the Contract Certainty work in 2005 and 2006