Britain's second biggest insurer Royal & Sunalliance (RSA) has buckled under pressure from broker bodies and dropped its attack on brokers' commission from its direct commercial marketing campaign.

In letters to Institute of Insurance Brokers (IIB) leader Andrew Paddick and British Insurance Brokers' Association (Biba) chairman George Nixon, RSA's commercial development director Rod Kitchen admitted the wording was wrong. “Our choice of words has caused concern and with the benefit of hindsight was unfortunately worded and will be removed,” he wrote.

RSA's marketing letter had said: “No middlemen, so the price you pay is lower,” clearly suggesting brokers artificially bumped up the price of insurance. Biba's Nixon said: “They've agreed not to use the words, which were very offensive, any more. On the whole I feel fairly happy with the response.”

Kitchen claims in his letters that its business insurance direct (Bid) “test” letter attracted more responses than the company had hoped for and 50% of respondents had no insurance cover in place.

And Kitchen has claimed that more than half of all enquiries did not fit with the RSA Bid target audience in that they needed advice and these customers were passed on to brokers.

“Our aim is to provide an insurance position for customers who choose to approach us directly and who have awareness of their insurance needs. We will explain the extent of the cover provided by our products and comment on their suitability for their stated insurance needs. Where more extensive advice is required we will recommend that they contact an insurance broker and, where requested, we provide names and contact details for brokers in their locality,” Kitchen said in his letter to Andrew Paddick.

But Paddick questioned whether the business accepted by RSA Bid as meeting its “deliberate and stringent acceptance criteria” had received the best advice and bought the cover that was suitable for them. “I can't see how these telesales people can assess the needs of businesses. I've been in this industry a long time and I've never known a small business yet that did know its own insurance needs, even if it thought it did,” Paddick said.

Insurance Times has also spoken to a Glasgow broker that received one of RSA Bid's letters offering the firm insurance direct, even though the broker had placed its own business insurance with RSA through its own agency. The firm has written to RSA to complain.