It is “only a matter of time” before regulators force greater transparency of broker commission, according to the ABI.
Speaking at the Birmingham Insurance Institute on Wednesday, ABI director general insurance policy James Dalton questioned if it was fair that commercial customers had to ask brokers to reveal the commission they received from selling policies.
“In a well-functioning market, service providers compete on the price and quality of their offering. They are not inappropriately influenced in providing advice based on the payment of commission,” Dalton said.
“The question for debate is whether there is a well-functioning market in the distribution of general insurance products.”
Dalton also pointed out that the FCA already requires broker remuneration to be disclosed on request by commercial customers.
“Are commercial customers aware that they can request disclosure and do they do so in practice? Is it right that the burden is on the customer to ask rather than on the broker to disclose upfront? And if brokers have nothing to hide from their customers, then what is the problem with increased and proactive transparency?” he said.
“These are not really questions for me to answer. But in the context of a discussion on the regulatory and reputational challenges of the future, it is impossible to ignore the GI distribution landscape.”