PB Week; Commission disclosure on the agenda in Parliament

And following watching last night’s momentous Champions’ League Final (unlucky Chelsea fans), this morning I attended the Houses of Parliament where apart from some Tibetan monks meditating in the corridors, representatives from the Institute of Insurance Brokers, the British Insurance Brokers’ Association and broking group Brokerbility put forward the argument against commission disclosure to the All Parliamentary Group on Insurance and Financial Services.

John Greenway MP, Baroness Turner and Lord Hunt were all present. Eric Galbraith, chief executive of BIBA, said: “This debate on commission disclosure has been going on too long and has become costly, unsettling and divisive. We would like a market solution which would be in three stages. First, we need to identify conflict of interests and evidence we can manage them. Second, we need to be clear about profit shares and over-riders when asked about commissions; and third, we would like brokers to change their TOBAs to BIBA TOBAs which highlights to customers that they can ask for the terms of commission.”

Steve Grantham, managing director of Cooke and Mason, a member of the Brokerbility group said he hoped the Financial Services Authority would “not be fooled by the other side of the argument.” He accused certain large insurers and brokers supporting disclosure saying that: “It’s like Tesco and Sainsburys saying the corner shops are destroying their business. Some say that going direct is cheaper, however somebody has to do the work whether that is acquiring the business or supporting the client.” Grantham handed a photocopy of the latest Director’s Q+A where Steve Rockingham, managing director of Stephen Russell Construtction told PB: “Everybody has to earn a living and everybody has overheads. I wouldn’t want to disclose what I think my margin is going to be as part of every quote that I issue, so I don’t expect that from my broker either.”

Graham Gomm, chairman of the Institute of Insurance Brokers, added: “Commission disclosure would threaten the future of the independent broker in the UK.”

Clearly this a topic that needs to be resolved once and for all as the industry still digests the document Transparency, disclosure and conflicts of interest in commercial insurance which questions a huge amount of the status quo in insurance. The consultation deadline is set for 25 June.

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