The Federation of European Risk Management Associations (Ferma) president Thierry van Santen said the European Commission “should define new transparency practices” in the wake of Eliot Spitzer's probe into the US insurance industry.
He said broker consolidation had the effect of allowing dominant brokerages to control the insurer's portfolio, consequently large brokerages had “been able to impose some remuneration rules”.
“Everybody knows that the broker remuneration system, with an adviser paid by the other party, is a fundamental problem,“ he said.
Results of an informal survey carried out by Ferma suggested this was not an isolated viewpoint.
Several risk management firms have begun internal inquiries as a result of Spitzer's investigation.
Ferma said it and the International Federation of Risk and Insurance Management Associations would also be developing proposals on the subject.
Van Santen said “bad practices” where the brokers and insurers practices were paid for by the consumer should be made transparent.
“Everybody has now to recognise that any service has a price and that transparency must be based on the servicing, too. The winning and successful insurers and brokers tomorrow will be those who are able to optimise costs and efficiency of the services.”
UK-based Ferma member the Association of Insurance and Risk Managers said it had set up a task force that had plans to produce draft disclosure standards for discussion with the insurance market this month.
Hosted by comedian and actor Tom Allen, 34 Gold, 23 Silver and 22 Bronze awards were handed out across an amazing 34 categories recognising brilliance and innovation right across the breadth of UK general insurance.
