Eric Galbraith on his visit to Brussels
Listening to a presentation from the Competition Commission on the insurance block exemption at a BIPAR meeting in Brussels earlier this month my resolve for our sector to be able to influence issues temporarily weakened.
The Competition Commission has already caused our sector to spend millions on its review of the business insurance sector. Now it wants to take away or amend the block exemption, even though they admit it works as it is.
While this is something that impacts insurers more than brokers it again seems to demonstrate that the Competition Commission has immunity from accountability and has, in my view, created an environment of fear - something that is contrary to a strong, competitive and innovative market place with commercial and legal certainty around competition issues. This position with the Competition Commission must not, however, make us disheartened, frustrating as it may appear.
At Biba 2009 in Manchester one of the three key points in my address was about having a strong voice and while it is sometimes difficult to see tangible results we can and do make a difference when we work together.
The recent changes to the FSA’s proposed regulatory fees and levy for our sector was an example of Biba, together with its members, highlighting a material inequality and being able to influence the final outcome. Contract certainty, the market solution on transparency, conflicts and disclosure, our work on aggregators and on travel agents, are other examples of positive influence. These examples helped restore my determination – persistence pays.
While on the subject of positive influences, our visit to Brussels also involved a meeting with the team which will be leading the review of the Insurance Mediation Directive (IMD), due to be finalised in 2010. This allowed Biba to explain early on in the review process what has been done in the UK on our market solution and to discuss a variety of other issues around any changes to the IMD. We will continue this dialogue to protect and promote members’ interests.
Now, having run a variety of broking organisations, I fully appreciate that all these external challenges are often very far away from members’ every day pressures to maintain income and profit to survive in business. I fully understand too that it is Biba’s task to highlight, engage and lead on influencing such matters.
The future, however, will need greater involvement and, where necessary, the full engagement of the intermediary community. This is made even more important by the political turmoil in the UK and the potential for the UK Government being, in the short and medium term, unable to effectively lobby on matters originating in the EU, which might have an adverse impact on UK plc.
So where can you help in making a difference? First, a recognition of the need to get involved where needed and, second, an engagement with BIBA on issues that you feel need to be highlighted.
Take, for example, the Financial Services Compensation Scheme and its current structure on cross subsidy. We, as a sector, support compensation for consumers in the event of an authorised firm failing but the cross subsidy with the rest of the financial services sector, which could result in some of the smallest general insurance intermediaries paying for the banks, is unjustifiable, inequitable, inappropriate and downright wrong.
The recent failures in the banking sector highlight the need for the current structure to be changed. It may seem like ‘mission impossible’ to influence change but the challenge, if you choose to accept it, is to raise this issue at every opportunity with MPs, government departments and the relevant authorities.
Don’t expect an immediate response. It will take some time but I fully anticipate some movement to right this wrong.
Tomorrow’s challenge will be to engage with such matters and maintain the pressure for change. Let’s make sure that all those wishful tomorrows become today’s reality.