Direct threat to ownership rules

To see the draft Biba and ABI-agreed standardised terms of business agreement in full click here .Brokers fear that insurers will reject efforts to set out new principles on client ownership because they have their eyes on the direct market. The principles are contained in the new Biba and ABI-agreed standardised terms of business agreement (TOBA) wording. Brokers have also criticised the TOBA for its lack of reference to service standards.The document, seen in draft exclusively by Insurance Times, sets out the core principles which insurers should regard when developing TOBAs. Clause five, which deals with the broker/client relationship, suggests the following wording: "Insofar as the policyholder has chosen to appoint the broker to advise upon and arrange the insurance, the policyholder remains the client of the broker. Insurers should undertake not directly and knowingly to solicit such business away from the broker during the currency of the TOBA and for a period of five years following the termination of the same..." Insurers are not bound to use the suggested text, and can amend it to reflect their individual trading relationships. Brokers are concerned that insurers will not use the wording in order to preserve their direct sales ambitions. One broker said: "The clause is a laudable attempt to recognise that the customer is a client of the broker. But with the greater development of direct operations, insurers might want to tempt the customer away from the broker. As SME business becomes commoditised this will happen in greater volumes."Other areas covered in the document include commission payment, credit risk transfer and agency termination. Unlike clause five, no wordings are suggested. Eastern Alliance chief executive Grant Taylor said: "There is no mention of service standards. This will come to the fore with FSA regulation and the document should be developed to include it." Biba and the ABI have been working on the core principles for six months. The draft has been signed off by Biba and the ABI and is awaiting FSA approval. The ABI expects to publish the final version by the end of the month.

What do brokers think of the TOBA?Grant TaylorEastern Alliance chief executive "I applaud the effort. It was a good first move"RATING: 7/10Carl WoodroffeDirector of charity broker MCIS "It is a positive step. It is not loaded against the broker"RATING: 8/10 Stuart ReidStuart Alexander managing director"Insurers will add to it and use it as a commercial differentiator"RATING: 8/10To see the draft Biba and ABI-agreed standardised terms of business agreement in full click here .