Survey finds nine in 10 insurance brokers feel too much regulation is being pushed through in too short a time
The vast majority of brokers feel new regulations currently facing them are overly burdensome with some of them deemed totally unnecessary, a survey has revealed.
The results of the survey, conducted by specialist insurer Ecclesiastical, showed that 90% of brokers felt too much regulation is being pushed through in too short a time without any consideration for the impact.
Additionally, 72% of the 250 insurance brokers surveyed felt there are too many new regulations to comply with and 82% said they doubted whether the benefits of the changes would outweigh the resource to comply.
Some of the changes set to affect insurance brokers in the next year include significant new regulation in the form of the Insurance Distribution Directive (IDD), the FCA’s Senior Managers & Certification Regime (SM&CR) and later this month the General Data Protection Regulation (GDPR).
The survey revealed 72% of brokers feel at least some of the new regulations are unnecessary, while 18% feel it is all unnecessary.
Adrian Saunders, commercial director at Ecclesiastical, said that while the regulations did seem onerous to implement, that they did present benefits to brokers and customers. He said regulators had to do more to engage with those frustrated brokers.
He added: “The new safeguards should also lead to improved accuracy of information provided, resulting in competitive pricing, less rejection of claims and reduced fraud – a win-win for the industry.
“Few people would disagree that improving fairness, efficiency and guarding against conflicts of interest is a good thing, but it’s important for the regulators to keep front of mind that implementing too much regulation in too short a timeframe can put a major burden on businesses.
“That burden will feel all the heavier if brokers feel that the short-term barriers outweigh the long-term benefits to them and their customers.”
Over three quarters (76%) felt the work needed to comply with the new regulations will impact on the time staff can spend with customers, and Saunders revealed it was particularly smaller, provincial brokers who were most worried on this front.
He added: “In an industry where a broker’s competitive advantage is their ability to get to know a customer and build a trusted relationship, this is a worrying finding. Rather than being enabled to offer better products and services, there is a clear risk that smaller firms could feel strangled by the red tape of regulation.
“Clearly more needs to be done to demonstrate to brokers what positive impact the new legislation could have for them and their customers. After all, if brokers aren’t bought into the benefits, then how can regulators expect them to be effective? They need to believe that regulation will change the insurance market for the better, giving it and them a better reputation and a brighter future.”
Other areas of concern brought up by the survey included the finding that less than half of brokers (49%) felt they had been given enough information to comply with all the new regulations, with only 58% saying they felt they had been given enough time to comply.
The finding follows a previous study that revealed just 14% of brokers felt informed about the implementation of the FCA’s SM&CR at the end of the year, while only 36% said they were even aware of the changes. SM&CR will affect insurers from 10 Decmber, and will eventually be implemented for brokers too, although a date has not yet been confirmed for when this will be.