Rate rises are over-inflated as underwriters cash in on the hard market to gain investor returns
Insurers are exploiting the current capacity crisis to over-inflate rate increases, said The Folgate Partnership chief executive Andy Homer.
"Some carriers are taking this current crisis too far, taking the piss on some rates and taking advantage of a market that needed to harden," said Homer.
"The industry doesn't punch its weight at Downing Street, our shareholders keep coughing up the money and underwriters are thinking that it's time to get something back, but some are taking it too far."
Homer told delegates that insurers needed to share more financial data with brokers.
"There's an awful lot of expertise in professional broking that is not used.
"They don't give the brokers enough information on loss ratios and the five leading carriers all define terms differently, so it is very difficult to aggregate.
"Information on what we're shooting at would be helpful," he said.
He added that brokers should use their expert client knowledge to command reasonable fees.
"Brokers know much more about the client's business, their processes, their management team, its risk management, and things that can help get a fair price and fair cover for the client," Homer said.
"I was staggered by the quality of knowledge on underwriting, pricing and risk management in broking.
"A lot of brokers are not using it, but a lot are giving a fantastic service and not getting paid for it.
"I wish we could find a way for charging a proper fee, which would take some of the pressure off commission."
Zurich UK chief executive Patrick O'Sullivan admitted insurers had failed to share information with brokers.
"The industry has done a poor job of explaining how we make money," he said.
"When Eagle Star and Zurich merged we didn't have any underwriter year data, so we couldn't monitor underwriters' performance.
"We can do this now. After the merger, we did actuarial analysis of our reserves and, as a result, we put in an extra £400m, then the following year we put in £50m.
"Whenever there are legislative changes, such as the Ogden tables, we need to go back and assess our reserves.
"For employers' liability this means looking back over the past 30 years and, as a result, we have to increase premiums. But we have done a bad job of explaining the rate increases to clients.
"We need to do better in the future."
