Broker in network talks with six insurers

Hamilton Fraser Insurance Solutions is talking to six insurers about "white labelling" its broker network.

Compliance consultant Ian Langley, who has been retained by Hamilton Fraser as head of compliance, said that insurers were keen to avoid seeing smaller brokers, who often provide them with their most profitable business, exit the market.

"Insurers are worried about loss of distribution," he said. "At least half a dozen major insurers are interested in putting brokers, who won't make it through FSA compliance, into a network."

Langley said that Hamilton Fraser, which established its 60-strong network in 1996, would consider both an exclusive deal with one insurer or white labelling for several insurers. Under such an arrangement, insurers could put brokers into the network which, for those brokers, would carry the insurer's name, and Hamilton Fraser would administer the network on behalf of the insurer.

Langley said that Hamilton Fraser would offer four options to brokers interested in joining the network: to sell to Hamilton Fraser now; to sell through a phased buyout; to become an appointed agent network member and avoid direct regulation; or to join the network, but become FSA compliant in their own right.

Hamilton Fraser will not allow its appointed agents to have multiple principals, as proposed in the FSA's CP159, due to the difficulty in monitoring all sales to ensure they are compliant.

"While the concept of multi-principals is there, I don't think it will work," Langley said. "Even if it did work we've taken the view that it's a grey area that we don't want to get into."

Instead, Langley said Hamilton Fraser would look at forming alliances to allow its members to sell credit cards, mortgages and life and pensions products.