"Will new evidence of grossing up force brokers to itemise client invoices?" (27 March, Insurance Times). The GISC and the FSA are not aware of the massive extent and depths of premium grossing up. A percentage added to the insurer's premium, without disclosure to the insured or insurer, is a mere routine step for certain intermediaries.

What is of greater concern are the huge single amounts which can be added and the huge credits that never reach the policyholder - only a fraction ever do.

There are intermediaries who act for an agreed fee in return for provision of a net premium. Yet substantial turnover or profit incentives are provided by the insurer. Certain brokers have found that a separate division of theirs has `accidentally' received normal commission, despite the apparent net premium client agreement,

Scheme intermediaries can present documents to a client with the appearance of an apparent premium plus a policy charge shown.

The client has the clear impression the policy charge is the intermediary's fee, but is not aware the intermediary is also receiving a commission of 20% or so on the premium. Customs and Excise should be actively interested in all of these charge strategies as premium tax could well apply.

Particularly obnoxious is the bandit intermediary who snatches a case by commission rebate and then stitches the client up by hidden charges or by absorbing credits.

I suppose European competition law will prevent all insurers always presenting net premiums with the complete absence of soft indirect commission.

Certainly, the absence of all commission -- direct and indirect - would have prevented the massive past and current problems in the financial services worls.

Name and address withheld

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