There's much to gain from coming clean on referral fees
It was unfair of the transport select committee to pick on insurers when, instead of banning referral fees, it called on them to disclose their referral fee arrangements.
It is true that this is a bit of a side issue, but it would be better to demolish the stables than give them a clean. It is also true that if insurers stop taking referral fees, other types of company will mop up the cash instead. Any industry, however, looks to be on sticky ground when it argues against transparency, especially in the post-WikiLeaks era.
Insurance Times made its view clear on this issue nearly two years ago when we urged insurers to follow Groupama managing director Laurent Matras’ call for insurance companies to reveal their referral fee arrangements. Allianz’s Andrew Torrance has in the past week also called for greater transparency.
Given the head of steam that has subsequently built up behind a ban on referral fees – which the government is still considering – the case for such a move is more powerful today than it was two years ago.
The moral high ground may not pay in the short term, but exposing the workings of what the ABI characterises as a “dysfunctional but little understood” system will surely bring forward the day of its reform. Such a move would also train the spotlight away from insurers and into the murkier corners of the supply chain, which deserve to be illuminated.
This is not the kind of money that a respectable business such as insurance should feel comfortable about taking. IT