Royal & SunAlliance's argument for rejecting a non-solicitation clause is nonsense. Insurers should accept the IIB's proposals, says John Jackson

The row between Royal & SunAlliance (R&SA) and the Institute of Insurance Brokers (IIB) about terms of business agreements (TOBAs) looks like a heavy-handed attitude by the insurer.

Under FSA regulation, due to start next January, brokers must have TOBAs in force with all with whom they deal, who must in turn be FSA authorised.

This is a sensible arrangement, and means updating all current TOBAs. The ABI, Biba and the IIB have put together a set of recommended core principles that includes non-solicitation.

Amazingly, with just five months to FSA regulation, only Royal & SunAlliance (R&SA) has so far surfaced publicly with its TOBA proposals. Biba had a meeting with the ABI earlier this week on TOBAs, when the R&SA situation was no doubt raised.

Brokers are between a rock and a hard place with the R&SA. If they refuse to sign they cannot trade with that insurer next year, but if they do sign it is an open-ended invitation for their clients to be poached. Whatever happened to trust?

The statement reported in last week's Insurance Times by Brendan McManus, R&SA director of commercial business, in his response to IIB director-general Andrew Paddick on TOBAs, was puzzling.

Apparently, his argument goes, there should be open season on poaching because an agent might go out of business, or be dishonest, or not have FSA authorisation or a policyholder's interests might be at risk.

What utter tosh! The ABI/Biba/IIB proposals state that insurers "should undertake not directly and knowingly to solicit such insurance business away from the broker during the currency of the TOBA and for a period of five years following termination of same, except in special circumstances", and these exceptions include the very points raised by McManus - non-regulation, fraud, bad accounting etc.

The code adds: "Furthermore, insurers should not, without the prior written consent of the broker, make use themselves of, or pass to any third party, any information supplied by the broker or his client, for the purpose of knowingly soliciting insurance business away from the broker."

So what is R&SA's problem? Is it signed up to the proposals agreed by the ABI or not? If not, then its bullying tactics are a clear case of force majeure, twisting the arms of brokers as time runs short to statutory regulation.

This is where the FSA should step in as a last resort. If the FSA is to live up to its claim to be in business to protect the consumer, then it should put a stop to this poaching as a general rule, as being unethical, unprofessional and unacceptable.

There is of course a final solution for brokers - move your business. There are plenty of good broker-friendly insurers around. Why bother with one that wants the right to pinch your clients?