Claims and regulatory cost burden to be key areas of focus for trade body this year

Biba unveiled a new pricing index to track the cost of insurance premiums at the launch of its 2014 Manifesto today in the Houses of Parliament.

At the meeting the trade body set out its priorities for the year and said its key goal was to deliver results for customers, businesses and the industry. One of these key priorities is tracking and measuring insurance premiums.

Biba executive director Graeme Trudgill said the index would help the industry to identify where and why insurance costs are increasing for small businesses and consumers, and help the trade body to work with the government to achieve affordable premiums for customers.

The new Biba-Acturis Insurance Price Index will track three ‘shopping baskets’. They comprise a consumer basket of a motor and home policy, an SME basket of a package and commercial vehicle policy, and a larger commercial basket with commercial combined, fleet and combined liability policies.

The index uses pricing data from the £4bn of premiums placed through the Acturis system each year and tracks the percentage change.

Chief executive Steve White added: “This is an exciting milestone, as it will allow us to regularly track the cost of insurance and will provide a wider insight into the economic health of the country, the cost of living, and our sector’s role in that.

“This year is a year of delivery for the government and in this document we set out our campaigning issues for 2014.

“We outline where more can be done to help consumers and their families, support businesses that provide vital employment and help the insurance industry itself – which plays such a critical role in driving growth.”

Regulatory cost burden

In 2014 Biba plans to continue pushing for change in how the Financial Services Compensation Scheme (FSCS) calculates the levy paid by brokers, which contributes to the high cost of broker regulation.

New regulation research has revealed that UK brokers have the most expensive regime in the world, with regulatory fees and levies costing more than five times those in New York, Japan, France and Germany.

White said: “We will work with the Financial Conduct Authority on the review of [the FSCS’s] funding to find a more equitable system and will continue to fight for a fairer separate sub-class within the FSCS for pure insurance brokers.”

As part of its efforts to ensure fairer regulation for brokers, Biba will also look the revision of the EU Insurance Mediation Directive.


After setting up a working group earlier this year to address the issues of claims rejections, repudiation and reservation rights, Biba will be working with AXA to create a paper detailing the common reasons for claims rejections.

Part of the working group’s strategy is to improve public understanding and enhance the customer experience of the claims process.

Trudgill said: “Brokers don’t want to see valid claims rejected. It’s bad for business and it’s bad for their professional indemnity.

“This subject is on the radar with the FCA, our members, consumer bodies and media. When everybody is concerned about one thing or another, it is healthy to get the industry together to look at the positive thing we can do.”

Support for SMEs

In 2014 Biba plans to provide a guide on under-insurance so that small businesses are kept informed about the coverage they should be buying to protect themselves fully. The trade body also plans to work with the government on a flood insurance solution for SMEs – which are excluded from Flood Re – and a revision of the Riot (Damages) Act.

Trudgill said: “There is nothing on the table to help SMEs to access Flood Re. If they are not going to be part of Flood Re, can we set up a plan B?

“Can we set up a scheme or improve communications so they know what to do? We are working with stakeholders on this.”


The trade body also wants to step up the number of agreements from insurers or brokers to refer non-standard risks to an alternative provider if they cannot offer coverage themselves.

More than 100,000 older customers have been able to find travel and car insurance through the so-called signposting agreement between insurers and the government since the agreement came into force on 6 April 2012.

Trudgill said Biba will now work to introduce other non-standard risks to the scheme, such as young drivers, SMEs unable to find flood cover and people with convictions.

Level playing field

Biba has welcomed the FCA’s recently announced thematic review into aggregators and the Competition Commission’s proposal to abolish ‘wide most favoured nation’ clauses, which aggregators use to prevent insurers offering cheaper prices elsewhere.

The trade body said it will continue to push for a level playing field in the market by insisting that the Insurance Mediation Directive applies to aggregators as well as brokers.

White said the measure of success for 2014 will be if stakeholders understand the issues Biba is campaigning and calling for and whether they can be achieved. But he added that not all the issues will have quick fixes.

He said: “We are not just going to put issues into the manifesto that we are going to get a quick win on – that isn’t what this is about. A number of these issues have run from 2013 into 2014.”

“A lot of lobbying is long term. These are campaigns we are waging here. Some campaigns are further advanced than others. Some issues are longer in the tooth than others. Our job is to pick up the issues that matter to our members and get on with them.”


Other key issues Biba will focus on in 2014 are:

1.     Passporting and balance of competences review  – a level playing field

Biba said passported, non-UK regulated overseas insurers have the potential to damage the UK insurance market. The trade body wants to see greater protection of the UK insurance market. Biba believes the UK must raise this issue in Europe and the UK regulator must do more to work with passported insurers’ domestic regulators. It added the government’s balance of competences review is the ideal vehicle to take this issue forward.

2.     Information overload

Brokers are required to give enormous amounts of information to a customer. Biba is concerned that the more information given to customers, the less inclined they are to read it. Biba’s call for action is for the government and the FCA to launch a review into appropriate information.

3.     Possible members’ code

The next stage of the trade body’s strategic review regards professionalism. Biba wants to raise standards and will be consulting members in 2014 about the potential for codes of professionalism, ethics, practice or conduct to promote high ethical and business standards.

4.     Insurance growth action plan

Biba said it is committed to working with government to deliver better outcomes for consumers, businesses and the insurance industry. Additionally it has committed to help the government implement the UK Insurance Growth Action Plan, particularly in the key areas of expanding the UK industry in overseas markets and promoting the UK as a location for insurers.