Mr Webb's letter (Insurance Times, 13 July) deserves a response, if only because his firm is a fully paid-up member of BIBA.

Simon Bolam is, of course, a practising insurance broker with direct experience of the scenario described by Mr Webb. He knows well, as does Biba, the real threats to brokers: complacency, a view that all competition is unfair, a belief that all insurers are determined to put brokers out of business, and a tendency to complain after the event rather than dealing with the problem.

We spend a great deal of time investigating dual pricing and getting insurers to “match” quotations. If only we had been asked to help in Mr Webb's case. I am not in the business of defending insurers, but I should say that my comments about Norwich Union's determination to listen to brokers were based on the fact that the company has made more efforts to consult with us and with brokers following the creation of CGNU than any other insurer I could name.

The way to deal with dual pricing is to demonstrate that brokers add value and reduce costs. There is, of course, a current reference to the Office of Fair Trading, which will determine whether insurers have a case to answer insofar as competition rules are concerned.

A look at Biba's press and media coverage over the past six months will show very clearly that we understand brokers' problems, and that we are addressing these, with a great deal of success, all the time.

In the meantime, we will continue to fight for brokers.
Mike Williams
Chief Executive

Plea to take a step back

Over the past few months you will have received various letters complaining about Norwich Union's dual pricing etc., but on this occasion I feel they are due a letter crediting them with being apparently the only insurance company who are still issuing underwriting guides that are up to date.

No doubt other brokers will have realised that over the past few years, with the so-called wonderful modern quoting systems, most insurers have stopped issuing underwriting guides and leave us to refer only to the notes on the screen. These are invariably nominal advises, which on a Saturday morning do not allow us to decide whether an insurance company will accept an additional young driver or any other anomaly, which could apply to a client's car policy, as most insurers are closed at the time.

We feel that the time has come for insurers to reconsider this somewhat backward step and re-issue underwriting guides, which will preferably include car group lists so that we can at least offer our clients a full service and advise them of all of the relevant anomalies, such as additional excesses and/or restrictions that could apply to any variation on their policy. More often than not a re-quote does not give us that information and it would be interesting to hear from other brokers on the matter.

In the meantime, Norwich Union are to be congratulated on at least keeping us up to date with their underwriting criteria, even if we do not agree with some of it or their other actions!
Ian Bevan-Mogg
Vaughan Insurance Brokers

Dear Insurance Broker,

Regulation - General Insurance

This letter is to confirm that plans drawn up by the Institute of Insurance Brokers to retain its IBRC administrative infrastructure as a self-regulatory body for members of an insurance broking profession, following repeal of the 1977 Act, are now at an advanced stage.

We are most encouraged with the level of support for this initiative from a substantial number of extremely solid and well established firms.

If you have read, and carefully considered, the GISC rules, then, no doubt like us (and our professional advisers – both legal and accountancy), you will have found them to be deeply flawed, inconsistent and illogical in many material respects – providing little in the way of serious consumer protection or, the “level regulatory playing field” originally promised.

Interestingly, when the Insurance Brokers (Registration) Act 1977 came into force, over 20,000 individuals and over 4,000 firms joined as volunteers. In stark contrast, according to press reports, the GISC, which seeks a membership of 30,000+ firms (not individuals), has only attracted a few hundred members since mailing application packs. This includes 180 Lloyd's brokers, forced into membership by the Council of Lloyd's, which (at its own risk) is abdicating regulatory control of its won broker market and handing this over to the GISC.

Thus, as far as voluntary membership is concerned, the take-up can only be described as negligible.

In an attempt to secure the regulatory monopoly it seeks, the GISC now proposes to give notification to the Office of Fair Trading, of a proposed “agreement” within its rules, whereby the risk carrier GISC members (ABI member insurers and Lloyd's syndicates) will only transact business directly with consumers through tied agents or, via GISC member intermediaries. The institute is firmly of the opinion that inter alia such an agreement would be both against the public interest and constitute a restraint of trade under competition law. Our initial legal opinion supports this view, and we have been referred to specialist Queen's Counsel, with a view to mounting the most strenuous defence (in the UK and EU) should any attempt be made to force brokers – regulated by our organisation – into GISC membership. We are informing the director general of fair trading of our stance in this matter.

We feel it appropriate to reiterate the words in the original Treasury paper on this subject, issued in 1998: “16. Repeal the 1977 Act would abolish the present statutory council. But it would be open to the broker sector itself to establish a non-statutory successor body if it saw advantages in this. Such a body could operate a system, with all the necessary features – admission criteria, discipline and rules – for accrediting or recognising professional insurance brokers. Practitioners would seek to attain that recognised status, and clients to use their services. There would be much in common with the present system, in which they choose to meet certain professional standards in order to gain access to a particular class of practice – except that there would be no associated statutorily-controlled title.”

Specifically, there is nothing whatsoever in the Financial Services & Markets Bill to prevent such a scenario being pursued by the professional insurance broking community or, for that matter, anything to force brokers into the GISC against their volition.

We are actually getting on with the express option suggested by the Treasury as detailed above, and hope that we have your full support for these entirely honourable endeavours on behalf of the insurance broking profession.

We will keep you fully informed of developments.

In the meantime the IBRA 1977 is a valid statute until the end of April 2001 – which gives us plenty of time to make all the necessary arrangements for effective and meaningful broker self-regulation, which will operate in the consumer interest.
Andrew Paddick
Institute of Insurance Brokers,