I write in response to your headline "Insurers plan counter-attack" (11 July, Insurance Times), and also to your dialogue between John Jackson and Grant Ellis (July 2002, Top 50 UK Brokers supplement) on the same subject.

While the Financial Services Authority's pursuit of transparency on commission is no doubt well intentioned, the Association of British Insurers' independent research into the same subject is infinitely more admirable, and will hopefully lead to common sense prevailing. Regulation of general insurance should have two aims: first, to protect the consumer; second, to introduce consistency for all insurance distributors.

The introduction of commission disclosure for intermediaries will simply create competitive advantage for the direct writers, as there is clearly no commission element within their premium. Direct Line even has its advert ready to run - remember the "cut out the middleman" campaign, with the image of the poor broker having the floor sawn away around him? That aside, commission disclosure will lead to even more scripting for telebrokers, pushing up call times and costs, and giving the direct players yet another edge.

Why should intermediaries be penalised for offering choice, when single product direct writers escape completely?

Many intermediaries spend little or nothing on advertising - perhaps direct writers should be compelled to disclose their acquisition cost so that customers know how much of their premium is used to fund expensive TV adverts ?

In many cases, this figure would be remarkably similar to the average commission figure. Or perhaps we should totally confuse our customers by telling them our income, our costs and of course, our profit per policy?

If we ask our customers, particularly in personal lines business, the vast majority will not care about commission, or fees, or marketing costs - they care about the price they pay, and (sadly) to a lesser degree, the cover they buy. So if an intermediary offers cover at a more competitive premium for the customer than a direct writer, why should the commission (or fee) the intermediary receives have any bearing whatsoever?

David Rudd
Retail director
Heath Lambert

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