The broker trade body’s research revealed that UK brokers face one of the highest direct costs of regulation out of 23 jurisdictions
Biba launched its 2020 Manifesto in the Houses of Parliament on 21 January; it called on more proportionate regulation into action to strengthen the broking sector of the future.
The general insurance intermediary organisation is asking government ministers to act on their insurance broking regulation comments, with this year’s theme being ’access’, which includes the need for customers and businesses to access suitable cover and the necessary adjustments to enable brokers to do so.
The manifesto was launched in front of an audience of ministers, MPs, Lords, senior government officials, insurance professionals and the media.
John Glenn, MP and minister for financial inclusion, addressed attendees yesterday. He said: “At this event last year, I challenged the industry to take up this mantle and I asked you to consider ways to ensure that everyone has access to the right insurance products, because there will always be individuals and groups with specific needs or who require additional support and especially the most vulnerable in our society. And, 12 months later, we see the new manifesto and it’s simply entitled ‘Access’. And I think that demonstrates that you have addressed that issue.
“No one should be denied the protections of insurance cover and the peace of mind it brings because of factors that are outside of their control.
“The manifesto contains some exciting, innovative ideas, which I am keen to continue to explore with you.
“I am very proud to say that you are world leaders and you have the expertise to thrive across a range of new sectors from cyber insurance to green finance. So please, now is not the time to hold back or slow down. It’s time to accelerate your efforts as a decade of renewal begins for our country.”
Brokers face highest direct regulation costs
Steve White, Biba chief executive, said its new research, undertaken with London Economics, looked into the comparative cost of regulation for UK insurance brokers. This revealed that UK insurance brokers face one of the highest direct costs of regulation out of the 23 jurisdictions examined - 71% of all respondents believed their indirect regulatory costs were increasing compared to 2016.
For a sector that poses no systemic risk, this is in contrast with previous comments by Conservative ministers on regulation and the Tory Manifesto 2019 which stated: “Through the red tape challenge we will ensure that regulation is sensible and proportionate.”
Proportionality and fairness in the regulation of such a low-risk sector has been a recurring chapter in Biba manifestos; although brokers are rightly regulated, Biba believes that the degree and nature of regulation require some finessing.
“We were perturbed but not surprised that it continued to show that they endure one of the highest costs of regulation in the world. This not only places a financial strain on brokers but affects their operational efficiency with the finding that more than 1 in 4 (26%) full-time equivalent staff in smaller brokers are employed simply on regulatory issues.
”This takes them away from their core purpose of helping customers to access the insurance they need,” White said.
Craig Tracey, MP and chair of all-party group on insurance and financial services, who hosted last night’s event, added: “One of the reasons that I actually got into politics in the first place from having a brokerage was that I was really concerned about the future of broking. Regulation looked to be stifling the industry and the internet really had the potential to make particularly the high street brokers and smaller brokers irrelevant.
“As soon as I walked through the door [of last year’s Biba conference, however], I was just so inspired about what a good state the industry is, what it was in and not only is it alive and well but it’s positively booming and that’s really good news and I think it’s a real credit to the industry, to the people that work in it and to organisations like Biba who help drive that change and make sure that the profession stays relevant.”
White explained that action on regulation is essential for the sector and indeed an examination of the demands the regulator places on it.
This is because it would not only enhance access to insurance but it could be of benefit to the entire UK economy.
“That is why we are calling on the government to introduce a competitiveness objective for the FCA, the PRA and the CMA. We believe that this is essential as we seek to maintain our leading position in this current period of uncertainty,” he added.
For Biba, its latest manifesto launch continues to highlight broker concerns while embedding Biba as a visible public platform. Speaking on prime minister Boris Johnson’s decision to publicly declare his interest in leading the Conservative party at last year’s Biba conference, for example, Jonathan Evans, chair at Biba, said: “The relevance of that to a non-political organisation like Biba is that it’s a demonstration of the fact that Biba is at the forefront of what is happening in terms of public affairs in the UK. Biba really was in the news and it has remained in the news ever since.
“Insurance brokers should be proud of their industry. They should be proud of the products that they are offering and the contribution they are making to the economy.”
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