Bluefin scandal sparks calls for shake up in broker pay

The insurance industry today faced calls for a shake up in the way brokers are paid following the Bluefin scandal. 

Bluefin was yesterday fined £4m by the FCA after it was found to push a strategy of placing business with AXA and preferred partners, to the customer’s detriment. 

In one case, a customer was left in the dark about a rival insurer verbally offering a deal £45,000 cheaper - only for it go to AXA.

The FCA has stressed that it makes no criticism of AXA, leaving all its fire for Bluefin.

Brokerbility chairman Ashwin Mistry said more business should be done in fees as a way of solving the conflicts problem.

”That is the way it should be done. The whole issue of customer detriment has to be looked at. Net rate is the way forward - it takes away issues around treating customers fairly and conflicts,” he said. 

”Over a certain size between £5K and £10k premium, it should be on a net rate and should be transparent on what you do for your fees.”

Manchester Underwriting Management founder Charles Manchester said brokers must be left to make their placement decisions in the best interests of the customer. 

Manchester said the soft market was a factor behind the commission deal making. 

He said: ”The problem at the route casue of this is that insurance is commission driven. This is something you regularly come across - brokers pushing up commissison rates in softer markers.

“The insurers that give higher commissions, one would suspect are in a position, to get business than those offering lower ones.”

AXA sold Bluefin to Marsh in December last year, when the issues had been cleared up.