Daily briefing: Friday - Brightside breaks broker silence

Brightside is the first big broker to reveal its referral income - it’s not much.

The broker makes between £60,000 and £120,000 a year from the practice, a spokesman said.

The insurers that have revealed details of their income have also been earning very little from referral fees.

Groupama also revealed its referral fee income last week pulling in just 0.05% of turnover, while Admiral earns 6% of income from referrals.

Silent contingent

While their honesty is notable, the silence from other firms has been telling. Companies such as BGL, Swinton and Kwik-Fit will not reveal how much they earn from referral fees. It is believed they make above-average earnings this way, relative to turnover, compared with rival brokers.

One argument for not revealing referral fee income is that it is commercially sensitive. Perhaps firms are worried about their public relations if they reveal referrals or invite scrutiny of their business model. But as the pressure mounts to reveal referral fee income, I’m looking forward to full disclosure from across the industry.

MGA power

Managing general agents, once considered the bête noire of the industry by insurers concerned about poor underwriting results, are now stronger than ever. Many MGAs have regrouped, refocused their underwriting and concentrated underwriting to specialists areas where they have the expertise over a traditional insurer.

Yesterday we heard that Brightside is considering setting up an MGA service to underwriters to grow its eCar motor business, according to chief executive Arron Banks.

The appetite for MGAs is not going away. MGAs now have a trade body called the Mangaing General Agents’ Association, the Managing General Agents’ Association, to back them up.

Even the most traditional insurance market has been quick to see the benefits of giving the pen away. At the MGAA launch event, Lloyd’s head of delegated underwriting Peter Montanaro said the industry “used to turn their noses up at the prospect of giving the pen away”, but that there were now about 2,500 Lloyd’s coverholders worldwide. Happy days indeed.