Solving a non-existent problem

Re: "More ado about nothing" (PB, February 2005) rehearses the popular distinction between a grocery retailer and an agent regarding disclosure of profit or fees, but entirely misses the point.

The law of agency prevents an agent from making an unreasonable profit without disclosing it to his principal, hence his duty to disclose his profit if asked. Very few SMEs or retail insureds ask, probably because they are only interested in the overall cost and quality of the service, not the breakdown.

Compulsory disclosure would not just involve quoting a figure or a percentage.

Brokers, especially those with higher levels of commission for underwriting, policy issue and claim services, would need to justify higher commissions in some detail, but how can an insured judge the value of such broker services?

Compulsory commission disclosure will add to the already excessive paperwork received by insureds. Less will be read, even less understood and some insureds will draw illogical conclusions, to their own detriment. Compulsory commission disclosure is political correctness trying to solve an almost non-existent problem, at the price of creating a far worse problem.

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