Brokers are about to wage war on 'Jekyll and Hyde' insurers who offer cheaper policies to direct customers.

Biba's conference next month is set to erupt over allegations that insurers use their direct channels to massively undercut brokers.

On April 13, the day the conference opens in Edinburgh, brokers will vent their fury at monster insurers who charge them higher rates than direct customers.

One broker, Glasgow-based Logie & McArthur, threatened this week to withdraw their potential £300,000 account with CGNU (if the merger of NU and CGU goes through) if NU's website continues to undercut its business with them (see letter on page 6).

Biba chairman Simon Bolam said the issue was the most serious concern facing brokers, after poor service standards.

"What really annoys brokers is that if they query a difference with insurers they reply that it represents the broker's commission. But the differences are far, far greater for this to be the case," Bolam said.

He has received numerous complaints - one of the worst involved a 'colossal' price difference of £500 - and cited Norwich Union Direct and Axa Direct as the worst offenders.

Bolam revealed that Biba has had private talks with insurers in an attempt to elicit justification for the wide variations in their quotes.

The issue was discussed at Biba's meeting with the UK's 15 largest insurers two weeks ago.

Bolam said the insurers gave a number of reasons why quotes from their direct arms could be lower than those given to brokers.

They argued that administration costs are higher and the retention rate is lower through brokers.

Sandy McArthur, director of commercial brokers Logie & McArthur, threatened to pull his firm's £300,000 account with the proposed new insurer CGNU after he obtained substantially lower quotes through NU's internet site.

One quote for a Mercedes CLK 230K sports car was £328 less than the renewal premium offered by NU's broker arm. Another, this time for a Renault Clio, was £241 lower on the internet. "I was expecting a difference of up to 15% but the differences between these quotes are much higher," said McArthur.

He went on to accuse NU of being a 'Jekyll and Hyde' insurance group, but vowed not to let the giant get the better of him.

NU said in the vast majority of cases quotes between its direct and broker channels should not vary by more than 20%.

Colin Colder, head of broker development at Axa, said it is working with brokers to reduce their distribution costs.