New terms will allow NU to hijack brokers' clients, IIB's Paddick says by Helene Dancer

Brokers are being told to reject Norwich Union's (NU) reviewed agency agreement.

IIB director general Andrew Paddick said the revised terms of appointment were "very unilateral".

He said: "Brokers are not happy. In the first few days, we received hundreds of calls. We are telling brokers not to accept the new terms."

In a letter sent to brokers and intermediaries, NU intermediary business director Ken Wallace stated the review followed NU's "post-merger conversion programme".

Paddick said he thought one of the most controversial clauses in the new terms was that NU reserved the right to cancel the agreement at anytime, without having to give a reason. In a letter to brokers he stated that this clause would enable NU to "hijack brokers' clients to NU Direct or transfer the business to a more favoured broker".

Brian Whicher, the managing director of broker Whichers Boylan and James, said: "These sorts of agency agreements fuel worries that insurance companies are looking at the direct route. They don't acknowledge that the client relationship lies with the broker."

Paddick also expressed concern over a clause that stated agents should be obliged to disclose to NU their contractual arrangements with other insurers and intermediaries.

Biba technical services officer Graham Trudgill said that Biba is currently looking at the revised terms. "We do expect to ask for some changes to be made," he said.

A spokesman for NU said that, in reality, the terms had not changed. "We have streamlined four agreements into one," he said.

He confirmed that Wallace was currently in discussion with Paddick about the issues.