Revised Insurance Mediation Directive could spell an end to existing commission arrangements
Brokers are bracing themselves for the imposition of greater commission disclosure following comments by the European Commission’s top insurance official that the issue is rising up the political agenda.
The Commission’s insurance unit head Karel van Hulle told Insurance Times that while Brussels had yet to draw up its replacement for the existing Insurance Mediation Directive (IMD), pressure was mounting for greater transparency surrounding fees.
He said: “Issues of conflict of interest and remuneration are higher on the agenda than they were five or six years ago. There’s no doubt that they are issues of political importance.”
His comments echo Ceiops (Committee of European Insurance and Occupational Supervisors) secretary-general Carlos Montalvo in last week’s Insurance Times when he said: “Everybody in the debate, be they consumers, regulators or brokers, agrees that there has to be more transparency. The issue is how much and what type.”
Biba’s technical and corporate affairs executive, Graeme Trudgill, told last week’s Insurance Times Broker Forum that commission disclosure was likely to be “the bare minimum that comes forward” when the Commission revises the IMD.
Brokerbility chairman Ashwin Mistry, who was also speaking at the forum, predicted that upcoming revisions to the directive could spell the end of the UK’s existing commission arrangements.
“Brokers are very naive to think that commissions are going to be around in three or four years time,” he said.
Mistry also launched a scathing attack on MGAs, saying insurers who used them should be ashamed.
“From a Brokerbility position, we don’t believe that insurers are that feeble or that weak to be giving the pen away. If you are genuinely saying that a broker can arrive at a better result than you can, then I think: shame on you.”
He also hit out at the failure of insurers to clamp down on claims farming and the poor record of the entire insurance sector in making plans for adequate succession planning.
Also speaking at the forum, Oval group managing director Jeff Herdman said there were too many inefficiencies in premium transactions. “If we can’t find a way to drive out these inefficiencies, then clients will. They won’t pay for them,” he said.