Ferma’s deal with BIPAR includes rules on remuneration and managing conflicts of interest
The Federation of European Risk Management Associations (FERMA) and the European Federation of Insurance Intermediaries (BIPAR) have signed an agreement on transparency including a requirement for brokers to “volunteer” the type of remuneration they receive.
The agreement also says that brokers should “manage and mitigate” any conflicts of interest and disclose any direct remuneration on request from the client.
Both federations urged their respective members to use the agreement as a guiding framework on broker transparency.
Where brokers are in competition with alternative forms of distribution for business insurance, BIPAR and FERMA said they expect them to meet a comparable standard of transparency.
According to the agreement:
>>Intermediaries should identify, manage and mitigate any potential conflict of interest in an appropriate and transparent manner.
>>They should provide clear and fair information on the nature of their services and the capacity in which they operate, including any underwriting powers and delegated authorities they may hold from insurers, so that business clients can make informed decisions on the purchase of insurance products.
>>They should voluntarily inform their clients about the nature of the remuneration directly related to the placing and servicing of the insurance contract, for example whether they are paid a fee or receive commission.
>>They should disclose the amount of this direct remuneration on request from the client.
>>Also on request from the client, they should give generic information about other types of payments they may receive from insurers if the business insurance contract of the client is part of the calculation of these payments.
The Chairman of BIPAR, Jaap Meijers and the President of FERMA, Peter den Dekker, said in a joint statement: “Intermediaries play an important role in the development, placement and servicing of business insurance contracts, and they should receive fair remuneration for their services. The amount and nature of that remuneration is a matter for the parties involved.”
“In the complex nature of these business insurances, conflicts of interests can arise from time to time. When this occurs, intermediaries should identify, manage and mitigate them in an appropriate and transparent manner.
“FERMA and BIPAR recognise that the complexity of the business insurance sector can sometimes create a perception of a lack of transparency. This protocol addresses these concerns to underpin and enhance trust in the purchase of business insurance.”