Broker trade body, BIIBA, is hoping to stamp out sharp practice between brokers and underwriters by introducing a code of conduct.
The move comes in response to a rash of recent cases where aggrieved underwriters, who have lost the business of a wholesale broker, contact high street brokers directly.
But the code will also tackle wholesale brokers who, in turn, directly contact the clients of high street brokers.
“A worrying number of these cases has come to light recently,” says BIIBA chief executive Mike Williams.
“It's sensible to put into place proper terms of business so that the actual position of ownership is made absolutely clear.
“We want the original supplier of the business to be recognised as the owner of that business, and we want it recognised that the underwriter or wholesaler is not in a position to pursue the business.”
Next month, Lloyd's publishes a consultation document on plans to scrap Lloyd's brokers and open the market up to all intermediaries. One broker says many of the poaching allegations have been caused by Lloyd's brokers or syndicates trying to shore up business in case these changes are passed.
Williams hopes to implement the code by the end of the year, although no precise plans have been tabled so far.
One route will be to introduce the code as part of BIIBA membership in a bid to stop wholesalers pinching retailer's business. The trade body has around 2,000 broker members.
But BIIBA is also considering drawing up a benchmark contract which would be signed at the time the broker presents the risk to the underwriter or wholesaler.
It would state that the introduction is being given to that broker or underwriter for quotation purposes only, thereby stopping them approaching the client direct or passing them to a third party.
Williams, though, hopes to avoid this option if possible: “We don't want to go down that route – it impinges on the concept of utmost good faith – but it is possible that we will nevertheless do so.”
Consolidation of the insurance industry looks set to exacerbate the trend to scheme business – specialist or niche books tied to brokers who have delegated authority from underwriters.
Paul Hirst, of Paul Hirst Insurance Services in Paignton, welcomes the move for a code of conduct as more and more high street brokers are selling clients scheme policies as the composite insurer field narrows.
“A number of insurers are either cancelling agencies or refusing to write business if the broker does not have a large enough book, so the only option left is schemes,” he said.
“There needs to be some way to protect the retailer broker's client base.
“But more worrying, is the trust you have to place in a wholesale broker.
“There is no document to guarantee that they have not sold a policy which includes a risk the insurer is unwilling to take.'